Ministry of Finance, Enterprise Accounting Guidelines - Fixed Assets

Issued: 21 November 2001
Effective: 1 January 2002
Applicability: The Guidelines are not applicable to the initial valuation of fixed assets acquired in mergers of enterprises or biological assets associated with forestry and husbandry (Item 2). They shall not be applied retroactively to fixed assets acquired prior to the effective date of the Guidelines other than provisions made for their devaluation (Item 34).

Main contents: These Guidelines concern the accounting methods for, and information disclosure in connection with, fixed assets. It is provided that a fixed asset is recognized only if its economic benefits are likely to flow to the enterprise concerned and its cost can be measured reliably (Item 4). Fixed assets shall be booked at cost (Item 7). However, fixed assets injected as investment shall be booked at such value as agreed by the investors, and fixed assets acquired in financial leasing, debt restructuring or non-monetary transaction shall be valued in accordance with the relevant Enterprise Accounting Guidelines (Items 10 to 13). Depreciation shall be charged against all fixed assets except for those fully depreciated and land booked separately (Item 17). At the option of the enterprise, depreciation may be determined on age-life, working-hours, double-declining-balance or sum-of-years-digits basis (Item 20). The recoverable value of each fixed asset shall be calculated to determine whether devaluation has occurred if a material change has occurred to the market price of the fixed asset, the business environment of the enterprise or the interest rate environment (Item 27). Provisions may be made for any devaluation, and such provisions may be entered into the account of current losses and gains (Item 28). The enterprise shall disclose information relating to its fixed assets, including their classification, pricing method, depreciation method, quantity changes and provisions for their devaluation and the book values of fixed assets that are idle for the time being or already fully depreciated or obsolete and pending disposal (Item 33).