What Are Monetary Assets?
Monetary assets refer to assets held in cash and assets to be received in a fixed or determinable amount of currency, including cash, accounts receivable and bills receivable, and bond investments that are ready to be held to maturity. Cash here includes cash on hand, bank deposits and other monetary funds. Generally speaking, the items listed on the balance sheet are non-monetary assets: equity investment, prepayments, inventory (in-transit materials, raw materials, packaging, low-value consumables, inventory goods, and commissioned materials) (Consignment of goods on consignment basis, goods issued in installments, production costs), bond investments not intended to be held to maturity, fixed assets, construction materials, construction in progress, intangible assets, etc.
Monetary assets
- Reduce procurement costs
- Maintaining a certain amount of monetary funds can get cash discounts on purchased goods and reduce materials
- Judging from the shape of corporate capital movement. Monetary funds are both the starting point and the end of the capital movement. It has the characteristics of being convenient to carry and quick to transform. In terms of use and management, it is necessary to strictly abide by national regulations and relevant settlement regulations. The payment of cash must conform to the scope of cash use stipulated by the state, and currency expenditures exceeding the scope of cash use shall be actively settled through non-cash transfers. According to the requirements of relevant financial management regulations, foreign-invested enterprises should be equipped with full-time financial and accounting personnel to carry out monetary fund accounting and daily control, and must have strict security protection measures to ensure the safety and integrity of various monetary assets.
- In accounting treatment, if the exchange of monetary assets meets the following conditions at the same time, the fair value and the relevant taxes and fees payable shall be used as the assets to be exchanged.
- Monetary assets
- Monetary asset exchanges that meet one of the following conditions have commercial substance: First, the future cash flows of the assets being exchanged are significantly different from the assets being exchanged in terms of risk, time and amount. Second, the present value of the estimated future cash flows of the asset being swapped in and out is different, and the difference is significant compared to the fair value of the asset being swapped in and out. When determining whether a monetary asset exchange has commercial substance, an enterprise should pay attention to whether there is a related party relationship between the parties to the transaction. The existence of related party relationships may cause the exchange of monetary assets to have no commercial substance.
- In terms of tax treatment, according to the provisions of Article 58 (5) and Article 62 (2) of the Implementation Regulations, the fixed assets obtained through the exchange of monetary assets are based on the fair value of the assets The related taxes and fees paid are the basis of tax calculation; Article 62 (2) stipulates that the productive biological assets obtained through the exchange of monetary assets shall be calculated based on the fair value of the assets and related taxes and fees paid. Tax basis; Article 66 (3) stipulates that the intangible assets obtained through the exchange of monetary assets are based on the fair value of the asset and the relevant taxes and fees paid; Article 71, paragraph ( Item 2) stipulates that investment assets obtained by means other than cash payment shall be at the cost of the fair value of the asset and related taxes and fees paid; Article 72 (2) stipulates that they shall be obtained by means other than cash payment. The cost of the inventory is based on the fair value of the inventory and related taxes and fees paid. The corporate income tax law does not require the exchange of monetary assets to have commercial substance, or whether the fair value of assets that are exchanged in or out can be reliably measured as conditions for whether they are measured at fair value; meanwhile, corporate income tax is not based on the exchange of assets The fair value is used as the basis for determining the cost of the assets to be exchanged, but is based on the fair value of the assets to be exchanged and the relevant taxes and fees paid as the tax basis or cost.
- Regarding whether business transactions and exchanges between related parties are of commercial substance, according to Article 41 of the Corporate Income Tax Law, business transactions between an enterprise and its related parties do not comply with the principle of independent transactions and reduce the taxable income of the company or its related parties Or the amount of income, the tax authorities have the right to adjust according to reasonable methods. Article 47 provides that if an enterprise implements other arrangements that do not have a reasonable business purpose and reduces its taxable income or income, the tax authorities have the right to adjust them in accordance with reasonable methods. According to Article 120 of the Implementation Regulations, Article 47 of the Enterprise Income Tax Law does not have a reasonable commercial purpose, which refers to the main purpose of reducing, exempting or delaying payment of taxes. It can be seen whether the corporate income tax treatment has commercial substance for related party business transactions and exchanges, mainly to see if it will reduce the taxable income or income of the enterprise or its related parties, or to reduce, exempt or delay the payment of taxes Tax planning and tax avoidance.