I. Impact of "fair value change gain or loss" on enterprise profit
(1) "Fair value change gain or loss" in trading financial assets and trading financial liabilities
(2) "Gain or loss" in investment real estate measured by the fair value model (ii) "Gains and losses on changes in fair value" in investment properties measured at fair value model
(iii) "Gains and losses on changes in fair value" in derivatives
(iv) "Gains and losses on changes in fair value" in hedging "
Since the above five categories of assets and liabilities recognized and measured in the gain or loss on changes in fair value on the impact of corporate profits have certain similarities, the author on the use of fair value changes in trading financial assets and the impact on profits to discuss in detail.
The impact of fair value changes of trading financial assets on the income statement of an enterprise
(1) The specific application of "fair value changes in profit or loss" and its impact on the total profit of an enterprise
At the balance sheet date, an enterprise shall recognize the difference between the fair value of a trading financial asset or liability and its carrying amount in the current period's profit or loss, and recognize the difference in the current period's profit or loss as a loss in the current period. On the balance sheet date, an enterprise shall recognize the difference between the fair value of a financial asset or liability for trading and its carrying amount in profit or loss for the current period (gain or loss on change in fair value); when a financial asset or liability for trading is disposed of, the change in the fair value of the financial asset or liability for trading in the previous period shall be transferred to "gain or loss on change in fair value", and the difference between the disposal proceeds and the initial acquisition cost of the financial asset shall be recognized as investment income.
Example:
Thus, this article believes that the "fair value changes in profit and loss" at the end of each accounting period on the total profit of the enterprise at the end of the current period of the fair value of the asset and the end of the current period of the difference between the carrying amount of the asset; asset disposal "fair value changes in profit and loss" on the total profit of the enterprise. The effect of "gain or loss on change in fair value" on the total profit of the enterprise is the amount of change in fair value recognized in previous periods, while investment income is not directly related to the change in fair value, which is equal to the difference between the initial investment cost and the price obtained on disposal. Therefore, the effect of the disposal of the financial asset on the total profit for the year is the amount of investment income plus the unrealized loss recognized in prior years or minus the unrealized gain recognized in prior years.
(2) Impact of changes in fair value on net profit under the balance sheet liability method
According to ASBE No. 22, "Recognition and Measurement of Financial Instruments", the carrying value of a financial asset for trading purposes at the end of a certain accounting period is its fair value; and the tax law stipulates that changes in fair value are not recognized in the taxable profit or loss for the period during which the asset is held. The tax law stipulates that changes in fair value during the holding period are not recognized in taxable income, and the amount to be recognized in taxable income is calculated at the time of disposal. The tax basis of such financial assets at the end of an accounting period is the cost of acquisition, which results in the difference between the carrying value of such financial assets and their tax basis under the change in fair value, which inevitably leads to the change in income tax expense and thus has an impact on net profit.
It can be concluded that, because the change in fair value is an unrealized gain or loss, before the disposal of the asset, although the tax law is not included in the taxable income, but in the income tax accounting using the balance sheet liability method under the deferred tax assets or deferred tax liabilities, corresponding to the increase or decrease in income tax expense, which will have an impact on the net profit.
Three, "fair value changes in profit and loss" account in the use of controversy and analysis
In the previous example of the disposal of trading financial assets, we see that the amount of $ 20,000 of the change in the fair value of the previous period transferred to the "fair value changes in profit and loss " account, but not directly into the "investment income" account, both are profit and loss accounts, after the end of the balance, the impact on the current year's profit is the same. Therefore, some people suggest that the investment price and financial assets obtained by the book balance of all recorded in the "investment income" account, accounting treatment is more simple. In fact, it is not. The reasons for the use of "fair value changes in profit and loss" separate accounting are as follows:
(a) seemingly troublesome to deal with the accounts, but in fact more truly reflect the composition of the enterprise's profits
(b) to facilitate the tax checking, and accounting can be justified