外商投资企业会计制度

外商投资企业会计制度第

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Chapter 6 Fixed Assets and

Work in Progress

Article 29 Fixed assets of enterprises with foreign investment shall be accounted for separately and separately disclosed in the balance sheet. Assets

under finance leases shall be accounted for separately until ownership is transferred. Assets under operating leases shall be recorded in supporting memorandum books and shall be disclosed in the notes to the accounts. Article 30 Fixed assets shall be accounted for at cost.

The cost of fixed assets contributed by the investors represents the amount stated in contracts, agreements, the enterprise's application document for incorporation or the statement of examination and receipt of fixed assets contributed including transportation, loading and unloading expenses, insurance

and taxes payable borne by the enterprise.

The cost of fixed assets purchased represents the purchase consideration including transportation, loading and unloading expenses, insurance and taxes

payable. Cost of fixed assets manufactured and constructed by the enterprise

itself represents actual expenses incurred in the manufacturing and construction

process.

The cost of fixed assets under finance leases represents the purchase consideration stated in the contracts including transportation, loading and unloading expenses, insurance and taxes payable borne by the enterprise. Where

the purchase consideration stated in the contracts includes interest and handling

charges, that portion of the interest and handling charges shall be deducted from

the cost. Such interest and handling charges need not be accounted for separately

if the value of the fixed assets under finance leases is not substantial and the term of the lease is not long.

The cost of fixed assets donated to the enterprise represents the price of

the fixed assets determined based on the provisions set out in the second paragraph of Article 49 of these Regulations, including transportation, loading and unloading expenses, insurance and taxes payable borne by the enterprise. For

used assets, the rate of depreciation shall be estimated according to the condition of these assets.

Surplus of fixed assets on physical counts shall be determined by the replacement cost of such assets and their rates of depreciation shall be estimated according to the condition of these assets.

Expenses incurred in modifying fixed assets for the purpose of expansion, replacement, renovation or technological improvement may be included under the

cost of fixed assets.

Cost shall also include installation costs, if any, of the fixed assets.

Article 31 Fixed assets shall generally be depreciated using the straight

line method. The production or service output method may also be used where the

straight line method is not appropriate.

Depreciation of fixed assets shall generally be determined based on the cost of fixed assets and the depreciation rate set for each category of fixed assets. Depreciation rates may also be applied on an individual asset basis where the depreciation rate by category is not appropriate. The rates of depreciation of fixed assets shall be determined based on their cost, estimated residual values,

which shall generally be not less than 10% of their cost, and their expected useful lives.

Accelerated depreciation shall generally be calculated using only the double reducing balance method or sum-of-digits method.