What Is a Commodity Swap?

Commodity swaps are also known as "commodity price swaps", the latest development of the OTC swap business. Commodity swaps are actually a composite tool of swaps and commodity index futures, and their basic methods are similar to interest rate futures. The fixed payment object should be the total product of a quantitative product multiplied by a fixed price. The total amount of the product multiplied by its market price. Commodity swap business is an international financial business innovation developed since the 1980s. For the end users of the swap market, the purpose of commodity swaps is to reduce funding costs and avoid exposure risks of commodity price fluctuations; for intermediaries in the commodity swap market, participation in commodity swap transactions is to obtain procedures Fees or transaction profits. ^[1]

Commodity swap

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Commodity swaps are also known as "commodity price swaps", the latest development of the OTC swap business. Commodity swaps are actually a composite tool of swaps and commodity index futures, and their basic methods are similar to interest rate futures. The fixed payment object should be the total product of a quantitative product multiplied by a fixed price. The total amount of the product multiplied by its market price. Commodity swap business is an international financial business innovation developed since the 1980s. For the end users of the swap market, the purpose of commodity swaps is to reduce funding costs and avoid exposure risks of commodity price fluctuations; for intermediaries in the commodity swap market, participation in commodity swap transactions is to obtain procedures Fees or transaction profits. ^[1]

Commodity swaps are a special type

Accounting and tax treatment of commodity swaps

Commodity swaps are non-monetary transactions. Generally, they involve no or only a small amount of monetary assets.

According to the relevant tax laws, exchanging non-monetary assets for other non-monetary assets is actually a behavior of transferring assets for a fee, but it is not the currency but the goods or other economic benefits. Non-monetary transactions should be decomposed into two economic businesses: the sale or transfer of held non-monetary assets and the purchase of new non-monetary assets for tax treatment, and calculation and payment of corresponding turnover tax and income tax respectively.

Example: Company A and Company B are general VAT taxpayers with a value-added tax rate of 17%. In October 2002, Company A exchanged its A products with B products of Company B. Both parties exchanged Calculate as inventory goods and obtain special VAT invoices issued by the other party. The book value of Product A is 80,000 yuan, and the fair value (excluding VAT, the same below) and the taxable price are 100,000 yuan. The book value of commodity B is 110,000 yuan, and the fair value and taxable price are 100,000 yuan. In March 2003, Company A sold the imported B-product at a price of 130,000 yuan (excluding VAT, the same below). In May 2003, Company B sold the imported A product at a price of 120,000 yuan.

Assume that neither company A nor B has made provision for impairment on the assets transferred in or out. The above businesses do not take into account additional factors such as urban construction tax and education fees.

The accounting and tax treatment of Company A was:

1. In October 2002, Company A used Product A for Product B. According to the "Provisional Regulations on Value Added Tax", sales shall be deemed as sales, and the amount of VAT output tax = 100000 × 17% = 17000 (yuan).

Borrow: Stock GoodsB Goods 80,000 Tax PayableVAT Payable (input tax) 17000

Credit: Inventory goodsA product 80,000 tax payablevalue-added tax (output tax) 17000

In 2002, accounting did not recognize revenue for non-monetary transactions. The taxation confirms the product sales income of 100,000 yuan and the product sales cost of 80,000 yuan, that is, the recognition of non-monetary transaction income of 20,000 yuan (100,000-800,000). Therefore, Company A should increase its taxable income by RMB 20,000 when applying for corporate income tax in 2002. At this time, the taxable cost of the B product is 100,000 yuan.

2. In March 2003, Company A sold product B, and the value-added tax output tax = 130000 × 17% = 22100 (yuan)

Borrow: bank deposits (accounts receivable, etc.) 152100

Loan: Main business income 130,000 tax payable-VAT payable (output tax) 22100

Borrow: Main business cost 80,000

Loan: Stock Goods --- B Goods 80,000

In 2003, accounting for this business confirmed product sales revenue of 130,000 yuan and product sales cost of 80,000 yuan, that is, sales profit of 50,000 yuan (130,000-80000). The sales revenue of RMB 130,000 and taxation cost of RMB 100,000 are recognized in taxation, that is, RMB 30,000 (130,000 to 100,000) of income from the transfer of goods is recognized. It can be seen that the accounting treatment is 20,000 yuan (50,000-30,000) more than the tax treatment. Therefore, Company A should reduce its taxable income by 20,000 yuan when reporting the 2003 corporate income tax.

In summary, Company A should increase its taxable income by 20,000 yuan when it exchanges for commodity B, and reduce it by 20,000 yuan when it sells it. During the entire exchange and disposal process, it should increase its taxable income by 0 yuan (20,000-20,000) .

The accounting and tax treatment of Company B is:

1. In October 2002, company B used product B for product A, and the value-added tax output tax = 100000 × 17% = 17000 (yuan).

Borrow: Inventory goodsA product 110000 Tax payableVAT payable (input tax) 17000

Loan: Inventory goodsB commodity 110000 Tax payableVAT (output tax) payable 17000.

In 2002, accounting did not recognize revenue for non-monetary transactions. The taxation confirms the product sales income of 100,000 yuan and the product sales cost of 110,000 yuan, that is, the recognition of non-monetary transaction losses of 10,000 yuan (100,000-110,000). Therefore, Company B should reduce its taxable income by 10,000 yuan when applying for corporate income tax in 2002. At this time, the taxable cost of Product A is 100,000 yuan.

2. In May 2003, Company B sold Product A. The value-added tax output tax = 120,000 x 17% = 20400 (yuan). Accounting entries are omitted.

In 2003, the accounting confirmed product sales revenue of 120,000 yuan and product sales cost of 110,000 yuan, which means sales profit of 10,000 yuan (120,000-110,000). The tax revenue is recognized as RMB 120,000 and the taxed cost is RMB 100,000. That is, RMB 20,000 (120,000 to 100,000) is recognized as the income from the transfer of goods. It can be seen that the accounting treatment is less than the tax treatment of 10,000 yuan (20,000-10,000). Therefore, Company B should increase its taxable income by RMB 10,000 when applying for corporate income tax in 2003.

In summary, Company B should reduce its taxable income by 10,000 yuan when it exchanges for product A, and increase it by 10,000 yuan when it sells it. During the entire exchange and disposal process, it should increase its taxable income by 0 yuan (10,000-10,000) .