A Comparative Analysis Of Equity Investment And Consolidated Price Differentials

The "accounting standards for enterprises investment" issued by the Ministry of Finance (hereinafter referred to as the "investment guidelines" and "Interim Provisions on consolidated accounting statements") (hereinafter referred to as the "Interim Provisions") has played a normative role in the accounting of enterprise investment and the compilation of consolidated statements of enterprise groups. However, the handling of equity investment differences in the investment guidelines is not consistent with the handling of consolidated price differentials in the Interim Provisions, which will have a negative impact on accounting.

The difference between equity investment difference and merger price difference is different from that of L..

The investment standard stipulates that the difference in equity investment refers to the difference between the investment cost and the share of the owner's rights and interests of the invested unit when the equity method is used to calculate the long-term investment, that is, the difference between the equity investment and the investment cost.

It can be seen that the difference in equity investment is essentially composed of two parts: first, the difference between the fair value and the book value of the net assets of the subsidiary company; and two, the investment cost of the parent company exceeds the difference between the fair value of the identifiable net assets of the invested subsidiary, that is, goodwill.

"Interim Provisions" stipulate that the difference between the amount of capital invested by the parent company and the share held by the parent company in the owner's equity is listed as a "combined price difference" item in the long-term investment project, which is the same as the difference in equity investment in the investment guidelines.

However, the Interim Provisions also stipulate that the difference between the investment in the long-term investment and the cancellation of the bonds payable will be treated as a combined price difference, which will have an impact on the comparability between the separate accounting statements and consolidated statements of the parent company.

2. of them are not amortized.

The investment Code stipulates that the equity investment balance is amortized in a certain period and is included in the profit and loss so that the difference between the book value of the parent company's long-term equity investment and its share in the net assets of the subsidiary company will be reduced to zero.

The interim provisions do not require the enterprise group to amortize the consolidated price difference when compiling the consolidated financial statements, but to list it as a permanent asset in the long-term equity investment.

Some people believe that the combined price differentials will be reduced year by year with the amortization of the equity investment balance, and the reduction is equal to the annual amortization of the equity investment difference, so the combined price difference has been amortized.

This view is incorrect. There are two reasons for this: firstly, the amortization of the equity investment difference is reflected in the separate statements of the parent company. When compiling the consolidated financial statements, the parent company's long-term equity investment will be replaced by the assets and liabilities of the subsidiary company, and the investment income of the parent company will be replaced by the income and expenses of the subsidiary company. The combined price difference will not be automatically amortized with the amortization of the equity investment balance.

Analyzing the contents of the consolidated price difference can also be seen that the combined price difference will not exist forever, and it will decrease as the assets of the subsidiary are consumed and the liabilities are repaid.

If the combined price difference is not amortized in the consolidated financial statements, the combined net income will be overestimated when the combined price difference is the number of borrowers, and the combined net profit will be underestimated when the combined price difference is the number of credits.

Second, in practice, the combined price difference decreases year by year with the difference in the equity investment balance. This is when China compiling the consolidated financial statements, the offsetting of the investment income of the parent company is not offset by the amount of the difference in the equity investment, or the illusion that the share of the parent company's share in the net income of the subsidiary is sold.

This approach can make the merger counterbalance but the investment gains on the consolidated statement are not correct at this time.

Two, solution L. the difference between the unified consolidated price difference and equity investment.

The equity method is the basis for compiling consolidated statements. The difference between equity investment and consolidation price should be consistent.

The difference between the balance arising from the offset of the equity assets and the internal debt and debt of the group is different.

The price difference arising from the purchase of the controlling right of an enterprise is the cost to be paid for the future excess profit distribution. It should be used as a combined price difference to list the consolidated balance sheet. The bonds and gains or losses arising from the purchase of the controlling rights only affect the consolidated profit and loss statement. They should not be listed on the consolidated assets balance sheet, but should be used as a deferred or deferred income and amortized with the liquidation of the bonds.

Therefore, as long as the difference does not include the difference between the internal debt investment and the amount payable of the bonds payable, the difference between the male price difference and the equity investment balance can be consistent, that is, the difference between the investment cost and the share of the owner's equity.

The 2. is the amortization of the combined price difference.

The consolidated price difference for the production of consolidated salt in the consolidated statements should be the same as the difference in equity investment in the accounting records, and be amortized in the consolidated statements according to the same amortization method, duration and amount, and shall be included in the "management expenses" of the consolidated statements.

Of course, this is also a simplification. The difference between fair value and book value of assets and liabilities of non regional companies and goodwill is regarded as the average amortization of goodwill within a certain period.

The reason for this is mainly to take account of the specific accounting environment in China.

When the market base of asset appraisal is formed, when the fair value acquisition conditions are ripe, the assets and liabilities of the subsidiary companies will be merged according to their fair value according to the current international prevailing methods.

The following examples are as follows: at the beginning of the year, the company purchased the net assets of the enterprise B $60% l000, and the owner's equity of the enterprise was 10 million yuan, of which the paid in capital was 6 million yuan, the capital surplus was 1 million 500 thousand yuan, the surplus reserve was 2 million yuan, the initial allocation profit was 500 thousand yuan, the second year net profit of the enterprise was 1 million yuan, and the 15% surplus surplus was extracted.

Suppose that the internal pactions at the end of the year between a and B enterprises, the difference between the equity investment and the combined price difference are amortized for 10 years. The following are: accounting for one enterprise: purchase date: Borrowing: long-term equity investment - B enterprise (investment cost) 6 million yuan, B enterprise (equity investment balance) 4 million yuan; loan: bank deposit 10 million yuan.

End of the year: Borrow: long-term equity investment 600 thousand yuan; loan: investment income 600 thousand yuan.

Amortization of equity investment difference: Borrowing: investment income 400 thousand yuan; loan: long-term equity investment - B enterprise (equity investment balance) 400 thousand yuan.

The compilation of consolidated accounting statements shall be offset by: 6 million yuan in capital account, 1 million 500 thousand yuan in capital reserve, 215 yuan (200+15) in surplus, and 500 thousand yuan in profits at the beginning of the year, and 500 thousand yuan in a B enterprise, 20 yuan (60-40 yuan) in investment income, 20 yuan in profit for one enterprise, 400 thousand yuan in profits and losses in one enterprise, 4 million yuan in combined price difference, loan: long term equity investment 1020 yuan (1000+60-40) million, minority shareholder equity 440 (RMB) million, and earning surplus of 150 thousand yuan.

Borrow: management cost 400 thousand yuan; loan: merge price difference 400 thousand yuan.

After the merger and cancellation, the combined price difference on the consolidated balance sheet is 3 million 600 thousand yuan, which is exactly the same as the equity investment difference in the surplus.

And the investment income is offset by the amount minus the equity investment balance, which is consistent with the amount of investment income on the parent company's statement.