What Is Net Unrealized Appreciation?

According to the "Accounting Standards for Business Enterprises", the assets of an enterprise shall be evaluated, and each property shall be valued at the actual cost at the time of acquisition.

Appreciation of assets

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Principles for Appreciation of Assets

The depreciation accrued in the value-added portion of the asset evaluation is allowed and required in the accounting system, but it is not allowed to deduct it before income tax, that is, tax adjustment or corresponding accounting treatment should be made.

It is generally believed that during the period from the asset evaluation reference date to the new business registration date,

Specific treatment of asset appreciation

because

I. Accounting for the increase or decrease in valuation of mergers and acquisitions of enterprises

(1) Accounting treatment of the merged enterprise First, accounting treatment after the evaluation of the merged enterprise. Approved merged enterprises shall perform asset appraisal of their assets by a statutory asset appraisal agency in accordance with regulations. This asset appraisal item is a matter of changes in the property rights of the enterprise. After the appraisal result is reported to the relevant department for approval or filing, it shall perform the corresponding Accounting treatment: The merged enterprise shall adjust the book value of relevant assets in accordance with the asset value approved for evaluation and filing. Current assets, long-term investments, and intangible assets shall be debited (or credited) to the relevant asset account and credited (or debited) to the "capital reserve" account in accordance with the difference between the value on file and the book value. For fixed assets, deduct (or credit) the fixed assets account based on the difference between the original value of the fixed asset and the original book value as assessed and calculated on the basis of the difference between the net value of the fixed asset as assessed and confirmed and the original net book value of the fixed asset. The difference is credited (or debited) to the "capital reserve" account, and the "accumulated depreciation" account is credited (or debited) according to the difference between the two. The second is the accounting treatment at the end of the merged enterprise. When the merged enterprise loses its status as a legal person, it shall debit the balance of all liabilities and owner's equity accounts and credit the balance of all asset accounts. An enterprise that retains the status of a legal person may continue to use the original enterprise account book; it may also close the old account. Create a new account. Whether the enterprise continues to use the original enterprise books or establish a new account, the net assets of the merged enterprise should be fully transferred to the paid-in capital.

(2) The accounting treatment of the acquiring company is also divided into two cases. The first is to deal with the case where the merged enterprise loses its legal personality. In the case of mergers with compensation, all asset accounts are debited according to the value of each asset's assessment and confirmation, and the difference between the transaction value higher than the net assets identified during the assessment is debited to the "Intangible Assets-Goodwill" account. The amount of each debt is credited to all debt subjects, and the "Special payables-payable to merged enterprises" subject is credited in accordance with the determined transaction value. When the enterprise pays the price, it debits the account of "Special payables-payable for mergers and acquisitions of enterprises" and credits the account of "bank deposits". In the case of mergers and acquisitions without compensation, all assets and liabilities should be evaluated and confirmed, and all asset accounts should be debited, and all liability accounts should be credited. If there is a difference between the two, the "paid-in capital" account should be credited. The second is to deal with the case where the merger enterprise still retains the status of a legal person. The enterprise merges with other enterprises for a fee and is treated as a long-term investment. The "long-term investment" account is debited according to the payment price, and the "bank deposit" account is credited. When performing financial accounting at the end of the year, the merging enterprise should use the equity method to calculate the investment when preparing individual accounting statements. The difference between the initial investment of the long-term investment and the share of the owner's equity of the investee should be used as the equity investment difference . If an enterprise acquires the assets of the merged enterprise by means of free transfer, the "long-term investment" account is debited and the "paid-in capital" account is credited according to the transferred net assets.

Accounting treatment for the increase or decrease in the value of assets assessed by enterprises abroad

An enterprise only needs to conduct an asset evaluation when investing in real assets. After the evaluation result is approved or filed by the relevant department and the investment is successful, the investor and the investee must conduct corresponding accounting treatment according to the evaluation result.

The initial investment cost of long-term equity investment shall be determined in accordance with the principle of non-monetary transactions when equity restructuring between enterprises or foreign investment with non-cash assets. When the equity method is used for accounting, the difference between the initial investment cost of the equity investment and the share of the owner's equity that should be enjoyed by the invested unit is accounted for as the difference in equity investment. The initial investment cost is greater than the owner's equity of the invested unit The difference in shares is debited to the subject of "Long-term equity investment-a unit (equity of equity investment)", credited to the subject of "Long-term equity investment-a unit (investment cost)" and amortized into profit or loss over a prescribed period; The initial investment cost is less than the difference in share of owner's equity that should be enjoyed by the invested unit, debit the account of "long-term equity investment-a unit (investment cost)" and credit the account of "capital reserve-equity investment preparation".

For a long-term equity investment obtained by an enterprise abandoning non-cash assets, the difference between the investment cost and the book value of the abandoned non-cash assets should first be deducted from the income tax payable in accordance with regulations in the future and recorded in the lender of the "deferred tax" account. The difference between the investment cost and the book value of the abandoned non-cash assets, after deducting future income taxes payable, is recorded in the "Capital reserve-Equity investment reserve" account. When the enterprise disposes of this investment, the amount originally recorded in the "Capital reserve-Equity investment reserve" account is transferred to the "Capital reserve-Other capital reserve transfer" account; when the company transfers capital in accordance with the prescribed procedures, The realized transfer to the "capital reserve-transfer of other capital reserve" account can be used to increase capital (or equity). When an enterprise invests in cash and uses the equity method for accounting, the difference between the initial investment cost of a long-term equity investment and the share of the owner's equity that should be enjoyed by the investee is also handled in accordance with the above principles.

3. Accounting treatment of corporate assets reform

The restructuring of an enterprise must be conducted by the state-owned asset management department to an institution that has the qualification for asset evaluation. After receiving the notice of assessment and confirmation, the accounting personnel of the enterprise shall adjust the book value of the assets and perform the corresponding accounting treatment.

(1) Accounting treatment of appraisal and appreciation of assets of state-owned enterprises restructuring According to the relevant provisions of Caishuizi [1997] No. 77 document, the reform of domestic-owned enterprises' shareholding system, after July 1, 1997, the appraisal of value-added will not be converted into shares. The balance is included in capital reserve appreciation provisions and is subject to income tax in accordance with the tax law. When an enterprise depreciates fixed assets, it may make the original assets at the original book value of the fixed assets, or the original assets at the original price of the assets.

Depreciation is provided based on the original fixed asset price after the assessment and adjustment. The value-added portion of the asset assessment is not converted into shares, and tax is required when depreciating, using or amortizing the assessed assets in accordance with the tax law. When adjusting the book value of the fixed assets based on the value of the fixed assets assessed and assessed, the value-added assets shall be assessed in accordance with the regulations. The income tax payable in the future is credited to the "deferred tax" account, and the difference between the appraisal of fixed assets after deducting the income tax payable in the future is recorded in the account of "capital reserve-asset valuation appreciation reserve". The company's income tax payable when depreciation, use or amortization of the assessed assets according to the regulations, or carried forward to the taxable income within the prescribed period, is debited to the "deferred tax" account, and credited to " Tax Payable-Income Tax Payable ". The asset appraisal net value-added provision originally included in the capital reserve, because the company implements the "Enterprise Accounting System", this "capital reserve" should be transferred to "other capital reserve"; after the valuation of the value-added assets is realized, the transfer The "other capital reserve" can be converted into the capital according to the prescribed procedures. The "capital reserve-transfer of other capital reserve" account is debited, and the "capital" account is credited. As for how to carry forward the appraisal and appreciation of assets into taxable income, in theory, each item should be dealt with separately when depreciation, use or amortization expenses are accrued. However, during the reorganization of the shareholding system, the asset assessment is to include the net amount of the asset's appreciation and impairment into the capital reserve, which is difficult to correspond one by one in actual work. You can consider adopting a comprehensive adjustment method in accordance with the tax law, that is, the asset The appraisal of value added regardless of asset items will be adjusted in the cost and expense items of tax declarations in subsequent years, and the taxable income of each tax year will be increased accordingly, and the adjustment period will not exceed 10 years. Qualified enterprises can also adjust item by item according to the actual value of each item.

Depreciation is calculated based on the original book value of the fixed assets. In this case, because the company only counts the depreciation part accrued based on the original book original price of the fixed assets into the cost, the assessment of the value-added part does not need to calculate the income tax payable in the future. Provident. When depreciation is made, the company should depreciate the depreciation based on the original book value of the fixed asset, debit the relevant account, and credit the "accumulated depreciation" account; meanwhile, depreciation based on the original value of the fixed asset after the appraisal of value added and the original book The difference between the depreciation provided at the original price, or the average resale amount over a prescribed period (not exceeding 10 years), is debited to the "capital reserve" account and credited to the "accumulated depreciation" account.

(II) Accounting treatment of assets impairment of state-owned enterprise restructuring As there is no uniform and clear stipulation for the accounting treatment of assets impairment, there are mainly two treatment methods in practice, one is to directly offset the capital reserve and the other is It is treated as non-operating expenses. Each of these two methods has its own advantages and disadvantages, and the company should distinguish the specific situation in actual work and decide which one to use.

IV. Accounting for valuation and appreciation of assets for clearing assets

The document "Regulations on Accounting Treatment of Pilot Enterprises with Assets Verification" [(93) Caihuizi No. 80] stipulates that after the revaluation of the main fixed assets of an enterprise, after verification and acceptance, the book value of fixed assets shall be adjusted accordingly. If the fixed assets are revalued after the revaluation, the value of the original value of the fixed assets will be increased, and the "fixed assets" account will be debited. Depreciation "account. Depreciation is not recognized in accounting for the appreciation of fixed assets arising from asset verification and capital verification. In addition, there is an appreciation of assets from bank loans. According to the document No. 25 of Finance and Accounting [1995], the book value of revalued assets can be adjusted only in the case of statutory revaluation and changes in corporate property rights. As a result of the company's loan to the bank, the asset appraisal by the asset appraisal agency designated by the lending bank to the company's asset revaluation can only be used as the basis for the bank's loan to the company. Book value. ^[1]