Year: 2015
Type: conference-paper
Abstract: As an outcome of financial innovation, transaction monetary assets have internal and natural relationship with the long-term equity investment. Equity is the part of the former, but the whole of the latter. This paper analyzes the differences between transaction monetary assets and long-term stock ownership from five aspects. The accounting method is different with the different investment purpose. In conclusion, it is found that accounting calculation is decided by the goal of investment in both transaction monetary assets and long-term stock ownership investment, so accounting calculation will be more accurate if the goal of investment is certain beforehand. KEYWORD: Equity; perspective; Transaction monetary assets; Long-term stock ownership investment International Conference on Social Science, Education Management and Sports Education (SSEMSE 2015) © 2015. The authors Published by Atlantis Press 1518 from distinct properties of assets. Transaction monetary assets are current asset; its liquidity ranks only next to monetary capital. Long-term stock ownership investment is non-current assets held for more than one year with many restrictive terms in dealing it. The former is a kind of financial assets, which is a flexible financial instrument. Its characteristics lies in strong ability of liquidity, speedy financing, public offer in secondary market, convenient measurement according to fair value, flexible and easy management. Impairment tests and allowance for assets depreciation reserves are not required. The measurement of changes in assets and income is realized by merely changing in fair value. Transaction monetary assets include different kinds of investments and a lot of family members in content. But the comparison in equity ingredients is made between them based on their different investments. As a result, it can show the active innovation of internet finance and market for stock allocation. Nowadays, with the rapid development of internet finance and communication technology, Transaction monetary assets are popular among a lot of investors for its flexibility, convenience and efficiency. Long-term stock ownership investment shows the traditional mode of ownership investment, which has a long investment cycle, single stable objective and positioning. In spite of market risk and industry life cycle, it regards investment as a long-term undertaking. From the perspective of assets classification, Long-term stock ownership investment belongs to non-current assets, capital equity investment and long-term investment assets. Its investment goal is to control the process of production, management, decision, and make significant influences on the invested entity. The objective of Long-term stock ownership investment can be divided into four kinds according to different contents: subsidiaries whose share holding ratio is more than 50%, joint ventures whose ratio is 50%, joint ventures whose ratio is above 20% (including) and below 50%(not included) and equity investment enterprise whose ratio is less than 20%. 3 DIFFERENT INITIAL MEASUREMENT AND TAX MANAGEMENT Different investment objective and asset nature determine the distinction in initial measurement and tax management. When obtained the Transaction monetary assets, the transaction fees of the obtained price should be processed as investment income. Because the transaction fees are regard as short-term profit. Cash dividend and interests declared when buying, for the nature of payment in advance, should accounted for as dividends receivable or interests receivable. When received as get back payment in advance, we should be accounted as bank deposit or other monetary capital-deposited investment fund. Because the Transaction monetary assets has quoted in open market, when obtained it should be measured by its fair value, accounted by its initial investment cost. The long-term quality of Long-term stock ownership investment determines that the related taxes of the obtained price should be counted in the initial cost no matter cost method or equity method is used. The cash dividends which declared but not yet issued, included in the payable price, should be accounted for as dividends receivable and accounted for as bank deposit directly, not for the cost of Longterm stock ownership investment when the actual payment is received,. Through cost accounting, Long-term stock ownership investment is merging the Long-term stock ownership investment and the cost should be counted in the initial cost of investment. In other words, whether or not the paid purchase cost equals to the deserved proportion according to the amount of their shares, it should be counted in the initial cost. On the equity method, the purchase cost which is initially paid should exceed fair proportion of Long-term stock ownership investment which is acceptable for the investee and initial investment is counted in investment cost. If the purchase cost which is initially paid is below the identifiable fair proportion of Long-term stock ownership investment in investee, the amount of shares in investee is counted in initial investment cost of Long-term stock ownership investment with the excessive part as a part of non-operating income. 4 DIFFERENT MEASUREMENT IN HOLDING PERIOD The dividends or profits, distributed by the invested entity while the Transaction monetary assets are held, should be counted in the account of dividends receivable or interest receivable. As investment income processing. At the end of accounting period, Transaction monetary assets are measured by fair value with asset impairment set aside. Yet the difference between fair value and the book balance of the debt to be restructured are handled as changes in the fair value of Transaction monetary assets. Its book value of assets and changes of profit and loss are adjusted by changing fair value profit and loss. In order to ensure that accounting record agrees with actual situation at the end of accounting period, the changes in fair value should be made timely for the book value of Transaction monetary assets may be above or below fair value. With the cost method of Long-term stock ownership investment, the accounting is not processed no matter how much profit or loss the
Subfield: Accounting
Domain: Social Sciences
Open Access status: hybrid
OpenAlex ID: W2253464640