Ministry of Finance, Enterprise Accounting Guidelines - Non-monetary Transactions (Revised)

Issued: January 18 2001
Effective: January 1 2001
Applicability: For the purposes of these Guidelines, "non-monetary transaction" means the exchange of non-monetary assets involving no or a small amount of monetary assets (as shortage cover), and "non-monetary assets" include inventory, fixed assets, intangible assets, equity investments and bonds not intended to be held to maturity (Section Four). These Guidelines do not apply to the non-monetary transaction involved in a merger of enterprises (Section Three). However, they have retrospective effect on prior non-monetary transactions treated with different accounting methods (Section Nine).

Main contents: This set of Guidelines is primarily concerned with the book value of the assets involved in non-monetary transactions. They provide that the value of an asset acquired in a non-monetary transaction shall be determined on the basis of its original book value plus related payable taxes and charges (Section Five). Where shortage cover is involved, for the paying party, the formula shall be: the book value = the original book value + shortage cover + related payable taxes and charges; and for the receiving party, the formula shall be: the book value = original book value - (shortage cover / fair value) x original book value + related payable taxes and charges (Section Six).

clp reference:3100/01.01.18(4)promulgated:2001-01-18effective:2001-01-01