Accounting For Changes In Fair Value Of Available For Sale Financial Assets

The sale of financial assets, such as stocks and bonds, causes the fluctuation of fair value on the basis of market supply and demand.

[case 1] a company bought a listed company in January 3, 2008 and issued a 3 year bond with a face value of 200 thousand yuan and a nominal annual interest rate of 8%, issued in January 1, 2008. The bond pays interest once a year and is paid back at maturity.

The total cost is 208 thousand yuan, and the tax is 4 thousand yuan.

A company divides the bonds into available for sale financial assets.

The real interest rate of the bond investment is (half a year) 2.9%.2008 in June 30th, the market value of the bond was 201 thousand yuan.

In December 31, 2008, the market value of bonds was 196 thousand yuan.

(1) when bonds are purchased

Borrowing: available for sale financial assets - cost 200000

Available for sale financial assets - interest

Loans: Bank Deposits - 212000

(2) amortization premium and recognition of fair value changes in June 30, 2008.

Interest receivable =200000 * 8%/2=8000 (yuan)

Investment income = availability

Premium amortization = interest receivable - investment income =8000-6148=1852 (yuan)

Loan: interest payable 8000

Loan: investment income 6148

Available for sale financial assets - interest adjustment 1852

At this point, the book value of the bond is 210148 yuan (212000-1852), and the market value of the bond is 201000 yuan.

The market value is lower than the book value of 9148 yuan, and the change of fair value should be recognized and included in capital reserve.

Borrow: Capital Surplus -- other capital reserves 9148

Loans: available for sale financial assets - fair value change 9148

The cumulative amount of capital accumulation formed by the change of fair value of the sale of financial assets is pferred out of the disposal of the available financial assets and is included in the investment income.