China Accounting Alert to all enterprises applying ASBEs. The revised standard generally maintains...
Transcript of China Accounting Alert to all enterprises applying ASBEs. The revised standard generally maintains...
This edition of China Accounting Alert provides news and updates about IFRS, financial reporting in Mainland China and EY publications.
IASB news and updates
► IASB Update for April 2019
The April 2019 issue of the IASB Update contains the IASB staff summary of the
IASB meeting held from 9 to 11 April 2019 when the board discussed:
► Amendments to IFRS 17 Insurance Contracts
► Business Combinations under Common Control
► Accounting Policies and Accounting Estimates (Amendments to IAS 8)
► Implementation matters
► Disclosure Initiative—Accounting Policies
► Research programme update
► Management Commentary
► Primary Financial Statements
► Goodwill and Impairment
► Dynamic Risk Management
May 2019
China Accounting Alert
2China Accounting Alert
Mainland news and updates
► MOF issues the revised presentation of financial
statements for general business enterprises for 2019
Regarding the phased implementation of Accounting
Standard for Business Enterprises No.21 – Leases (Cai
Kuai [2018] No.35, the “new lease standard”) starting
1 January 2019, and the implementation issues
related to Accounting Standards for Business
Enterprises (“ASBEs”), the Ministry of Finance (the
“MOF”) has issued Notice on Issuing the Revised
Presentation of Financial Statements for General
Business Enterprises for 2019 (the “Notice”). The
Notice is applicable to 2019 interim financial
statements, and financial statements for the year of
2019 and subsequent periods of non-financial
enterprises applying ASBEs.
Financial enterprises applying ASBEs should prepare
financial statements in accordance with Notice of the
Ministry of Finance on Issuing the Revised Presentation of
Financial Statements for Financial Institutions for 2018
(Cai Kuai [2018] No.36), and adjust the related items,
other than those specific to financial enterprises, based on
the presentation of financial statements required by the
Notice. Notice of the Ministry of Finance on Issuing the
Revised Presentation of Financial Statements for General
Business Enterprises for 2018 (Cai Kuai [2018] No.15)
issued by the MOF on 15 June 2018 is repealed
simultaneously.
For further details about the major changes in the
presentation of financial statements, please refer to EY
WeChat : A Farewell to Annual Financial Statements, and
Welcome to Interim Financial Statements! The Updated
Presentation of Financial Statements for 2019!
► MOF revises Accounting Standard for Business
Enterprises No.7 - Exchange of Non-Monetary Assets
In order to regulate the accounting for the exchange of
non-monetary assets and improve the quality of
accounting information, the MOF has revised Accounting
Standard for Business Enterprises No.7 - Exchange of Non-
Monetary Assets (the "revised standard"), which is
applicable to all enterprises applying ASBEs.
The revised standard generally maintains the original
measurement principle, further clarifies the scope of the
standard, standardizes the timing of recognition and
derecognition of assets received and assets surrendered,
refines the specific accounting treatment of the exchange
of non-monetary assets under different measurement
bases, and fully considers consistency among different
standards.
► For the exchange of non-monetary assets between 1
January 2019 and the effective date, adjustments
should be made in accordance with the revised
standard.
► For the exchange of non-monetary assets prior to 1
January 2019, retrospective application is not
required by the revised standard.
The revised standard will become effective starting 10
June 2019.
For further details about the main content of the revised
standard, please refer to EY WeChat: Results of Internal
Coordination of Accounting Standards for Business
Enterprises: Issuance of Revised Accounting Standard for
Business Enterprises No.7 - Exchange of Non-Monetary
Assets.
For non-financial enterprises
Non-financial enterprises that have not implemented the new financial instrument standards (1), the new revenue standard (2) and the new lease standard
Format 1 (3)
Non-financial enterprises that have implemented the new financial instrument standards, the new revenue standard and the new lease standard
Format 2 (3)
Non-financial enterprises that have implemented the new financial instrument standards, but have not implemented the new revenue standard and the new lease standard
Format 1 and Format 2 combined with adjustments
Non-financial enterprises that have implemented the new financial instrument standards and the new revenue standard, but have not implemented the new lease standard
Format 1 and Format 2 combined with adjustments
Notes:
(1) The “new financial instrument standards” refer to Accounting Standard for Business Enterprises No.22 – Financial Instruments: Recognition and Measurement (Cai Kuai [2017] No.7), Accounting Standard for Business Enterprises No.23 – Transfer of Financial Assets (Cai Kuai [2017] No.8), Accounting Standard for Business Enterprises No.24 – Hedge Accounting (Cai Kuai [2017] No.9) andAccounting Standard for Business Enterprises No.37- Financial Instruments: Presentation (Cai Kuai [2017] No.14).
(2) The “new revenue standard” refers to Accounting Standard for Business Enterprises No.14 – Revenue (Cai Kuai [2017] No.22).
(3) “Format 1” and “Format 2” correspond to Appendix 1 and Appendix 2 of the Notice, respectively.
3China Accounting Alert
► The Accounting Regulatory Department of the MOF
releases its interpretation on issues related to the
application of the Requirements on the Accounting
Treatments for VAT to Announcement on Related
Policies of Deepening the VAT Reform
Recently, the MOF, State Taxation Administration and
General Administration of Customs have issued
Announcement on Related Policies of Deepening the VAT
Reform (Announcement No.39 of the MOF, State Taxation
Administration and General Administration of Customs,
2019) (“Announcement No.39”), which stipulates that
“from 1 April 2019 to 31 December 2021, taxpayers in
the production and living service industry are allowed to
add 10% based on the input VAT deductible in the current
period to deduct the tax amount payable” (the
“Provision”). The Accounting Regulatory Department of
the MOF has released Interpretation on Issues related to
the application of the Requirements on the Accounting
Treatments for VAT to Announcement No.39. The
interpretation on issues related to the application of the
Requirements on the Accounting Treatments for VAT (Cai
Kuai [2016] No.22) to the Provision is as follows:
For taxpayers in the production and living service industry,
when acquiring assets or receiving services, VAT-related
businesses should be accounted for in accordance with
the Requirements on the Accounting Treatments for VAT;
when paying VAT, the amount payable should be debited
to “Taxes payable - Unpaid VAT” and other accounts; the
amount paid should be credited to "Cash in banks", and
the additional deduction should be credited to “Other
income”.
EY publications
► IFRS Developments Issue 147: Curing of a credit
impaired financial asset
The IFRS Interpretations Committee (IFRIC) published a
final agenda decision confirming that reversals of
impairment losses related to previously unrecognized
interest on credit-impaired financial assets must be
presented as reversals of impairment. Further details
about the final agenda decision are found in IFRS
Developments Issue 147.
► IFRS Developments Issue 148: IBOR reform: the IASB’s
proposals, part 3
On 3 May 2019, the IASB published Exposure Draft,
Interest Rate Benchmark Reform - Proposed Amendments
to IFRS 9 Financial Instruments and IAS 39 Financial
Instruments: Recognition and Measurement, providing
relief to allow hedge accounting to continue despite the
uncertainties resulting from the transition from IBOR to
risk-free rates. In IFRS Developments Issue 148, we
summarize the IASB’s proposals and share EY views.
Comments on the Exposure Draft are due by 17 June
2019.
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China Accounting Alert is our monthly executive update for Mainland China and Hong Kong on recent developments in local and international financial reporting, and related hot topics and emerging issues. China Accounting Alert is designed to help keep you one step ahead by providing easy access to the information you need, all in one place. It is not intended to be a substitute for reading the financial reporting standards or other appropriate authoritative guidance, to which reference should be made for a full understanding of the relevant subject matters.
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