Discussion On Accounting Calculation Of Contractual Income Of Controlling Subsidiaries

The company has pferred the controlling rights of the controlling shareholder to get the revenue from the contracted operation, especially in the past few years.

There are two opinions on how to carry out the accounting of the contracted revenue. Firstly, it is considered that it should be treated as an investment income. The reason is that the contracted revenue comes from the investment income of the company. Two, it is considered that it should be treated as other business income. The reason is that the income from the contract has nothing to do with investment, nor is it the actual operating result of the controlling subsidiary. Its income is bound by the contract law, and the number of contracted revenue is directly stipulated in the contract.

In my opinion, the above two opinions have their reasonable side, but they do not start from the principle of prudence to consider the relationship between contractual operation income and investment.

Even if the controlling subsidiary contracts to go out, it should still carry out the accounting of the equity law according to the investment standards, and the merger of accounting statements should be consolidated if the conditions are met.

If only one contract contract is used to confirm that the contract revenue is easy to make false, and it has great randomness. In addition, the parent company will contract out the subsidiary company, only temporarily pfer the operation rights of the subsidiary company, and it still owns the ownership of the subsidiary company.

Therefore, only by combining the accounting statements can we accurately reflect the company's financial structure, reasonably compile the consolidated balance sheet and calculate the financial ratios such as the turnover ratio, the receivables cycle rate, the combined asset liability ratio and so on.

Long term investment, fixed assets and intangible assets belong to asset classes, and the rental income derived from leasing fixed assets is included in other business income. The cost is that the depreciation cost of the corresponding leasing period is included in other business expenses, and the difference constitutes other business profits. The rental income of leasing intangible assets (such as trademarks, patents, etc.) is also included in other business income, and its cost is the amount of intangible assets amortized in other business expenses, and the difference also constitutes other business profits.

In this way, I think that the income from rental equity (that is, the right to pfer the controlling rights of a subsidiary company) should also be treated as other business income, and the business tax should be paid according to the regulations (as the investment income does not need to pay business tax).

Then, is there any cost problem in obtaining income from rentals? This problem can not be simply answered with or without. We should proceed from the prudence principle of accounting, and calculate the equity method according to the investment criteria, and reconfirm the net income of contracted business income.

For example, a company that owns 100% of the shares will be leased to company B for one year, and the company will pay 5 million yuan to the leasing company according to the contract.

Suppose that the net assets of the subsidiary before being rented are 50 million yuan, and the net assets after one year are 54 million yuan, of which 4 million yuan is net profit.

If a company performs the contract to pay the lease fee to the company a, 5 million yuan. When a company consolidated the accounting statement in the year, it will get the contract revenue of 5 million yuan and 4 million yuan to offset each other. The 4 million yuan is reflected in the profit and loss account (that is, the profit and loss table of the subsidiary is directly merged with the profit and loss account of the parent company), and the other 1 million yuan remains in other business income subjects and pays the corresponding business tax.

If a company owns only 40% of the subsidiary, the contractual income should be 2 million yuan (5 million yuan, 40% yuan = 2 million yuan). According to the equity method, the investment income of this year is 1 million 600 thousand yuan (4 million yuan x 40% = 1 million 600 thousand yuan). The difference between the contract income and the investment income is 400 thousand yuan, which should be included in other business income and pay business tax.

The company assumes that the subsidiary will lose 1 million yuan a year and net assets of 49 million yuan.

If a company has a 100% stake and the loss is 1 million yuan at the time, it will reduce the profit of the parent company. The combined profit will increase by only 4 million yuan. On the profit and loss account of the parent company, the other business profits will be 5 million yuan, and the business tax should be paid, and the investment income will be -100 million yuan.

If a company has a 40% stake, according to the equity method, the current investment income is -40 million yuan, other business income is to obtain contracted income of 2 million yuan, and the net increase of rental equity income is 1 million 600 thousand yuan (regardless of taxes and fees).

In the above example, a company confirmed that the contract rental income should follow the accounting prudence principle and calculate according to the cost method.

For example, B company pays only 3 million yuan to the contract fee of a company. The revenue from a company's contracted operation should be 3 million yuan, and it should not be recognized by accrual basis as 5 million yuan.

This will avoid the bad debts handled in the coming year.

If the contract revenue of the previous year is received in the next year, it will be treated as the proceeds of the year.

When the subsidiary company was leased, the actual operation of the subsidiary company was in deficit, and the parent company gained more revenue from the contracted operation, or the percentage of the parent company obtaining the contracted business income was greater than the actual profit of the subsidiary company (such as 50%). Then the CPA should follow the prudence principle and conduct an audit of the controlling subsidiary company to be rented, further analyze the rationality and authenticity of the contracted revenue, and pay attention to whether there are unfair related pactions.

In the notes to the accounting statements, we can fully disclose the comparison between the actual operating results of the leased subsidiaries and the income obtained from the lease contracts, and if necessary, we can consider them in the audit reports.