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TABLE OF CONTENTS CHAPTER I GENERAL PROVISIONS CHAPTER II RECOGNITION AND MEASUREMENT CHAPTER III DISCLOSURE CHAPTER I GENERAL PROVISIONS Article 1. For the purpose of regulating the recognition and measurement of exchange of non-monetary assets, and disclosure of the relevant information, these standards are formulated in accordance with the Accounting Standards for Enterprises-Basic Standards. Article 2. The "exchange of non-monetary assets" refers to the exchange of non-monetary assets between both parties, mainly including the transactions of inventories, fixed assets, intangible assets and long-term equity investment. Such an exchange involves no or little monetary assets (namely "boot"). The "monetary assets" refer to the cash held by enterprises and the assets to be received in fixed and determined amounts of currency, including cash, bank deposits, accounts and notes receivable, and debt investments to be held to maturity. The "non-monetary assets" refers to the assets other than monetary assets. Article 3. Where an exchange of non-monetary asset simultaneously satisfies the following conditions, the cost of a received asset shall be its fair value plus the relevant payable taxes and the difference between the fair value and the carrying amount of the surrendered asset shall be recorded in the profits and losses of the current period: (1) The exchange is commercial in nature; and (2) The fair value of the received asset or surrendered asset can be reliably measured. If the fair value of both the received asset and surrendered asset can be reliably measured, the fair value of the surrendered asset shall be the basis for the determination of the cost of the received asset, unless there is any exact evidence showing that the fair value of the received asset is more reliable. CHAPTER II RECOGNITION AND MEASUREMENT Article 4. An exchange of non-monetary assets, which meets any of the following conditions, is commercial in nature: (1) The future cash flow of the received asset is conspicuously different from that of the surrendered asset in respect of risk, time and amount; and (2) The current value of the expected future cash flow of the received asset is different from that of the surrendered asset, and the difference between them, in comparison with the fair values of the received asset and the surrendered asset, is very significant. Article 5. When determining whether or not an exchange of non-monetary assets is commercial in nature, an enterprise shall pay attention to whether or not the parties to the transaction are connected parties. The existence of the relationship between connected parties is likely to cause that a non-commercial exchange of non-monetary assets is not commercial in nature. Article 6. Where any exchange of non-monetary assets does not simultaneously meet the conditions as prescribed in Article 3 of these Standards, the carrying amount and the relevant payable taxes of the surrendered assets shall be the cost of the received asset without recognizing any profits and losses. Article 7. If an enterprise treats the fair value and the relevant payable taxes as the cost of the received asset and if a boot is incurred, the boot shall be accounted for according to the following circumstances, respectively: (1) The enterprise, which pays the boot, shall record the difference between the cost of the received asset and the sum of the carrying amount of the surrendered asset plus the paid boot and the relevant payable taxes in the profits and losses of the current period; or (2) The enterprise, which receives the boot, shall record the difference between the cost of the received asset plus the received boot and the carrying amount of the surrendered asset plus the relevant payable taxes in the profits and losses of the current period. Article 8. If the enterprises treat the carrying amount of the surrendered asset and the relevant payable taxes as the cost of the received asset and if a boot is incurred, the boot shall be accounted for according to the following circumstances, respectively: (1) The enterprise, which pays the boot, shall treat the result of the carrying amount of the surrendered asset plus the paid boot and the relevant payable taxes as the cost of the received asset without recognizing the profits and losses; or (2) The enterprise, which receives the boot, shall treat the result of the carrying amount of the surrendered asset minus the received boot and plus the relevant payable taxes as the cost of the received asset without recognizing the profits and losses. Article 9. Where an exchange of non-monetary assets simultaneously involves several assets, the cost of each received asset shall be determined according to the following circumstances, respectively: (1) If the exchange of non-monetary assets is commercial in nature and if the fair value of the received assets can be reliably measured, the cost of each received asset shall be determined by allocating the total cost of the received assets on the basis of the proportion of the fair value of each received asset in the total fair value of the received assets; or (2) If the non-monetary asset exchange is not commercial in nature, or if it is commercial in nature, but the fair value of the received assets can not be reliably measured, the cost of each received asset shall be determined by allocating the total cost of the received assets on the basis of the proportion of the original carrying amount of each received asset in the total carrying amount of the received assets. CHAPTER III DISCLOSURE Article 10. An enterprise shall, in the notes, disclose the following information relating to non-monetary transactions: (1) The type of the received asset and surrendered asset; (2) The method for the determination of the received assets; (3) The fair value of the received asset and surrendered asset, as well as the carrying amount of the surrendered asset; and (4) The recognized profits and losses of the exchange of non-monetary assets. |
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