实用的会计英语（2012年注册会计师英语）

Unit 1 Introduction to Accounting

I．Key terms Accounting 会计 Accountant 会计师 Bookkeeping 簿记 Bookkeeper 簿记员 Account 账目 账户 T-account T型账户 accounts payable 应付账款 CPA (certified public accountant) 注册会计师 Economic entity 会计主体 Going concern 持续经营 Accounting period 会计分期 Monetary unit 货币计量 Accrual basis 权责发生制 Cash basis 现金收付制 Qualitative Characteristics质量特征 Reliability可靠性 Relevance 相关性 Understandability 可理解性 Comparability 可比性 Substance over form 实质重于形式 Materiality 重要性 Prudence 谨慎性 Timeliness 及时性 Elements of accounting会计要素 Assets 资产 current assets 流动资产 cash and cash equivalents 现金及现金等价物 inventory存货 receivable应收账款 non-current assets 固定资产 property （land and building） 不动产, plant 厂房, equipment 设备 （PPE） Liabilities 负债 current liabilities 流动负债 non-current liabilities 长期负债 advance from customers 预收款 bond债券 government bond /treasury bond 政府债券，国库券 debenture债券 （由公司发行） / 57

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Owners’ equity 所有者权益 （Net assets） paid in capital （contributed capital） 实收资本 shares /capital stock 股本 retained earnings 留存收益 reserve 储备金 （capital reserve 资本公积, other reserve其他公积） Revenue 收入 sales revenue销售收入 interest revenue利息收入 rent revenue租金收入 Expense 费用 cost of sales销售成本 administrative expense管理费用 Gain 利得 Loss 损失 Profit 利润 Financial statement 财务报表 balance sheet 资产负债表 income statement 利润表 cash flow statement 现金流量表 Accounting cycle 会计循环 journal entries 日记账 general ledger 总分类账 trial balance 试算平衡表 adjusting entries 调整分录 Double-entry system 复式记账 Dr.—Debit 借 Cr.—Credit 贷 资产类Assets 现金及现金等价物：Cash and cash equivalents 应收账款：Account receivable 应收票据：Notes receivable 应收股利：Dividend receivable 应收利息：Interest receivable 其他应收款：Other receivables 原材料：Raw materials 库存商品：inventory 存货跌价准备：provision for the decline in value of inventories 坏账准备：Bad debt provision 待摊费用：Prepaid expense 交易性金融资产：Trading financial assets 持有至到期投资：held-to-maturity investment 可供出售金融资产：Available-for-sale financial assets 短期投资：Short-term investment 长期股权投资：Long-term equity investment / 57

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固定资产：Fixed assets 累计折旧：Accumulated depreciation 在建工程：Construction-in-process 固定资产减值准备：provision for the decline in value of fixed assets 无形资产：Intangible assets 累计摊销：Accumulated amortization 商誉：Goodwill 递延所得税资产：deferred tax assets （DTA ） 负债类Liability 短期借款：Short-term loans/ borrowing 长期借款：Long-term loans/ borrowing 预收账款：advance from customers 应付票据：Notes payable 应付账款：Accounts payable 应付工资薪酬：wages payable 应付股利：Dividends payable 应付利息：Interest payable 应交税费：Tax payable 其他应付款：Other payables 递延所得税负债：Deferred tax liabilities 所有者权益类 Owners’ equity 实收资本：Paid-in capital 股本： Share Capital 资本公积：Capital reserve 盈余公积：Surplus reserve 未确认投资损失：Unrealized investment losses 未分配利润：Retained earnings after appropriation 成本类科目Cost 生产成本：Manufacturing Cost 制造费用：Manufacturing overhead 研发支出：R & D expenditure 损益类Profit and loss 主营业务收入：Main operating revenue 其他业务收入：Other operating revenue 营业外收入：Non-operating income 投资收益：Investment income 产品销售收入：sales revenue 主营业务成本：Main operating costs，cost of goods sold / cost of sales 其他业务支出：Other operating costs 营业外支出：Non-operating expense 销售费用：Selling expense 管理费用：General and administration expense （G&A expense） 财务费用：Finance expense / 57

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公允价值变动损益：Gain/loss of the change of fair value 所得税：Income tax II．Reading Materials （I）Accounting

Accounting is an information system. It measures business activities, processes data into reports, and communicates results to people.

Recognition 确认 Measurement 计量 Record 记录 Report 报告

There are both external users (外部使用者) and internal users (内部使用者) of accounting information. We therefore classify accounting into financial accounting and management accounting.

Financial accounting （财务会计）provides information for people outside the firm, such as Wall Street investors and bankers. Government agencies and the public are other external users. Financial accounting information must meet certain standards of relevance（相关） and reliability （可靠）.

Management accounting （管理会计）generates inside information for internal decision makers, such as the managers. Management information is tailored to serve the company’s specific needs and thus does not have to meet external standards of reliability.

（II）Objectives

General objectives of financial reporting include the following

Financial reporting should provide information that is useful to external users in making rational investment （投资）, credit （信用）, and similar decisions. Investor： 投资人 risk & return

Creditor： 债权人 liquidity 流动性 solvency 偿债能力

Specific objectives of financial reporting show the types of information that should be included in specific financial reports

Financial reporting should provide information about the economic resources (assets) of an entity, any claims （要求权）to those resources (liabilities), including obligations to transfer resources to other entities or to owner’s equity, and the effects of circumstances, transactions, and events that alter（改变） the entity’s resources and claims to those resources.

Statement of Financial Position or Balance Sheet 财务状况表 资产负债表

Financial reporting should provide information about an entity’s comprehensive income and its components.

Statement of Comprehensive Income 全面收益表

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Financial reporting should provide information about an entity’s cash flows. Statement of Cash flows 现金流量表

（III）Accounting assumptions and conventions

Monetary unit （stable monetary unit concept）币值稳定假设

In the United States, we record transactions in dollars. British accountants record transactions in pounds sterling, Japanese in yen, and Europeans in euro.

Under the stable monetary unit concept, accountants assume that the dollar’s purchasing power is stable，ignoring the effect of inflation (通货膨胀) in the accounting records.

Economic entity

An economic entity is any business enterprise, ranging from a sole proprietorship to a global corporation. The economic entity assumption distinguishes business enterprises from their owners and accounts for each separately （独立核算）.

Going concern

It is assumed that the entity will continue in operation for the foreseeable future and it has neither the intention nor the necessity of liquidation （清算）or of curtailing （缩减）materially the scale of its operation.

Periodicity

Periodicity assumes that economic activities are divided into artificial portions of time such as months, quarters, and years.

Cost-benefit relationship 成本收益关系

Cost-benefit relationship assumes that unless the benefits of providing information exceed the costs associated with it, the information should not be prepared. Materiality

Materiality refers to the threshold （最低要求）at which the omission（漏报） or misstatement （错报）of an item in a financial report would influence or change the judgment of the information users. In other words, if the item makes a difference, it should be included or corrected. Conservatism 稳健性

Conservatism is defined as a prudent reaction to uncertainty to try to ensure that uncertainty and risks inherent （固有）in business situations are adequately considered. 对商业环境中的不确定性和风险因素给予足够谨慎的考虑

Traditional conservatism has led to undervalued inventories and unreasonable depreciation or income recognition practices. Both conservative and optimistic biases can mislead investors, so the FASB now recommends conservatism be defined by neutrality and honesty in the disclosure of uncertainties, thus allowing users to form their own opinions as to the outcomes of uncertain events.

通常的谨慎性会导致低估存货和不合理的折旧或收益确认等问题。无论是保守还是乐观的偏向都会误导投资者，因此财务会计准则委员会建议披露不确定性时，中性地定义谨慎性，让使用者自己判断不确定事项。 Full disclosure

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Full disclosure is a general concept that refers to reporting all known information about a company’s finances that would be of sufficient materiality to influence the decisions of a reasonable and informed user. The information should also meet a cost-benefit constraint （成本收益的约束）.

（IV）A complete set of financial statements comprises A statement of financial position A statement of comprehensive income

A statement of cash flows

Notes 报表附注, comprising a summary of significant accounting policies and other explanatory information

（V）Underlying assumptions

Accrual basis：accrual accounting recognizes, or records in the general ledger, revenue when it is realized 实现or realizable 可实现and when it is earned 获得; accrual accounting recognizes expenses in the period in which they are incurred 发生rather than when the cash is actually paid. （VI）Qualitative characteristics

Understandability: The information should be in a form that is understandable by user groups. Relevance: The information influences the economic decisions of users by helping them evaluate past, present or future events or confirming, or correcting their past evaluations.

Reliability: The information is free from material error and bias and can depended upon by users. Substance over form: It requires transactions must be accounted for according to their commercial substance rather than their legal form.

Neutrality: the information is free from bias.

Prudence: Prudence is the exercise of a degree of caution in making estimates in matters of uncertainty, such that assets or income are not overstated and liabilities or expenses are not understated. Such uncertainty may be the collectability of doubtful receivables, the probable useful life of plant and equipment and the number of warranty claims that may occur. However prudence cannot be used to deliberately understate profit or create excessive provisions (this would break the neutrality principle).

Completeness: To be reliable, the information in financial statements must be complete within the restrictions of materiality and cost. An omission can cause information to be misleading.

Comparability: Accounts should be comparable with those of other similar companies, and from one period to the next.

Consistency

Disclosure of accounting policies

Unit 2 Financial Statement Elements-Assets

Financial asset

IAS 39 classifies financial assets under the following categories:

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Financial assets at fair value through profit or loss （以公允价值计量且其变动计入当期损益的金融资产）: these are held for trading or elected to be classified in this category. Derivatives are always classified as held for trading unless they are effective hedges （有效套期）. Financial assets held for trading 交易性金融资产 Derivatives 衍生工具

On the balance sheet at fair value with gains and losses immediately recognized through profit and loss account.

Held-to-maturity investments（持有至到期投资）: are financial assets with fixed or determinable payments and fixed maturity（到期） that an entity has the positive intent and ability to hold to maturity.

Loans and receivables: 贷款和应收款项

Both held to maturity investments and loans and receivables are carried at amortized cost using the effective interest method （实际利率法下的摊余成本）.

Available-for-sale financial assets （可供出售的金融资产）: are any financial assets designated as such or that do not fall into any of the three categories above.

Available-for-sale financial assets are carried at fair value with gains and losses recognized directly in equity but recycled to income on disposal （处置时要将公允价值累计变动额从所有者权益中转出，重新计入当期损益）. Illustration: (1) A company invests $5,000 in 10% debentures. The debentures are repayable at a premium after 3 years. The effective rate of interest is 12%. What amounts will be shown in Income Statement and Balance Sheet for year 1-3?

(2) A company invested in 10,000 shares of a listed company in 11/20x7 at a cost of $ 4.2 per share. At 31/12/2007, the s hares have a market value of $ 4.9. The company are planning on selling these shares in 2008/4.

Prepare extracts from Income Statement for 31/12/20x7 and Balance Sheet at that date.

(3) A company invested in 10,000 shares of a listed company in 10/20x7 at a cost of 4.9 per share. At 31/12/2007, the shares have a market value of $ 4.2. The company are not planning on selling these shares in the short term. Prepare extracts from Income Statement for 31/12/20x7 and Balance Sheet at that date. Solution: (1) Assumed held to maturity-amortized cost Income Statement Investment income

1 2 3 625

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600 612

Balance Sheet :

1

2

3

Non-current asset : Investment: Working Year b/f 1 2 3

(2) This is a fair value through profit or loss asset as it is held for sale in the short term. Change in value recognized in Income Statement. Income Statement :

Investment income ( 10,000 x (4.9-4.2)) Balance Sheet : Current Assets:

Investment (10,000 x 4.9)

49,000

7,000

investment inc12%

600 612 625

Cash received 10%

(500) (500) (500)

c/f

5,100 5,212 0

5,100 5,212

0

5,000 5,100 5,212

(5,337)

(3) This is an available for sale investment. Income Statement: Investment income: Balance Sheet : Non-current asset: 10,000 x 4.2 Equity:

Reserve 10,000*(4.2-4.9)

(7,000)

42,000

0

Inventory

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The cost of inventories shall comprise all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition.

存货成本包括采购成本，加工成本以及使存货达到目前场所和状态所发生的其他成本。 Inventories are valued at lower of cost and NRV（Net Realizable Value）at the balance sheet date. 存货期末应当按照成本与可变现净值孰低计量。

NRV is the estimated selling price in the ordinary course of business, less the estimated cost of completion and the estimated costs necessary to make the sale. Any write-down to NRV should be recognized as an expense in the period in which the write-down occurs. Dr Asset impairment loss

Cr Provision for the decline in value of inventories 借：资产减值损失

贷：存货跌价准备

Perpetual Inventory System （永续盘存制）

This involves keeping a current and continuous record of all stock transactions on an inventory card or computer record for each type of inventory item held. Periodic inventory system (定期盘存制)

The costs of additional stock purchases during the year are recorded in the Purchases Journal. When an item of stock is sold, only one entry is made and that is to record the sale at selling price. Since no record of the goods sold is maintained during the period, it is necessary to count the units on hand to determine the cost of goods on hand (or unsold) at the period end. There are 4 methods of valuing stock:

(a) Specific identification （个别计价法）- Specific costs are attributable to identified items of inventory.

(b) First-in-first-out (FIFO) （先进先出）- Assumes goods are sold in order of their receipt, i.e. first price in is the first price out. Ending stock is always valued at the latest price.

(c) Last-in-first-out (LIFO) （后进先出）- Assumes goods are sold in the reverse order of their receipt, i.e. last price in is the first price out. Ending stock is valued at the earliest price. (not allowed in IAS 2)

(d) Weighted average (AVCO) （加权平均）- The weighted average cost per unit of stock is measured by dividing total cost of goods available for sale by total number of units available for sale.

Consistency: An entity shall use the same cost formula for all inventories having a similar nature and use to the entity. For inventories with a different nature or use, different cost formulas may be justified.

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Illustration：

During an inventory count on 31 March 2004 items that had cost $6 million were identified as being either damaged or slow moving. It is estimated that they will only realize $4 million in total, on which sales commission of 10% will be payable. Answer：

The damaged and slow moving inventory should be written down to its estimated realizable value. This is $3·6 million ($4 million less sales commission at 10%). Therefore the required write down is $2·4 million ($6 million – $3·6 million). Dr Asset impairment loss $2.4

Cr Provision for the decline in value of inventories

$2.4 / 57 10

Initial measurement 初始计量

? ?

At cost.

That is all necessary costs involved in bringing the asset into working condition. （达到固定资产预定可使用状态前所发生的一切合理必要的支出）

Purchase price (less trade discount , not cash discount) Add:

Import duties and non-refundable purchase taxes Directly attributable costs: ? Site preparation cost

? Initial delivery and handling costs ? Installation costs

? Testing costs whether the asset is functioning properly; ? Professional fees

? Borrowing costs (Refer to IAS23)

? Present value of future clean-up costs if the entity has an obligation to incur such costs

(Refer to IAS37 Provision, contingent assets and liabilities) 存在弃置费用的固定资产 Excluding:

? Administration and general overheads ? Abnormal costs

? Costs incurred after the asset is physically ready for use Exchanges of assets 资产交换

IAS 16 specifies that exchange of items of PPE regardless of whether the assets are similar, are measured at fair value, unless the exchange transaction lacks commercial substance （商业实质） or the fair value of neither of the assets exchanged can be measured reliably. If the acquired item is not measured at fair value, its cost is measured at the carrying amount of the asset given up. Subsequent expenditure 后续支出 ?

Capital expenditure (资本化支出)--Subsequent expenditure on property, plant and equipment should only be capitalized if it improves performance e.g. faster production or higher quality output. ?

Revenue expenditure（费用化支出）--All other expenditure incurred to maintain the economic benefits originally expected should be expensed in Income Statement.

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Depreciation methods Straight line: Annual Depreciation = (Cost-residual value残值)/useful life Reducing balance Annual Depreciation = Net book value opening balance* depreciation rate% Sum of Digits Annual Depreciation =(cost-residual value)*depreciation rate% Machine hours Depreciation per machine hour = (Cost-residual value)/total machine hours Dr: Depreciation expense Cr: Accumulated depreciation Disposal of PPE 固定资产的处置

Profit or loss on disposal = Net proceeds – Carrying Value of the asset Recognized as income or expense in I/S

The useful lives of assets or depreciation method should be reviewed at least at each financial year-end and change of useful life or method is a change in accounting estimate not a change in accounting policy.

Illustration：

Louisville Farms paid $432,000 cash for a prize-winning stallion on January 1, 2002. The stallion is depreciated on a straight-line basis. Estimated useful life was nine years, with no residual value. After owning the animal for six years and five months, Louisville Farms sold the stallion on May 31, 2008, for cash of $85,000. Depreciation had last been recorded on December 31, 2007. Required：

a) Compute the book value of the stallion at May 31, 2008, the date of sale. b) Compute the gain or loss on the sale of the stallion. Answer：

a) Book value of the stallion at May 31, 2008

Original cost ................................................................ Depreciation for 6 years (year 1 through year 6)

($432,000 ? 9) x 6 years ................................................

$432,000

$288,000

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Depreciation for 5 months in year 7

[($432,000 cost ? 9 years) x 5/12] .................................. $ 20,000

Accumulated depreciation to May 31, 2008 ......................

Book value of stallion at May 31, 2008 ...................

(308,000) $ 124,000

b) Loss on sale of the stallion:

Sales price $85,000 - $124,000 book value.......................

$ 39,000 loss

Intangible Assets

Research and development costs Research Expense as incurred

Development Capitalized as intangible assets if all following criteria have been met: technical feasibility to complete. intention to complete.

generate probable future economic benefits

availability of adequate technical, financial and other resources to complete.

ability to measure reliably the expenditure attributable to the intangible asset during its development.

The cost of an internally generated intangible asset is the sum of the expenditure incurred from the date when the intangible asset first meets the recognition criteria. The earlier expenditure which have been expensed should not be retrospectively recognized at a later date as part of the cost of an intangible asset.

内部开发无形资产的成本仅包括在满足资本化条件的时点之后的支出。对于之前已经费用化计入当期损益的支出不在进行调整。 Measurement after initial recognition Cost model (more commonly used in practice), the accounting treatment is that intangible assets should be carried at cost less amortization and any impairment losses.

An entity must assess whether the useful life of an intangible asset is finite or indefinite. With a finite useful life 使用寿命有限

? ?

Amortization 摊销

Normally the straight-line method with a zero residual value should be used. 直线法摊销，残值为零 Not amortized.

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With a indefinite useful ?

life

使用寿命不确定

? Instead an impairment review must be carried out at least annually.

Investment Property

Investment property is defined by IAS 40 as land or a building held to earn rentals or for capital appreciation or both, rather than for use or for sale in the ordinary course of business. 投资性房地产持有的目的是为了赚取租金或资本增值。 Accounting treatment ? ?

Investment properties should initially be measured at cost.

IAS 40 then gives a choice between following a cost model or a fair value model.

Fair value model

The asset is revalued to fair value at the end of each year. The change in fair value (gain or loss) will then be shown directly in the income statement. (公允价值变动损益：Gain/loss of the change of fair value) No depreciation is charged on the asset.

If it is impossible to measure fair value reliably, then the cost-based model should be adopted. Changing models

once the entity has chosen the fair value or cost model, it should apply it to all its investment property.

It should not change from one model to the other unless the change will result in a more appropriate presentation.

IAS 40 states that it is highly unlikely that a change from the fair value model to the cost model will result in a more appropriate presentation. Transfers

Transfer to or from investment property should only be made when there is a change in use. From investment property to owner occupied: Cost = Fair value at date of change

Difference between fair value and carrying amount should be recognized in the income statement.

企业将采用公允价值模式计量的投资性房地产转换为自用房地产时，应当以其转换日的公允

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价值作为自用房地产的账面价值，公允价值与原账面价值的差额计入当期损益。 From owner occupied to investment property: Revalue from cost to fair value

If the fair value is higher than carrying amount, the difference should be recognized in the reserve.

企业将自用房地产转换为采用公允价值模式计量的投资性房地产时，应当以其转换日的公允价值作为投资性房地产的入账价值，结转原已计提的累计折旧或减值准备，转换日公允价值小于账面价值的，差额计入当期损益，转换日公允价值大于账面价值的，差额计入资本公积。 Example:

A building has been using as a head office. On 30 June 2009 it was rent out. It had an original cost on 1 January 2000 of $250,000 with useful life 50 years. At 30 June 2009 its fair value was $350,000.

Dr Investment property

$350,000

Dr Accumulated Depreciation (250,000/50*9.5) $47,500 Cr PPE

$ 250,000 $147,500

Cr Capital reserve

Impairment of assets

Impairment loss: 减值损失 Recoverable amount： 可收回金额 Carrying value：账面价值 Fair value minus the disposal expenses ( FV less cost to sell) : 公允价值减去处置费用 Current value of the expected future cash flow of the assets ( Value in use ): 预计未来现金流量的现值 Individual asset： 个别资产 Group asset ( cash generating unit): 资产组 Impairment test (review): 减值测试 Reversal of impairment: 减值的转回 Impairment signs (indicators): 减值迹象 The objective of IAS 36 Impairment of assets is to set rules to ensure that the assets of an enterprise are carried at no more than their recoverable amount

An asset has been impaired if its carrying value in the Statement of Financial Position

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exceeds its recoverable amount.

资产减值，是指资产的可回收金额低于其账面价值。

The recoverable amount is the greater of net selling price (selling price less direct costs of sale )and value in use (Present Value of future cash flows generated by the asset discounted at a pre-tax market determined rate which allows for the risks specific asset)

Carrying Value > Recoverable Amount Greater of Fair value less costs to sell Value in Use (PV of future cash flow) 资产的可回收金额，应当根据资产的公允价值减去处置费用后的净额与资产预计未来现金流

量的现值之间较高者确定。

An entity should assess at the end of each reporting period whether there are any indications of impairment （减值迹象）to any assets.

Recognition and measurement of an impairment loss Impairment losses are recognized in the income statement immediately and future depreciation charges are adjusted to depreciate the recoverable amount of the asset over its remaining useful economic life.

Reversal of previous impairment losses is not permitted.

资产减值损失计入当期损益，在以后期间对该固定资产计提折旧时，应当以固定资产的账面价值为基础计提每期的折旧额。资产减值准则规定，资产减值损失一经确认，在以后期间不得转回。

Cash-generating units (CGUs) a. If it is not possible to calculate the recoverable amount for an individual asset, the recoverable

amount of the asset’s cash-generating unit should be measured instead.

b. Cash generating unit is the smallest identifiable group of assets for which independent cash

flows can be identified and measured.

c. Impairment should be calculated for the unit as a whole.

d. A cash-generating unit to which goodwill has been allocated is tested for impairment annually.

The carrying amount of the unit, including goodwill, is compared with the recoverable amount.

e. When an impairment loss is recognized for a cash-generating unit, the loss should be allocated

between the assets in the unit in the following order:

1st goodwill allocated to the group of assets

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nd

2 other assets on a pro-rated basis

减值损失金额应当按照下列顺序进行分摊: 1. 抵减分摊至资产组中商誉的账面价值

2. 根据资产组中除商誉之外的其他各项资产的账面价值所占比重，按比例抵减其他各项资产的账面价值。

f. In allocating the impairment loss, the carrying amount of an asset should not be reduced

below the highest of: (1)net selling price (2)Value in use (if determinable) and (3) zero.

抵减后的各资产的账面价值不得低于以下三者之中最高者：该资产的公允价值减去处置费用后的净额，该资产预计未来现金流量的现值和零。 Illustration:

ABC company runs a unit that suffers a massive drop in income due to a machine breakdown on 1 January. The following carrying values were recorded in the books immediately prior to the impairment:

$m

Goodwill 20 Technology 5 Brands 10 Land 50 Buildings 30 Other net assets 40

The recoverable value of the unit is estimated at $85 million. The technology is worthless, following its complete failure. The other net assets include stock, debtors and creditors. It is considered that the book value of other net assets is a reasonable representation of its net realizable value.

Required: Show the impact of the impairment Answer: Goodwill Technology Brands Before impairment 20 5 10 Impairment loss (20) (5) (5) After impairment -- -- 5 / 57 17

Land Buildings Other net assets

50 30 40 155 (25) (15) -- (70) 25 15 40 85 —（本章完）—

Unit3 Financial Statement Elements-Liabilities

I．Current liability● Account payable应付账款 Notes payable应付票据 ? ? Interest-bearing带息票据 Zero-interest-bearing无息票据 Current maturities of long-term debt将要到期的长期负债 Short-term obligations to be refinanced预期再融资的短期债务 Dividends payable应付股利 Returnable deposits and advances需要归还的押金和预收款 Unearned or deferred revenues未实现的或递延的收入 Sales taxes payable应交销售税金 Income taxes payable应交所得税 Employee-related liabilities与员工相关的负债 Payroll deductions薪酬扣项 Compensated absences缺勤补偿 Bonus obligations奖金义务 Property taxes payable应交财产税 Short-term obligations expected to be refinanced 预期再融资的短期债务

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If a company intends to refinance a short-term obligation and demonstrates the ability to do this by having a refinancing agreement with clear terms, then the debt can be reported in the long-term liability section.

如果一个公司签订了有明确期限的再融资合同，说明其有意图进行再融资短期债务并且显示有能力进行，这笔负债将在长期负债部分列示。

Financial statement presentation requirements for current liabilities 报表列报

Current liabilities are usually reported in financial statements at their maturity value （到期值）. They are presented on the balance sheet in order of liquidation preference （流动性强弱） or in order of maturity （到期日长短）. Current liabilities 流动负债 短期借款 应付账款 应付与员工相关的负债 应计负债 递延劳务收入 应交所得税 应付票据 Short-term borrowings Accounts payable Accrued payroll-related liabilities Accrued liabilities Deferred service revenues Income taxes payable Note payable Total current liabilities 流动负债合计 Supplemental information should be provided to grant full disclosure of current liabilities. Liabilities secured with collateral （担保）and the related collateral should be identified. 补充信息也应提供以对流动负债进行全面披露。有担保保证的负债和相关担保保证应予以确认。

II．Equity

Face value/par value Face rate/coupon rate Market rate 面值 债券利率 市场利率 Issued at the face value （par value） 平价发行 Issued at a premium Issued at a discount voting rights

溢价发行 折价发行 选举权 / 57 19

Shares without voting rights Declare dividend Pay dividend Liquidation 无表决权的股票 宣布股利 支付股利 清算 留存收益 未分配利润 Retained earnings Undistributed profit Outstanding shares 发行在外的股票 Capital stock ( share capital) 股本 Additional paid-in capital (paid-in capital in excess of par, premium on common stock, capital premium) 资本公积 Preference/preferred shares Common/ordinary shares Authorized shares Treasury shares 优先股 普通股 核定股票 库藏股（我国会计准则中叫库存股） Equity in a corporation is called corporate capital, stockholders’ equity, or shareholders’ equity. Corporate capital is made up of capital stock, additional paid-in capital ( paid-in capital in excess of par, premium on common stock) and retained earnings.

Two types of share capital (capital stock): ordinary shares ( common stock ) and preference shares ( preferred stock ). Ordinary shares: ? ? ?

Carry voting rights

Shareholders receive a dividend at the discretion of the company’s directors.

Dividend is paid out of profits after the preference shareholders receive their dividend 发放优先股股利后支付普通股股利.

Preference shares: ? ? ?

Do not generally carry voting rights

shareholders receive a fixed dividend (calculated as %*nominal value 面值of shares held). Dividend is paid out in priority to ordinary dividend. 优先股股利优先于普通股股利

Share capital Value:

Nominal or par value面值: Each share has a nominal or par value, often $ 1, 50c or 25c. Shareholders are issued by the company at an issue price（发行价）. This is at least equal to the

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nominal value of the shares, but often exceeds it. Stock issuance at a premium 溢价发行 Dr cash

Cr common stock

Cr paid-in capital in excess of par ( premium on common stock, capital premium)

Redeemable preference shares （可赎回优先股）are preference shares which are repayable by the company at a specific future date. These shares have the characteristics of debt. They are therefore classified as a liability on the statement of financial position (balance sheet). Dr: Cash: Issue price x no . of shares. Cr: Liability: Issue price x no. of shares. Irredeemable preference shares 不可赎回优先股

Irredeemable preference shares are preference shares which are not redeemable. They remain in existence indefinitely. These shares are classified as equity on the statement of financial position (balance sheet).

Treasury stock (reacquisition of shares) 库藏股 （股票回购）

Shares that have been issued by a company and are later reacquired are called treasury stock. Shares may be reacquired for the following reasons: ? ? ?

To reduce the number of stockholders or prevent takeover attempts 防止收购

To have shares available for the exercise of employee stock options 为员工股票期权做准备 To increase earnings per share and return on equity 增加每股收益及股票回报

Treasury stock is reported as a reduction of stockholders’ equity and has no voting or dividend rights.

Stock options（股票期权）, warrants （认股权证） and rights （配股权）are call options (看涨期权)that give the holder the right to buy shares at a set exercise price . Cash dividends：现金股利 Property dividends：财产股利 Liquidating dividends：清算股利 Stock dividends：股票股利

Stock splits and reverse stock splits： 股票拆分和反向股票拆分 Practice question 1:

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Florida Corporation has the following items on its Statement of Financial Position. Treasury stock $ 8,000 5-year note payable 12,000 Capital lease obligations 15,000 Deferred income taxes 7,000 20-year bond 20,000 Dividends payable 3,000 Retained earnings 14,000

What is the amount that should be classified as long-term debt? a. $54,000. b. $62,000. c. $68,000. d. $79,000.

Answer: A ( 12+15+7+20) Practice question 2:

Fox Company has 1,000,000 shares of common stock authorized, of which 100,000 shares are held as treasury shares; the remainders are held by the company shareholders. On November 1, the Board of Directors declared a cash dividend of $0.1 per share to be paid on January 2. At the same time, the Board declared a 5% stock dividend to be issued on December 31. The total amount of these declarations to be shown as current liabilities on Fox’s Statement of Financial Position as of December 31 is a. $90,000. b. $100,000. c. $540,000. d. $600,000.

Answer: A {0.1*(1,000,000-100,000)}

III．Financial liability

IAS 32 requires that financial instruments should be presented according to their substance, not merely their legal form. ?

An equity instrument is any contract that evidences a residual interest剩余收益 in the assets of an entity after deduct all of its liabilities.

A financial instrument is a debt instrument if it contains obligations to transfer economic

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?

benefits even if its legal form is shares i.e. redeemable preference shares are in substance debt and should be accounted for as such.

Illustration1:

On 1 October 20x4, a company issued 50,000 redeemable preference shares with a par value of $ 100 each to investors at $ 55. The shares are redeemable at par on 30/09/20x9 and have a coupon rate （票面利率）of 2%. The effective rate of interest （实际利率）is 15.62%. How to show in Balance Sheet and Income Statement for the year ending 30/09/20x5 and 30/09/20x6? Solution:

Redeemable preference shares are in substance debt and should be accounted for as such. 可赎回优先股实质是负债

Proceeds of issue = 50,000x$ 55 = $ 2,750,000 Annual payment = 50,000x$ 100 x 2% = $ 100,000

Period Opening Balance Finance cost Cash paid

Closing balance

$ 000 15.62% 2% $ 000

20x5 20x6

2750 3080

430 481

(100) (100)

3080 3461

Year ended 30/09/20x5 Balance Sheet Liability

3,080

Income Statement Finance cost

430

Year ended 30/09/20x6 Balance Sheet liability

3461

Income Statement Finance cost

481

Compound instruments: 混合证券

Compound instrument is one which has both a liability and an equity component.

As convertible loan stock 可转换债券 contains an embedded derivative嵌入式衍生工具 (the

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conversion rights) so it will be necessary to split the derivative from the host contract 主合同and account for both separately. Calculate the split:

Calculate the value for the liability component.

Deduct this from the instrument as a whole to leave a residual value for the equity component. Illustration2:

A company Petersen issues 3-year convertible loan stock,$ 100,000 4% when the cost of capital资本成本 is 8%, and the conversion terms are 1 ordinary share for $2 of debt. How should this be accounted for? Solution:

According to substance over form, the compound instrument must be split into debt component and equity component and accounted for separately.

按照实质重于形式的原则，混合证券必须拆分为负债和权益部分并分别进行核算。

Yr 1 2 3 Debt element Fair Value Equity element

Dr: Cash

$100,000

$89,692

Cash flow 4,000 4,000 104,000 Discount 8% 1/1.08 1/1.082 1/1.083 PV 3704 3429 82559 89,692 100,000 10,308 Cr: Liability Cr: Equity

$10,308

Financial liability

Subsequent measurement of financial liabilities 金融负债的后续计量

After initial recognition an entity should measure all financial liabilities at amortized cost using the effective interest rate method （实际利率法下的摊余成本）, with the exception of financial liabilities at fair value through profit or loss （以公允价值计量且其变动计入当期损益的金融负债）.

The effective rate method is the preferred method for computing bond interest expense and amortizing bond discounts and premiums. Under the effective rate method, interest expense is

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calculated by multiplying the effective rate by the carrying value of the debt at the beginning of the period. The difference between bond interest paid (face value times the stated rate) and bond interest expense (beginning carrying value times effective rate ) is the amount of discount or premium amortized.

实际利率法是计算债券利息费用和债券折价溢价摊销中更为可取的方法。在实际利率法下，利息费用是通过实际利率乘以期初债券账面价值计算得到。实际支付利息（票面价值乘以票面利率）和债券利息费用（实际利率乘以期初债券账面价值）之间的差额为债券折价溢价的摊销额。

Amortization Amount = (carrying value of bonds at start of period * effective interest rate) – (face amount of bonds * stated interest rate) Dr Cash

Dr/Cr Bond payable-interest adjustment Cr Bond payable-par value

Dr Finance cost (or building in construction) Dr/Cr Bond payable-interest adjustment Cr Cash/interest payable

In the effective rate method, interest expense is a constant percentage of the bond’s carrying value. If the bond was issued at a discount, the carrying value and interest expense will both increase over time. Conversely, if the bond was issued at a premium, the carrying value and interest expense will both decrease over the term of the bond.

在实际利率法下，利息费用占债券账面价值的恒定比例。如果债券以折价发行，债券的账面价值和利息费用会随着时间的推移而上升。相反，如果债券以溢价发行，债券的账面价值和利息费用会随着时间的推移而下降。 Practice question 3

On January 1, Evangel Company issued 9% bonds in the face amount of $100,000, that mature in five years. The bonds were issued for $96,207 to yield 10%, resulting in a bond discount of $3,793. Evangel uses the effective interest method of amortizing bond discount. Interest on the bonds is payable annually on December 31. What is the amount of interest to be paid at the end of the first year? a. $8,659. b. $9,000. c. $9,621. d. $10,000.

Answer: B (9%*100,000)

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Practice question 4

On January 1, bonds with a face value of $200,000, an 8% annual effective yield, and a 7% annual coupon rate were sold by Thomas Dynamics Inc. for $180,000, The bonds pay interest January 1 and July 1. Using the effective interest method, the company’s interest expense for the first six months ended July 1 will be a. $7,000. b. $7,200. c. $14,000. d. $14,400.

Answer: B (180,000*8%/2) Practice question 5

On January 1, Evangel Company issued 9% bonds in the face amount of $100,000, that mature in five years. The bonds were issued for $96,207 to yield 10%, resulting in a bond discount of $3,793. Evangel uses the effective interest method of amortizing bond discount. Interest is payable annually on December 31. What is the amount of Evangel’s unamortized bond discount at the end of the first year? a. $621. b. $2,452. c. $3,172. d. $3,793.

Answer: C {3793- (96,207*10%-100,000*9%)}

Provisions, Contingent Liabilities and Contingent Assets

预计负债，或有负债和或有资产

Prudence suggests that if a future cash outflow is foreseen we should provide for it, i.e. put a liability (a provision) in the balance sheet and the corresponding debit as a cost in the profit and loss.

The problem is that prudence not only ensures companies show bad news in the accounts as soon as possible，it also allows the accounts to be manipulated (smoothing profits).

IAS 37 attempts to prevent this manipulation and get the accounts to show a true and fair view by setting strict criteria for the recognition of a provision. A provision is a liability of uncertain timing or amount.

A liability is a present obligation of the entity arising from past events, the settlement of

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which is expected to result in an outflow from the entity of resources embodying economic benefits.

The recognition criteria are derived from the definition of a liability and the recognition criteria laid down in the Framework. A provision should be recognized when: ?

an enterprise has a present obligation (legal or constructive) as a result of a past event 过去事项所引起的现实义务 （法律或推定义务）

it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and

a liable estimate can be made of the amount of the obligation.

?

?

If any of these conditions are not met then the enterprise should show a contingent liability unless the probability of an outflow is remote in which case nothing should be disclosed. Measurement of a provision 预计负债的计量 ?

The amount recognized as a provision should be the best estimate 最佳估计数of the expenditure required to settle the present obligation at the reporting date. ?

Provisions for one-off events (restructuring, environmental clean-up, settlement of a lawsuit) are measured at the most likely amount. ?

Provisions for large populations of events (warranties, customer refunds) are measured at a probability-weighted expected value. ? ?

If the time value of money is material then the provision should be discounted.

The amortization of the discount is a finance cost, and it should be disclosed separately on the face of the income statement. Environmental provision Illustration:

On 1 April 2004 the company brought into use a new processing plant that had cost $15 million to construct and had an estimated life of ten years. The plant uses hazardous chemicals which are put in containers and shipped abroad for safe disposal after processing. It is a legal requirement that the plant is decontaminated at the end of its life. The estimated present value of this decontamination, using a discount rate of 8% per annum, is $5 million. Solution: ? ? ?

Clean-up provision should be recognized since there is a present obligation.

Where they are based on future values, they should be discounted to their present value. Rather than being immediately written off to the income statement, the decontamination costs are added to the cost of the related asset and amortized over the expected life of the asset.

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?

The depreciation charge must be based on the full cost of the plant which must include the decontamination costs.

Also an imputed finance cost must be applied to the provision. Non-current assets

$million

20·0

? ?

Plant at cost ($15 million + $5 million) Depreciation at 10% per annum

(2·0) 18·0

Non-current liabilities Provision

0·4 5·4

?

Income statement

Depreciation 2·0 Accrued finance costs ($5 million x 8%) 0·4

Warranties产品质量保证

Illustration ? ? ?

A company offers a warranty on the sale of all its goods for one year after the date of sale. The probability of a warranty claim on an individual item is estimated at 15%.

If a warranty claim is made then on average the repair or replacement costs 40% of the original sales value. Sales for the year ended 31 December 2008 totaled $2 million. ?

Warranty claims in respect of those sales prior to 31 December 2008 totaled $40,000.

5·0

Accrued finance costs

Solution: ?

The total expected warranty claims in respect of 2008 sales are $120,000 ($2 million ? 15% ? 40%). ?

Dr sales expense

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Claims of $40,000 have been made before the year end.

Therefore a provision is required for expected future claims of $80,000 ($120,000 - $40,000)

Cr provision Guarantees债务担保 In some instances (particularly in groups) one company will make a guarantee to another to pay off a loan if the other company is unable to do so. This guarantee should be provided for if it is probable that the payment will have to be made. It may otherwise require disclosure as a contingent liability. onerous contracts亏损合同 Generally speaking no provision should be made for future operating losses since these relate to future events. However there are two exceptions to this general rule: ?

If another accounting standard either permits or requires a provision in specific circumstances, say IAS 11 ?

onerous contract

Onerous contracts ?

An onerous contract is a contract in which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it. The least net cost of an onerous contract should be recognized as a provision. The least net cost is the lower of ? the cost of fulfilling the contract

? the cost of terminating it and suffering any penalty payments

预计负债的计量应当反映了退出该合同的最低净成本，即履行该合同的成本与未能履行该合同而发生的补偿或处罚两者之中的较低者。 Restructurings重组义务 Accrue only after a detailed formal plan is adopted and announced publicly. A board decision is not enough.

有详细正式的重组计划并已对外公告。 Summary of recognition criteria by probability: Probability Virtually certain probable possible

? ?

Asset recognize disclose nothing Liability recognize recognize as provision disclose / 57 29

remote Practice question 6

nothing nothing A liability arising from a loss contingency should be recorded if the a. amount of the loss can be reasonably estimated.

b. contingent future events have a reasonably possible chance of occurring.

c. contingent future events have a reasonably possible chance of occurring and the amount of the loss can be reasonably estimated.

d. contingent future events will probably occur and the amount of the loss can be reasonably estimated. Answer: D

Basic EPS & Diluted EPS

Basic earnings per share (EPS) is reported for a company with a simple capital structure. It is computed as net income available to common stock (net income minus dividends on preferred stock ) divided by the weighted average shares of common stock outstanding during the year: EPS=(net income-preferred dividends)/ weighted average number of shares outstanding 每股收益=归属于普通股股东的当期净利润/当期发行在外的普通股加权平均数

Investors are interested in the future performance of the company. A company may however have obligations that will adversely affect the future EPS. As a result a fully diluted EPS figure is calculated, on the assumption that all instruments e.g. convertible debt have been exercised, to provide some indication of the possible effects of future dilution. 最大稀释假定 Convertible Bonds 可转换债券

Normally, most investors opt for conversion rather than repayment. This means that existing ordinary share holders must be informed of the potential effects on EPS of conversion. The EPS will be affected in two ways: ?

Earnings will be increased, because the finance costs will cease on conversion (post-tax interest saved)

The number of equity shares would increase.

?

Share options 股份期权

When a company has potential ordinary shares in issue then the diluted EPS needs to consider the effect on earnings and on the number of shares issued if the potential ordinary shares are converted into ordinary shares. Now assume that the company made no issue of shares during the year ended 31 December / 57 30

20X4, but on that date there were outstanding options to purchase 920,000 ordinary $1 shares at $1.70 per share. The average fair value for year of ordinary shares was $1.80. Net profit for the year is $2,208,000 and the outstanding ordinary shares is 8,280,000. Calculate diluted EPS Solution: Full price element = 920,000 x 1.7 / 1.8 = 869,000（以千为单位保留两位小数） Free element = 920,000 – 869,000 = 51,000 DEPS = 2,208,000 / (8,280,000 + 51,000) = 26.5c

Practice question 7:

At the beginning of the year, Lewis Corporation had 100,000 shares of common stock outstanding. During the year, the following transactions occurred. Date Transaction

April 1 Issued 10,000 shares in exchange for land July 1 Declared and distributed a 10% stock dividend October 1 Purchased 5,000 shares of treasury stock

The number of shares that Lewis should use when computing earnings per share at the end of the year is a. 117,000. b. 116,000. c. 111,750. d. 106,250.

Answer :a {(100,000×12/12+10,000×9/12)×1.1-5,000×3/12}

Leasing

Lessee 承租人 Lessor 出租人

Fiancé lease （capital lease） 融资租赁 Operation lease 经营租赁 Classification of Leases A lease is classified as a finance lease if it transfers substantially all the risks and rewards incidental to ownership. All other leases are classified as operating leases. Whether a lease is a finance lease or an operating lease depends on the substance of the transaction rather than the

/ 57 31

form. ?

the lease transfers ownership of the asset to the lessee by the end of the lease term; 所有权转移

the lessee has the option to purchase the asset at a price which is expected to be sufficiently lower than the fair value at the date the option becomes exercisable, and at the inception of the lease, it is reasonably certain that the option will be exercised; 廉价购买权

the lease term is for the major part (75%) of the economic life of the asset, even if title is not transferred; 租赁期占租赁资产使用寿命的大部分

at the inception of the lease, the present value of the minimum lease payments amounts to at least 90% of all of the fair value of the leased asset; 租赁开始日承租人最低租赁付款额的现值几乎相当于租赁资产公允价值 ?

the lease assets are of a specialized nature such that only the lessee can use them without major modifications being made.租赁资产性质特殊

?

?

?

Accounting by Lessee The following principles should be applied in the financial statements of lessees. Operating leases

The lease payments should be recognized as an expense in the income statement over the lease term on a straight-line basis, unless another systematic basis is more representative of the time pattern of the user's benefit. 直线法确认租赁费用

Where the lessee is offered an incentive such as a rent-free period or cash-back incentive, this will be spread over the period of the operating lease in accordance with the accruals principle. For example: the first year rent-free, the 2nd, 3rd, 4th year rental payment $20,000. The rental charge is $20,000×3/4=$15,000. Finance leases ?

at commencement of the lease term, finance leases should be recorded as an asset and a

liability at the lower of the fair value of the asset and the present value of the minimum lease payments (discounted at the interest rate implicit in the lease租赁内含利率).

中国会计处理原则：在租赁期开始日，承租人应当将租赁开始日租赁资产公允价值与最低租赁付款额现值两者中较低者作为租入资产的入账价值，将最低租赁付款额作为长期应付款的入账价值，其差额作为未确认融资费用。 ?

the depreciation policy for assets held under finance leases should be consistent with that for owned assets. If there is no reasonable certainty that the lessee will obtain ownership at the end of the lease - the asset should be depreciated over the shorter of the lease term or the life of the asset; 在租赁期和租赁资产使用寿命两者中较短者作为折旧期间 ?

finance lease payments should be apportioned between the finance charge and a repayment of part of the capital cost of the asset. ( pay in advance and pay in arrears)

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Step 1

Capitalize using lower of PV minimum lease payments and fair value Dr Leased equipment under finance lease

Cr Finance lease obligation Step 2

Depreciate over shorter of lease term and useful economic life Dr Depreciation expense-finance lease Cr Accumulated depreciation-finance lease Step 3 Calculate interest charges and outstanding liability

Finance leases treated as an operating lease: Finance lease:

Operating lease: No asset No liability Full rental charge No depreciation

Assets capitalized Liability recognized Finance charge

Depreciation charge

If a finance lease asset is incorrectly treated as an operating lease it will have the following effects on the F/S: ? ? ?

Assets understated and so ROCE （资本回报率）overstated Liabilities understated and so gearing understated Little effect on I/S

Sale and leaseback

There are two key questions to ask when assessing the substance of these transactions: ? ?

Is the new lease a finance lease or an operating lease?

If the new lease is an operating lease, was the original sale at Fair Value or not?

Generally speaking ?

If the leaseback is a finance lease then the deal is recognized as a secured loan rather than a sale.

If the leaseback is an operating lease then there has been a genuine sale which will be

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?

recognized in the income statement. Accounting treatment

Sale and leaseback under finance lease ( IAS17) ?

Any excess of sales proceeds over the carrying amount shall not be immediately recognized as income by a seller-lessee. Instead, it shall be deferred and amortized over the lease term.

Sale and leaseback under operating lease ? ?

A sale is normally recorded.

The operating lease rentals are recorded in the Income statement.

Problems arise when the sale proceeds are not at FV.

(a) if the transaction is clearly carried out at fair value - the profit or loss should be recognized

immediately; (b) if the sale price is below fair value - profit or loss should be recognized immediately, except if

a loss is compensated for by future rentals at below market price, the loss should be amortized

over the period of use;

(c) if the sale price is above fair value - the excess over fair value should be deferred and

amortized over the period of use; e.g. NBV=1000 =FV FV 1700 excess above Fair Value of 200 is amortized over lease term to decrease future lease expense Practice question 8

If a company uses off-balance-sheet financing （表外融资）, assets have been acquired a. for cash.

b. with operating leases. c. with financing leases.

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gain in Income Statement

d. with a line of credit （信用额度）. Answer: b

The Unit Summary: Current liability Equity

Financial liability

Provisions, Contingent Liabilities and Contingent Assets Basic EPS & Diluted EPS Leasing

-（本章完）-

Unit 4 Financial Statement Elements-Revenues

Revenue

Definition

Revenue is an inflow of economic benefits during the period arising in the course of ordinary activities of an entity when those inflows result in increases in equity other than increases relating to contributions from equity participants. Inflow of economic benefits: 经济利益的流入 Increase in equity: 所有者权益的增加

Contributions from equity participants: 所有者投入 Measurement

Revenue is measured at the fair value of the consideration received or receivable. 收入以将要收到或已收到对价的现值来计量

If the inflow of cash or cash equivalents is deferred （递延）, the fair value of the consideration receivable is less than the nominal amount of cash and cash equivalents to be received, and discounting（折现） is appropriate. Illustration: On 1 January 2011 SAP sold furniture for $4,000 with three years’ interest-free credit. SAP’s cost of capital is 8%. / 57 35

3Revenue recognized in 2011 will be $3,175 ($4,000*1/1.08). Also SAP will recognize interest income of $254 ($3,175*8%). In 2012 interest income will be $274 ((3,175+254)*8%). And in 2013 the remaining interest income of $297 will be recognized. This means that the full $4,000 will be recognized as revenue over the three years. Identification of the transaction

Normally, each transaction can be looked at as a whole. Sometimes, it is necessary to break a transaction into its component parts. E.g. a sale include both the transfer of goods and the provision of future servicing, the revenue for which should be deferred over the period the service is performed.

On the other hand, seemingly separate transactions must be considered together if apart they lose their commercial meaning. E.g. sale and repurchase. Sale of goods

Revenue is recognized when:

(a) all significant risks and rewards of ownership have been transferred to the buyer

企业已将商品所有权上的主要风险和报酬转移给购货方

(b) the entity has no continuing managerial involvement to the degree usually associated with

ownership, and no longer has effective control over the goods sold.

企业既没有保留通常与所有权相联系的继续管理权，也没有对已售出的商品实施有效控制

(c) both revenue and the associated costs of the transaction can be measured reliably

收入的金额和相关的成本能够可靠地计量

(d) probable that economic benefits will flow to the enterprise

相关的经济利益很可能流入企业

The passing of risks and rewards is critical to revenue recognition. The normal critical event is when goods are delivered to the buyer i.e. pass of position or transfer of legal title.

通常情况下，转移所有权凭证并交付实物后，商品所有权上的主要风险和报酬随之转移。 Uncertainty: there is return or refund terms （退货条款）. If the return or refund is proved to be insignificant, revenue in such cases is recognized at delivery and a liability for returns is recognized based on previous experience.

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Uncertainty: there is warranty terms （质保条款）. Revenue is recognized at delivery and a liability for warranty is recognized based on previous experience.

Uncertainty: installation needed after delivery （交货后安装）. If the installation is significant, revenue is recognized after installation. If not, revenue is recognized at delivery before installation.

Uncertainty: irrecoverable debt （坏账） may be incurred in future. Assess the probability and make allowance for it.

Goods shipped subject to conditions-installation and inspection 商品需要安装和检验销售 Goods shipped subject to conditions-right of return 附有销售退回条件的销售 Consignment sales 委托代销 Payment in advance of delivery 预收款销售 Sale and repurchase agreements 售后回购 Sales and lease back 售后租回 Installment sales 分期收款销售 Cash discount, trade discount and sales allowances 现金折扣，商业折扣和销售折让 Trade in 以旧换新 Collection with acceptance 托收承付 Rendering of services

When the outcome of the transaction can be estimated reliably revenue is recognized by reference to the stage of completion of the contract.

当提供劳务交易的结果能够可靠估计时，应当采用完工百分比法确认提供劳务收入。 When the outcome of the transaction cannot be estimated reliably, the standard recommends a no loss/no gain approach. Revenue is recognized only to the extent of the expenses recognized that are recoverable.

如果提供劳务交易结果不能可靠估计的，劳务收入的确认以能够得到补偿的劳务成本金额为限。

The sales price of a product may include an identifiable amount for subsequent servicing. In this case, the amount is deferred and recognized as revenue over the period during which the service is performed.

同时销售商品和提供劳务，如果能够区分且单独计量，应当分别核算。 Installation fees 安装费 Advertising commissions 广告费 Admission fees 入会费 / 57 37

Tuition fees 学费 Membership fees 会员费 Franchise fees 特许权费

Illustration A computerized accountancy package is sold with one year’s after sales support. The cost of providing support to one customer for one year is calculated to be $50. The company has a mark-up on cost （成本加成）of 15%. The product is sold for $350. How is this sale accounted for? Solution: $57.50 (50+(50×15%)) will be treated as deferred income and recognized over the course of the year. The remaining $292.5 will be treated as revenue. Dr. Cash 350 292.5 57.5 Cr. Revenue Cr. Deferred income Interest, royalties and dividends

(a) interest （利息收入）shall be recognized using the effective interest rate (EIR) method (time

proportionate, probable and measured reliably) (b) royalties （使用费收入）shall be recognized on an accrual basis in accordance with the

substance of the relevant agreement;

(c) dividends （股息收入） shall be recognized when the shareholder’s right to receive payment

is established

Illustration: Revenue Recognition

Suppose market rate of interest is 10% for all the questions. (a) Magazine publisher

A company publishes a magazine and on 1 July sold annual subscriptions totaling $200,000. The monies have been received and are non-refundable. The financial year end of the company is 31

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December. Solution:

The money is non-refundable and the service will be provided over one year, so the revenue is recognized on a straight-line basis. Since the service has not been provided at the point of advance payment from customers, no revenue should be recognized. 1 July Dr Cash

200,000

200,000

Cr Deferred income 31 December

Dr Deferred income 100,000

Cr Revenue 100,000 (b) Internet travel agent

An internet travel agent receives $1,000 for arranging a hotel booking, and will pass on $900 in due course to the hotel.

Solution: In an agency relationship, the gross inflows of economic benefits include amounts collected on behalf of the principal and which do not result in increases in equity for the entity. The amounts collected on behalf of the principal are not revenue. Instead, revenue is the amount of commission.

Dr Cash 1,000 Cr Sales commission Cr Payables

100 900

Substance over form in revenue recognition Consignment stock 委托代销

This is very common in the car industry. Consignment inventory is held by the dealer (经销商) but legally owned by the manufacturer （生产商）. The issue is who should record the inventory as an asset? This will depend on whether it is the dealer or the manufacturer who bears the risks and benefits from the rewards of ownership.

Treatment- Is the inventory an asset of the dealer at delivery?

If yes - the dealer recognizes the inventory on the statement of financial position with the corresponding liability to the manufacturer. Dr Inventory (库存商品) Dr Tax payable Cr Payables

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If no - do not recognize inventory on statement of financial position until transfer of title has crystallized (manufacturer recognizes inventory until then ). Sale and repurchase agreements

A common way to dress up a secured loan is to disguise it as a sale and repurchase agreement. The issue is to decide whether the substance of the transaction is a sale or raising of finance on an asset still held.

Yes legal=substance, a real sale and purchase Accounting treatment: On sales: 1)recognize gain or loss on sales 2)derecognize asset No legal<>substance, a secured loan 1)Continue to recognize the asset 2)Recognize the proceeds as a liability rather than as income 1)Charge interest on carrying value of loan 2)Repayment of loan

Factoring of debts 应收账款的保理

Many companies use factors to speed up their cash inflow from their trade receivables. The receivables are sold to factor, which then collects the cash from the customers. The factor makes a profit by charging a fee. The key issue is the extent to which the risks and rewards of ownership have been transferred. Possible treatments:

Debts are no longer an asset of the seller- derecognize(终止确认) asset, or Debts remain an asset of the seller- recognize a liability

On repurchase: Recognize asset Construction Contracts

The primary issue in accounting for construction contracts is the allocation of contract revenue and contract costs to the accounting period in which the construction is performed. Definition

A construction contract is a contract specifically negotiated for the construction of an asset or a combination of assets that are closely interrelated or interdependent in terms of design, technology and function of their ultimate purpose or use.

建造合同，是指为建造一项或数项在设计、技术、功能、最终用途等方面密切相关的资产而订立的合同

Identifying contract revenues and costs

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Contract revenue ◆ Initial amount agreed 固定的初始收入 ◆ Variations 变更 ◆ Claims 索赔 ◆ Incentive payments 奖励款 Recognizing contract revenue and costs

Contract costs Direct costs ◆ Site labor and supervision ◆ Materials ◆ Plant ＆ equipment depreciation ◆ Moving costs ◆ Hire Charges 租赁费用 ◆ Design Attributable costs ◆ insurance ◆ Overheads 间接费用 Long-term construction contracts span more than one accounting year-end. This leads to the problem of determining when and how the contract revenue and contract cost should be recognized.

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Outcome can be estimated reliably 合同结果能够可靠估计 If the expected outcome is a profit: ? Recognize revenue and costs by reference to stage of completion of contract 完工百分比. If the expected outcome is a loss 合同预计损失: ? ? Recognize revenue by reference to stage of completion of contract. Recognize the whole loss to I/S immediately regardless of the percentage completed ( make necessary provision) (提取损失准备). Recognize contract costs as an expense in period incurred. 合同成本在发生时确认为费用 Recognize revenue only to the extent of contract costs expected to be recovered. 合同收入根据能够收回的实际合同成本予以确认 Outcome cannot be estimated reliably 合同结果不能可靠估计 ? ? Percentage of completion

Cost to date =% Total expected costs

The percentage of completion method is applied on a cumulative basis in each accounting period to the current estimates of contract revenues and costs

合同完工进度=累计实际发生的合同成本/合同预计总成本

Practice question:

Paulson Company uses the percentage-of-completion method to account for long-term construction contracts. The following information relates to a contract that was awarded at a price of $700,000. The estimated costs were $500,000, and the contract duration was three years. Cumulative cost to date

Year 1 $300,000

Year 2 $390,000 130,000 220,000 200,000

Year 3 $530,000

Costs to complete at year end 250,000 Progress billings 325,000 Collections on account 300,000

-0- 155,000 200,000

Assuming that $65,000 was recognized as gross profit in Year 1, the amount of gross profit Paulson recognized in Year 2 was a. $59,950. b. $70,000. c. $124,950. d. $135,000. Answer: b

Year 2 cumulative percentage of completion: 390/(390+130)= 75% Year 2 cumulative gross profit: (700-(390+130))*75%=135 Year 2 gross profit:135-65=70

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-（本章完）-

Unit 5 Special Issues

Government grants

Definition A government grant is defined as assistance, in the form of cash or other assets, given in return for compliance with certain conditions relating to the enterprise’s operations.

Accounting treatment

An entity should not recognize government grants ( including non-monetary grants at fair value) until it has reasonable assurance that : ? ?

The entity will comply with any conditions attached to the grant The entity will actually receive the grant

IAS 20 requires grants to be recognized under the income approach (收益法), i.e. grants are recognized as income over the relevant periods to match them with related costs which they have been received to compensate. This should be done on a systematic basis of matching. Grants related to assets: Set up the grant as deferred income Example:

Europe Limited buys a building for a total cost of $200,000. They receive a European Community grant of $60,000 towards the cost and pay the net of $140,000 by check. The useful economic life of the building is estimated at 50 years.

Under the deferred income (递延收益) method:

Dr NCA 200,000 Cr Cash 140,000 Cr Deferred Income 60,000 Depreciation （折旧） = 200,000 / 50 = 4,000 pa

Amortization of Government grant （政府补助的摊销）= 60,000 / 50 = 1,200 pa

Dr Deferred income 1,200 Cr Grant income （营业外收入） Grants related to income: 1. If expenditure already incurred:

1,200

Dr Grant Receivable $x

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2.If expenditure is to be incurred in the future:

Cr Grant Income

Dr Grant Receivable Cr Deferred Income

Dr Deferred Income Cr Grant Income

$x $x

$x $x $x

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Borrowing costs

Borrowing costs comprise the interest and other costs incurred by an enterprise in borrowing funds：

Interest expense calculated using the effective interest rate Finance charges in respect of finance leases

Exchange differences

借款费用是企业因借入资金所付出的代价，包括借款利息、折价或者溢价的摊销、辅助费用以及因外币借款而发生的汇兑差额等。承租人确认的融资租赁发生的融资费用属于借款费用。 They may be based on specifically borrowed funds （专门借款）or on the weighted average cost （加权平均成本） of a general borrowings （一般借款）.

Qualifying assets are assets that take a substantial period of time to get ready for its intended use or sale.

符合资本化条件的资产是指需要经过相当长时间的构建或者生产活动才能达到预定可使用或者可销售状态的资产。

Accounting treatment 1.Other borrowing costs, such as interest cost on funds borrowed for operations, should be expensed when incurred.

2.Borrowing costs directly incurred on a qualifying asset can be capitalized as part of the cost of that asset.

企业发生的借款费用可直接归属于符合资本化条件的资产构建或者生产的，应当予以资本化，计入相关资产成本。其他借款费用应当在发生时根据其发生额确认为费用，计入当期损益。 Capitalization should:

Start when expenditure on the asset is being incurred, borrowing costs are being incurred and

activities are in progress that are necessary to prepare the asset for its intended use or sale

借款费用允许开始资本化必须同时满足三个条件，即资产支出已经发生、借款费用已经发生、为使资产达到预定可使用或者可销售状态所必要的构建或者生产活动已经开始。 Be suspended when activity development is interrupted

中国：发生非正常中断且中断时间连续超过3个月的，利息费用的资本化应当暂停。 Cease when substantially all the activities necessary to prepare the asset for its intended use or sale are completed

当使资产达到预定可使用或者可销售状态的生产活动实质上已经完成时，借款费用应当停止资本化。

Income Taxes 所得税

Accounting profit 会计利润 Taxable profit 应纳税利润 Current Tax 当期所得税 Deferred tax 递延所得税 / 57 45

Deferred tax liability 递延所得税负债 Deferred tax asset 递延所得税资产 Permanent differences 永久性差异 Temporary differences 暂时性差异 Taxable temporary differences 应纳税暂时性差异 Deductible temporary differences 可抵扣暂时性差异 Tax base 纳税基础 Accounting profits form the basis for computing taxable profits, on which the tax liability for the year is calculated; however, accounting profits and taxable profits are different. There are two reasons for the differences.

Permanent differences. Those occur when certain items revenue or expense are excluded from the computation of taxable profits.

Temporary differences. Those occur when items of revenue or expense are included in both accounting profits and taxable profits, but not for the same accounting period. In the long run, the total taxable profits and total accounting profits will be the same so that timing differences originate in one period and are capable of reversal in one or more subsequent periods. Deferred tax is the tax attributable to temporary differences.

Taxable temporary differences, which are temporary differences that will result in taxable amounts in determining taxable profit ( tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.

Taxable temporary differences give rise to a deferred tax liability

Deductible temporary differences, which are temporary differences that will result in amounts that are deductible in determining taxable profit ( tax loss) of future periods when the carrying amount of the asset or liability is recovered or settled.

Deductible temporary differences give rise to a deferred tax asset. Prudence dictates that deferred tax assets can only be recognized when sufficient future taxable profits exist against which they can be utilized.

Deferred tax is an accounting measure used to match the tax effects of transactions with their accounting impact. It does not represent tax payable to the tax authorities.

Temporary differences are differences between the carrying amount of an asset or liability in the statement of financial position and its tax base.

Tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. 计税基础即从税法的角度来看，企业持有的资产、负债的金额。

Tax base of an asset is the amount that will be deductible for tax purposes against any taxable

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economic benefits that will flow to the enterprise when it recovers the carrying value of the asset. 资产的计税基础，是指在企业收回资产账面价值过程中，计算应纳税所得额时按照税法规定可以自应税经济利益中抵扣的金额，即某一项资产在未来期间计税时可以税前扣除的金额。 Illustration example:

1.A machine cost $10,000. For tax purposes, depreciation of $3,000 has been deducted in the current and prior periods and the remaining cost will be deductible in future periods. Tax base is $10,000-3,000=$7,000

2.Interest receivable has a carrying amount of $1,000. The related interest revenue will be taxed on a cash basis. Tax base is nil.

3.Trade receivable have a carrying amount of $10,000. The related revenue has already been included in taxable profit. Tax base is $10,000.

4.A loan receivable has a carrying amount of $1m. The repayment of the loan will have no tax consequences. Tax base is $1m.

Tax base of a liability is its carrying amount, less any amount that will be deducted for tax purposes in relation to the liability in future periods.

负债的计税基础，是指负债的账面价值减去未来期间计算应纳税所得额时按照税法规定可予抵扣的金额。 Illustration example:

1.Accrued expenses with a carrying amount of $1,000. The related expense will be deducted for tax purposes on a cash basis. Tax base is nil.

2.Interest revenue received in advance, with a carrying amount of $10,000. The related interest revenue was taxed on a cash basis. Tax base is nil.

3.Accrued expenses with a carrying amount of $2,000. The related expense has already been deducted for tax purposes. Tax base is $2,000.

4.Accrued fines and penalties with a carrying amount of $100. Fines and penalties are not deductible for tax purposes.

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Tax base is $100.

5.A loan payable has a carrying amount of $1m. The repayment of the loan will have no tax consequences. Tax base is $1m.

Recognition of Deferred Tax Liabilities (DTL) Deferred tax liabilities are the amounts of income taxes payable in future periods in respect of taxable temporary differences. Formulae:

Carrying Amount of Asset > Tax Base of Asset ? ? ?

Taxable Temporary Difference x Tax rate = Deferred Tax Liability Pay less tax now (more capital allowance available now)

Pay more tax later (no more capital allowance but company continue to charge depreciation which is added back to taxable profits) Recognition of Deferred Tax Assets (DTA)

Deferred tax assets are the amounts of income taxes recoverable in future periods in respect of deductible temporary differences. Formulae:

Carrying Amount of Liability > Tax Base of Liability ? ? ?

Deductible Temporary Difference x Tax Rate = Deferred Tax Asset

Pay more tax now (as expenses are not allowable, it will be added back to taxable profit) Pay less tax later (in future when the company pays for the expenses, it will be deductive when paid)

Economic benefits in the form of reductions in tax payments will only flow to the organization if it earns sufficient taxable profits against which the deductions can be offset. Therefore an organization only recognizes deferred tax assets when it is probable that taxable profits will be available against which they can be utilized.

递延所得税资产的确认应以未来期间可能取得的应纳税所得额为限。

Accounting policies, changes in accounting estimates and errors

Accounting policies

Accounting policies are the specific principles, bases, conventions, rules and practices adopted by an entity in preparing and presenting financial statements.

An entity must select and apply its accounting policies for a period consistently for similar transactions.

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Changes in accounting policies

Accounting policies are normally kept the same from period to period to ensure comparability of financial statements over time.

IAS 8 allows accounting policies to be changed only if:

required by statute or an accounting standard setting body;

the change will result in a more relevant and reliable presentation of events or transactions.

会计政策变更的条件：法律、法规或准则制定机构的要求；会计政策的变更能够提供更可靠、更相关的会计信息。

A change in accounting policy must be applied retrospectively：追溯调整法

Retrospective application means that the new accounting policy is applied to transactions and events as if it had always been in use.

An adjustment to the opening balance of retained earnings in the statement of changes in equity.

Comparative information should be restated unless it is impracticable to do so

追溯调整法，是指对某项交易或事项变更会计政策，视同该项交易或事项初次发生时即采用变更后的会计政策，并以此对财务报表相关项目进行调整的方法。采用追溯调整法时，会计政策变更的累计影响数应包括在变更当期期初留存收益中，并调整比较财务报表相关项目。

Changes in accounting estimates

Examples of changes in accounting estimates

the residual value（残值）of non-current assets the useful lives of non-current assets the depreciation methods

warranty provisions （质保预计负债）

A change in accounting estimate should be accounted for prospectively. 未来适用法

The effects of any change in accounting estimate should be included in the income statement of the period of the change and, if subsequent periods are affected, in those subsequent periods. 如果会计估计的变更仅影响变更当期，有关估计变更的影响应于当期确认；如果会计估计的变更既影响变更当期又影响未来期间，有关估计变更的影响在当期及以后各期确认。

Correction of prior period errors

Prior period errors should be corrected retrospectively. Practice question:

A change in the estimated useful life of a depreciable asset should be reported

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a. prospectively

b. retrospectively

c. either prospectively or retroactively d. both prospectively and retroactively

Answer: a

Equipment bought by James Steam Generating Company three years ago was charged to equipment expense in error. The cost of the equipment was $100,000, with no expected salvage value, and a 10-year estimated life. James uses the straight-line depreciation method on similar equipment. The error was discovered at the end of year 3 prior to the issuance of James’ financial statements. After correction of the error, the correct carrying value of the equipment will be a. $30,000. b. $70,000. c. $80,000. d. $100,000. Answer: b

Events After the Balance Sheet Date

An event, which could be favourable or un-favourable, that occurs between the balance sheet date and the date that the financial statements are authorized for issue. 资产负债表日后事项，是指资产负债表日至财务报告批准报出日之间发生的有利或不利事项。 Adjusting event 调整事项

An event after the balance sheet date that provides further evidence of conditions that existed at the balance sheet.

调整事项是指对资产负债表日已经存在的情况提供了新的或进一步证据的事项。 Non-adjusting event 非调整事项

An event after the balance sheet date that is indicative of a condition that arose after the balance sheet date.

非调整事项是指表明资产负债表日后发生的情况的事项。

Accounting treatment

Adjust financial statements for adjusting events 调整事项应当调整资产负债表日的财务报表。

Do not adjust for non-adjusting events

非调整事项不调整资产负债表日的财务报表。

Non-adjusting events should be disclosed if they are of such importance that non-disclosure would affect the ability of users to make proper evaluations and decisions. The required disclosure is (a) the nature of the event and (b) an estimate of its financial effect.

非调整事项由于事项重大，对财务报告使用者具有重大影响，如不加以说明，将不利于

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