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The New Borrowing costs criteria for the performance of listed companies

Author: DiXiaoZuo From: www.yourpaper.net Posted: 2010-04-05 01:00:13 Read:
[Abstract] In this paper, based on comparative analysis of old and new borrowing costs accounting standards discussed borrowing costs in the revised guidelines for major changes in its implementation of the impact of the criteria on the performance of listed companies, to help users of accounting information is more profound understanding of enterprise-related statements and information to make the right investment decisions.
[Keywords] borrowing costs criteria; change; listed companies; impact

In order to adapt to the development of the market economy as well as to promote the need for Accounting Internationalization in China, 2006 China promulgated the new accounting standards. "Accounting Standards for Business Enterprises No. 17 - Borrowing costs (referred to as the new borrowing cost guidelines), compared with 2001," Enterprise Accounting Standards - Borrowing costs "(the old borrowing costs criteria) in borrowing costs should be capitalized of the range of assets and borrowings range, as well as the determination of the amount of borrowing costs capitalized revised and restructured. Listed company in 2007 after the implementation of the new accounting standards, is bound to have a greater impact on its financial position and operating results.

First, the main features of the new borrowing cost guidelines

(A) the scope of application of the guidelines of the new borrowing costs
The borrowing costs enterprises to borrow funds to pay the cost of borrowings and interest and other related costs, including interest on borrowings, amortization of premium and discount, ancillary expenses and foreign currency borrowings, exchange differences. The specific scope, new borrowing costs criteria, not only to govern the borrowing costs incurred in the real estate product development process, but also need to go through quite a long time to build inventory assets available for use or sale or production activities in order to achieve borrowing costs incurred are the norm, while the "finance charges in respect of finance leases included in the" Accounting Standards for Business Enterprises - leasing norms; while the old borrowing costs Standard does not deal "finance charges in respect of finance leases" and " borrowing costs incurred in the real estate product development process. "
(B) the borrowing costs to be capitalized on the range of assets and borrowings range
Borrowing costs standards require assets eligible for capitalization in addition to fixed assets should be capitalized, also include the need to go through quite a long time of the acquisition, construction or production to reach can use or sale, real estate and inventory of the state's investment, etc.; The borrowing includes not only specific borrowing for general borrowings for the acquisition, construction or production of qualifying assets capitalized conditions should also calculate the amount of interest that should be capitalized. , The new guidelines specifically borrowings sums borrowed specifically for the acquisition, construction or production of assets eligible for capitalization, borrowing generally refers to other borrowers outside the specific borrowing. Borrowing costs while the old borrowing costs guidelines stipulates that only enterprise in the purchase of fixed assets or construction process of borrowing costs to be capitalized in the case of qualified; occurred in other assets (such as inventories, intangible assets) You can not be capitalized. In other words, the assets should be capitalized the old borrowing costs required by the guidelines is of fixed assets should be capitalized borrowing range of specific borrowings.
(C) to determine the amount of borrowing costs capitalized
1. The amount of capitalized interest (including amortization of premiums and discounts) to determine
Old borrowing costs standard requires the capitalization of interest charges first must be specific borrowings; followed its merely limited to interest expense has been actually used for the acquisition or construction of fixed assets on specific borrowings. Specific borrowings and interest began capitalized along with three conditions, it should reach a predetermined fixed assets before they can use the state in determining the amount of capitalization, capitalization of interest occurred in the acquisition or construction of fixed expenditures linked assets, how much spending and spending commitments to the length of the period of the borrowing costs will directly affect the amount of capitalized interest, the interest of each accounting period capitalized amount equal to the weighted average number of cumulative expenditures to when the end of the period for the acquisition or construction of fixed assets capitalization rate of the plot.
The new Borrowing costs standard requires the capitalization period "for the acquisition, construction or production of qualifying assets capitalized conditions specifically borrowed loans should be based on the current actual interest costs of specific borrowings, less unused borrowing funds deposited The bank's interest income or the amount determined after the temporary investment of investment income, the amount is the concept of a net interest expense, it actually reflects the specific borrowings real interest burden. "And a general borrowing for the acquisition, construction or production of assets eligible for capitalization, enterprise should be based on the weighted average asset disbursement multiplied by the cumulative capital expenditure over the special borrowing occupied the general borrower's capitalization rate calculated to determine the general borrowing the amount of interest that should be capitalized. "for the acquisition, construction or production of assets eligible for capitalization taking up general borrowing, you need to calculate the amount of interest to be capitalized on the general borrowing. This amount is calculated and determined in accordance with the capitalization rate multiplied by the related assets expenditures (spending the weighted average number of accumulated expenditures for the asset over the assets of the special borrowing). Which the capitalization rate should be the weighted average interest rate of the general borrowing, which is calculated as follows: the weighted average interest rate of the general borrowing = (occupied by the current actual interest of the general borrowing) (general loan principal occupied by the weighted average number) .
In addition, amortization of discounts or premiums on borrowings exist, the cost of new borrowing guidelines provides borrowers a premium or discount, it shall be determined in accordance with the effective interest method, the amortization of the discount or premium amount of each accounting period should adjust interests in each period amount; However, in accordance with the provisions of the guidelines for the amount of the old borrowing costs, either using the effective interest method, using the straight-line method.
Ancillary costs capitalized and the amount
Borrowing costs under the old guidelines, Ancillary costs incurred due to the arrangement of specific borrowers, belonging to happen before the acquisition or construction of fixed assets to achieve the intended use should be capitalized when incurred as bank borrowings fee, commitment fee and issue bond fees, etc.; relatively small amounts of auxiliary costs, can also be recognized as an expense in the period occurred. In accordance with the guidelines of the new borrowing costs, specific borrowings Ancillary costs incurred in the acquisition, construction or production of assets eligible for capitalization reached that occurred prior to the intended use or sale, shall be capitalized according to the amount of its occurrence occurs, included in the cost of assets eligible for capitalization; eligible for capitalization in the acquisition, construction or production of assets for their intended use or sale, it should be based on time in the event of the actual amount is recognized as an expense and included in the current profit or loss. Auxiliary general borrowing costs should be based on the actual amount is recognized as an expense in profit or loss occurs. New borrowing cost guidelines based on the importance of the principle is not a small amount of auxiliary costs be expensed provisions.
3 foreign currency borrowings capitalized and the amount of the exchange differences
Basically the same as the old and new borrowing cost guidelines for capitalization of exchange differences determining the amount of the provisions of foreign currency borrowings. Exchange differences is the difference between the amount of functional currency and the exchange rate of foreign currency borrowings of principal and interest at the end of the original book recording currency balance, and with the guidelines of new borrowing costs should be capitalized foreign currency borrowings of assets expand the scope of the exchange differences are debited or credited to the subjects not only "construction in progress" should include "cost of production" and "development costs".

Second, the new borrowing cost guidelines on the performance of listed companies

In January 2007, China's listed companies have been fully implemented a new corporate accounting standards. On the criteria in terms of borrowing costs, due to the many changes in the assets should be capitalized borrowing range, and the capitalization of borrowing costs in determining the amount, resulting in a listed company's assets and costs on the measurement of the difference, and thus its financial condition and results of operations.
(A) the implementation of the guidelines of the new borrowing costs to improve the financial condition of the listed companies
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