Discussion On Accounting Treatment Of External Investment By Public Institutions

With regard to the accounting treatment of foreign investment by public institutions, the book "intermediate accounting practice (1)" of the national accounting professional and technical qualification examination is stated in this way: the public institutions have invested materials in other units, according to the value determined by the contract agreement and the value added tax payable, borrowed the subject of "foreign investment", credited the "material" subject according to the book value of the materials, and credited the "payable tax payable - value added tax (output tax)" subject to the value added tax payable, according to the value determined by the contract agreement, deducting the difference between the book value of the material and debit or credited the "business fund - Investment Fund" subject.

At the same time, according to the book value of the material and the value-added tax payable, we will borrow the "business fund general fund" subject and credit the "business fund - Investment Fund" subject.

The author believes that the above accounting treatment is not in line with the provisions of the accounting system of public institutions.

According to the provisions of the accounting system of public institutions, the institutions of the State Council have invested the materials in other two units: the 1. belongs to the general tax payers, and the general taxpayer has invested materials in other units, according to the value determined by the contract agreement, borrowing the "foreign investment" subject, according to the material book value (excluding VAT), crediting the "material" subject, and crediting the "payable tax payable - value added tax (output tax)" subject, according to the value determined by the contract agreement, deducting the difference between the book value of the material and the value added tax (output tax), debit or credit the "business fund - Investment Fund" subject.

At the same time, according to the book value of the material, we borrow the "business fund - General Fund" subject and credit the "business fund - Investment Fund" subject.

2. belongs to a small scale taxpayer with value added tax. The public institutions outsource materials. According to the value determined by the contract agreement, they borrow the "foreign investment" subject, and borrow or record the "enterprise fund investment fund" subject according to the book value (including tax), crediting the "material" subject, and according to the difference between the value and the book value determined by the contract agreement.

At the same time, according to the book value of the material, we borrow the "business fund - General Fund" subject and credit the "business fund - Investment Fund" subject.

The following are some examples: A, a general taxpayer of value added tax, invest a group of materials to the company.

The book value of a material is 200 thousand yuan, and the value added tax rate is 17%, and the value determined by the two sides agreement is 250 thousand yuan.

According to "intermediate accounting practice (1)", the accounting treatment is: borrowing 284 thousand yuan (25 + 20 x 17%) for external investment; loan: material 200 thousand yuan, payable tax payable: value added tax (output tax) 34 thousand yuan, enterprise fund - 50 thousand yuan of investment fund.

At the same time, borrow: Business Fund - General Fund 234 thousand yuan (20 + 20 x 17%); loan: Business Fund - Investment Fund 234 thousand yuan.

Such treatment is wrong and does not conform to the provisions of the accounting system of public institutions.

According to the "accounting system for public institutions", the accounting treatment is: Borrowing: 250 thousand yuan for external investment; 200 thousand yuan for loan: material tax payable, 34 thousand yuan for value added tax (output tax) and 16 thousand yuan for investment fund.

At the same time, borrow: Business Fund - general fund 200 thousand yuan; loan: Business Fund - investment fund 200 thousand yuan.

The difference between these two methods is relatively large: the book balance of foreign investment is 34 thousand yuan, and the difference between the fund of the cause fund and the investment fund is 68 thousand yuan.