Converting long-term equity investment into intangible assets

The main differences between the old and new accounting standards, the scope of application of the revised standards, the definition of intangible assets () and the scope of application of the standards are different. The original standard stipulates that the intangible assets standard does not involve the goodwill generated in business combination, but at the same time, it stipulates that intangible assets are divided into identifiable intangible assets and unrecognizable intangible assets, and unrecognizable intangible assets refer to goodwill. In this way, there is a contradiction in the expression of the content, and there is doubt whether the package includes goodwill or not, and the concept is not clear. However, the new standard has been revised, and it is clearly stipulated that this standard does not include goodwill. However, when the business combination is not under the same control, the difference between the merger cost of the buyer on the purchase date and the recognized net fair value of all identifiable assets and liabilities is recognized as goodwill. (), the definition of the standard is different from the original standard. Intangible assets refer to non-monetary long-term assets held by enterprises for producing goods, providing services, renting them to others, or for management purposes, and have no physical form. Intangible assets are divided into identifiable intangible assets and unrecognizable intangible assets. The revised standard stipulates that intangible assets refer to identifiable non-monetary assets without physical form. No longer distinguish identifiable intangible assets from unrecognizable intangible assets, and exclude goodwill. (2) The words "but the intangible assets that an enterprise accepts from investors for initial stock issuance" in Article of the original standard shall be cancelled, and the book value of the intangible assets in the investor shall be taken as the entry value. In the process of formulating the original standard, the opinions of the Securities Regulatory Commission and other relevant parties were mainly considered, and the above contents were added. However, many problems were encountered in the actual work. For example, many enterprises invested in intangible assets, and some intangible assets had no accounts, so they had to be evaluated, which also triggered the question of whether they could be recorded at the evaluation price. Therefore, the article in the original standard "but the intangible assets that an enterprise accepts from investors for initial stock issuance should be recorded at the book value of the intangible assets in the investor" is cancelled. Revise the accounting treatment of expense and capitalization of research and development expenses. The original standard stipulates that "the recorded value of intangible assets that are developed by themselves and applied for according to law shall be determined according to the registration fees, attorney fees and other expenses incurred when they are obtained according to law; The research and development expenses incurred before the legal application is obtained shall be recognized as the current expenses when incurred. " The new standard has revised the expense of research and development expenses, and the research expenses are still treated as expenses. After entering the development process, the expenses in the development process can be capitalized if they meet the relevant conditions. Provisions on accounting treatment of intangible assets with uncertain useful life are added. In the original standard, only the accounting treatment of intangible assets with limited useful life is provided, while in the new standard, provisions on accounting treatment of intangible assets with uncertain useful life are added. The useful life of an intangible asset may be very long or short, or it may be uncertain. The uncertainty statement should apply the principle of conservatism and should be tested for impairment. The original standard stipulated the provision for impairment of intangible assets, while the new standard stipulated in the asset impairment standard that once withdrawn, it is not allowed to be reversed. II. Comparison of accounting contents and recorded value of intangible assets under the old and new accounting standards (I) The accounting enterprise of this subject has no identifiable non-monetary assets in physical form. Including patent right, non-patented technology, trademark right, copyright, land use right, etc. The goodwill created by the enterprise itself and other items that do not meet the conditions for the recognition of intangible assets cannot be regarded as intangible assets of the enterprise. (2) The intangible assets of an enterprise shall be measured at the actual cost at the time of acquisition. The actual cost at the time of acquisition shall be determined according to the following provisions: (1) The purchased intangible assets shall be regarded as the actual cost according to the actually paid price. For intangible assets invested by investors, the new standard takes the value confirmed by all investors as the actual cost, while the old standard is priced according to the amount confirmed by evaluation or agreed in contracts and agreements. Handling of debt restructuring: Debtor ① The new standard stipulates that "when paying off debts with non-cash assets, the debtor shall take the difference between the book value of the restructured debt and the sum of the fair value of the transferred assets and related taxes and fees as the restructuring income and confirm it as the current profit and loss." The relatively old standards introduced the concept of fair value, which broke away from the original idea of taking book value as the bookkeeping basis and value-added part as capital reserve. The difference between the original book value and the current fair value of the transferred assets is treated as the reorganization income. (2) Where contingent expenses are involved, the debtor shall discount the contingent expenses, including the amount payable in the future, to determine the income from debt restructuring; When it actually happens, the book value of the restructured debt is written off. If it doesn't happen, it will be regarded as the debt restructuring income in the current period of debt settlement and included in the current profit and loss. Creditor ① The new standard stipulates that the difference between the book balance of creditor's restructured creditor's rights and the fair value of cash received, non-cash assets transferred, equity enjoyed and the present value of future receivables (if impairment provision has been made, impairment provision should be written off first) shall be included in the current profit and loss as debt restructuring loss. Transferred non-cash assets are accounted for at fair value. Similarly, accounting at fair value and the present value of future receivables are the biggest differences from the old standards. (2) Where contingent income is involved, the creditor shall not include the contingent income in the future receivables to determine the restructuring loss; When the contingent income actually occurs, it is included in the current profit and loss. In the case of intangible assets exchanged by non-monetary transactions: (1) In the case of fair value measurement, if the premium is not involved, the new standard stipulates that if it is priced at fair value, the fair value of the exchanged assets plus the relevant taxes and fees payable will be taken as the book value of the exchanged assets, and the difference between the fair value of the exchanged assets and its book value will be included in the current profit and loss; The old standard stipulates that the book value of the exchanged assets, plus the relevant taxes and fees payable, is the book value of the exchanged assets, which does not involve profit or loss. (2) In the case of premium payment, the fair value of the exchanged assets, plus premium and relevant taxes and fees payable, shall be taken as the entry value of the exchanged assets if the new criteria for paying premium are measured according to fair value. The difference between the fair value of the exchanged assets and its book value is included in the current profit and loss; The old criterion is that the book value of the exchanged assets, plus the premium and related taxes and fees payable, is taken as the book value of the exchanged assets, and no profit or loss is involved. Under the new standard of the party receiving the premium, the fair value of the exchanged assets, minus the premium and relevant taxes and fees payable, shall be taken as the recorded value of the exchanged assets. The difference between the fair value of the exchanged assets and its book value is included in the current profit and loss; The old criterion is based on the book value of the exchanged assets, MINUS the book value contained in the premium plus the relevant taxes and fees payable, as the book value of the exchanged assets; And calculate the profit and loss included in the premium and include it in the current profit and loss. () In the case of measurement based on book value ① In the case of no premium involved, the book value of the swapped assets is taken as the book value of the swapped assets, and neither party to the transaction confirms the profit or loss; (2) If premium is involved, the premium party shall pay the premium at the book value of the exchanged assets and receive the premium as the value of the exchanged assets, and the book value of the exchanged assets shall be deducted as the value of the exchanged assets. The new standard determines the actual cost of intangible assets for which no profit or loss is recognized and donations are accepted according to the following provisions: (). If the donor provides relevant credentials, the amount indicated on the credentials plus the relevant taxes payable shall be regarded as the actual cost. (). If the donor fails to provide relevant evidence, the actual cost shall be determined in the following order: ① If there is an active market for similar or similar intangible assets, the amount estimated according to the market price of the same or similar intangible assets, plus the relevant taxes payable, shall be regarded as the actual cost; ② If there is no active market for similar or similar intangible assets, the actual cost shall be the present value of the estimated future cash flow of the donated intangible assets. However, the old standard stipulated that the intangible assets accepted as gifts should be priced according to the amount listed in the invoice or the market price of similar intangible assets. For intangible assets developed by ourselves and applied for according to legal procedures, the actual cost of intangible assets is based on the material costs incurred in the development process, the wages and welfare expenses of the personnel directly involved in the development process, the rent and loan expenses incurred in the development process, and the registration fees and attorney fees incurred when legally obtained. The expenses in the research process are directly included in the current profit and loss. The research and development expenses that have been included in the expenses of each period shall not be capitalized when the intangible asset is successful and the right is applied for according to law. However, the old standards stipulate that the self-developed intangible assets only take the registration fee and lawyer's fee in the application process as the actual cost of intangible assets, while the expenses in the research and development process are included in the current profit and loss. The land use right purchased by the enterprise, or the land use right obtained by paying the land transfer fee, shall be regarded as the actual cost according to the actually paid price, and shall be accounted as intangible assets; When the land is developed, its book value will be transferred to related projects under construction (real estate development enterprises will transfer the book value of land use rights to deposit and loan projects). The old standard stipulates that the land transfer price paid to the state or other taxpayers for land use rights should be managed as intangible assets, and it should be amortized evenly within the use period not shorter than that stipulated in the contract, so there is no possibility that it will be transferred to the accounting of projects under construction. Expenditures incurred after the recognition of intangible assets shall be included in the current profits and losses when incurred. III. Main accounting subjects involved and instructions for use Intangible assets (1) This subject accounts for intangible assets held by enterprises, including patents, non-patented technologies, trademarks, copyrights, land use rights, etc. The leased land use right measured by the cost model and the land use right held and transferred after value-added are accounted for in the subject of "investment real estate", not in this subject. (2) An enterprise shall conduct detailed accounting according to intangible assets. (three), the main accounting treatment of intangible assets, intangible assets purchased, according to the amount that should be included in the cost of intangible assets, debit the subject, credit "bank deposits" and other subjects. If the purchase of intangible assets exceeds the normal credit conditions and the payment is delayed, which is essentially financing in nature, the account shall be debited according to the present value of the purchase price of the purchased intangible assets, credited to the account of "long-term payables" according to the payable amount, and debited to the account of "unconfirmed financing expenses" according to the difference. , self-developed intangible assets, debit the subjects, credited to the "R&D expenditure" subjects. Intangible assets acquired in business combination shall be debited to this account and credited to relevant accounts according to their fair value on the purchase date. For intangible assets obtained by other means, the amount that should be included in the cost of intangible assets shall be determined in different ways, and the account shall be debited and credited to the relevant account. If the intangible assets are not expected to bring economic benefits to the enterprise, they should be debited to the "cumulative amortization" subject according to the accrued cumulative amortization, and to the "intangible assets impairment reserve" subject according to the book balance, and credited to the subject according to the difference, and debited to the "non-operating expenses" subject. When disposing of intangible assets, debit "bank deposit" and other subjects according to the actually received amount, debit "cumulative amortization" and "intangible assets impairment reserve" if accrued, credit "taxes payable" and other subjects according to its book balance and "non-operating income" according to its difference. (four), the ending debit balance of this course, reflecting the cost of intangible assets of enterprises. Cumulative amortization (1) This account accounts for the cumulative amortization of intangible assets with limited service life. The cumulative amortization of land use rights as investment real estate measured by cost model can be set up separately as the subject of "cumulative amortization of investment real estate", which can be accounted according to this subject. (two), this course should be detailed accounting by intangible assets. (3), the enterprise monthly amortization of intangible assets, debit "management fees", "other business expenses" and other subjects, credited to this account. (four), the ending credit balance of this course, reflecting the accumulated amortization of intangible assets of enterprises. Provision for impairment of intangible assets (I). This account accounts for the impairment provision accrued when the intangible assets of an enterprise are impaired. The provision for impairment of the land use right of investment real estate measured by the cost model can be separately set as the subject of "provision for impairment of investment real estate", which can be accounted according to this subject. (two), this course should be detailed accounting by intangible assets. (3) On the balance sheet date, if the enterprise determines that the intangible assets are impaired according to the asset impairment criteria, it shall debit the "asset impairment loss" account according to the amount to be written down and credit it to this account. When disposing of intangible assets, the accrued impairment reserve for intangible assets shall be carried forward at the same time. (4) The credit balance at the end of this course reflects the impairment reserve of intangible assets that the enterprise has accrued but has not written off. Goodwill (1) This account accounts for the value of goodwill acquired in the merger. If the goodwill is impaired, the detailed account of "impairment provision" should be set in this course for accounting, or the account of "impairment provision for goodwill" can be set separately for accounting. (two), the enterprise shall, according to the business combination criteria to determine the value of goodwill, debit the subjects and other subjects, credited to the relevant subjects. On the balance sheet date, if an enterprise determines that the goodwill is impaired according to the asset impairment criteria, it shall debit the "asset impairment loss" account and credit this account (impairment reserve) according to the amount to be written down. (3) The debit balance at the end of this course reflects the value of the goodwill of the enterprise. 4. Examples of major accounting entries, intangible assets purchased, borrowed according to the actual price: intangible assets loans: bank deposits, etc., intangible assets invested by investors, borrowed according to the value confirmed by all investors: intangible assets loans: paid-in capital (or equity), intangible assets acquired by debtors in the form of non-cash assets to offset debts, or intangible assets exchanged by receivables, shall be treated as the accounts of debt restructuring. Intangible assets accepted for donation are borrowed according to the determined actual cost: intangible assets loan: deferred income tax liabilities (income tax payable in the future) capital reserve (determined value minus the difference after income tax payable in the future) bank deposits (related expenses paid) taxes payable (related taxes payable), intangible assets accepted for donation by foreign-invested enterprises, Borrow at the determined actual cost: intangible assets: non-operating income, bank deposits (related expenses paid), taxes payable (related taxes payable), intangible assets developed by ourselves and applied for by legal procedures: intangible assets (expenses eligible for capitalization in the development process and expenses such as registration fees and attorney fees incurred when legally obtained), bank deposits and other materials incurred in the research process, Expenses such as salaries and welfare expenses of personnel directly involved in the development: borrowing: management fee loans: bank deposits, etc., land use rights purchased by enterprises, or land use rights obtained by paying land transfer fees: intangible assets (actually paid price) loans: bank deposits will transfer their book value to related projects in progress when the land is developed: loans such as projects in progress: intangible assets, intangible assets obtained by enterprises through non-monetary transactions, According to the accounting treatment of non-monetary transactions () In the case of fair value measurement, the fair value of the exchanged assets is taken as the entry value of the exchanged assets, and the difference between the fair value of the exchanged assets and its book value is included in the current profit and loss. Borrow: intangible assets gain and loss loans for non-monetary transactions: if the assets are involved in the premium, the premium will be paid, and the fair value of the exchanged assets will be added as the value of the exchanged assets.