The cost method can be simply understood as cash basis, and the equity method can be correspondingly understood as accrual basis. The cost method can be simply understood as cash basis. Whether it is profit or loss, the investment income is recognized when the invested enterprise declares dividends. Under the cost method, the book value of long-term equity investment will not be adjusted unless the investment is increased or decreased. Accordingly, the equity method can be understood as accrual basis. As long as the invested enterprise has a profit at the end of the year, regardless of the share size, the investment income will be confirmed in proportion and the book value of long-term equity investment will be adjusted. Of course, if there are internal transactions with joint ventures or joint ventures, they will also offset.
There are two differences between a joint venture and a joint venture:
1. Share ratio:
(1) Joint venture
When an enterprise or individual owns 20% or more to 50% of the voting capital of another enterprise, it is usually considered that investors have a great influence on the invested enterprise.
(2) Joint ventures
According to the contract, the control of an economic activity refers to an enterprise established by two or more enterprises or individuals with the same investment. The proportion of capital contribution shall conform to the contract.
2. Control method:
(1) affiliated enterprises generally involve the control level and are divided into parent companies and subsidiaries.
(2) A joint venture is jointly controlled, and the joint venturers jointly control the operation and financial decisions of the investment enterprise.
I hope the above content can help you. If in doubt, please consult a professional lawyer.
Legal basis:
"People's Republic of China (PRC) tax collection and management law" article 1.
This Law is formulated in order to strengthen the administration of tax collection, standardize tax collection, safeguard national tax revenue, protect the legitimate rights and interests of taxpayers and promote economic and social development.
second
This law is applicable to the collection and management of various taxes collected by tax authorities according to law.
essay
The collection and suspension of tax, as well as the reduction, exemption, refund and overdue tax, shall be implemented in accordance with the provisions of the law; Where the State Council is authorized by law, it shall be implemented in accordance with the administrative regulations formulated by the State Council.
No organ, unit or individual may, in violation of the provisions of laws and administrative regulations, arbitrarily make decisions on tax collection, suspension, tax reduction, exemption, tax refund, overdue tax and other decisions inconsistent with tax laws and administrative regulations.
Article 4
Units and individuals who are obligated to pay taxes according to laws and administrative regulations are taxpayers.
Units and individuals that have the obligation to withhold and pay taxes according to laws and administrative regulations are withholding agents. Taxpayers and withholding agents must pay taxes, withhold and remit taxes and collect and remit taxes in accordance with the provisions of laws and administrative regulations.