中华人民共和国中外合资经营企业会计制度(英文版)

中华人民共和国中外合资经营企业会计制度(英文版)
2013-09-16 14:55:29.0  
发文单位：财政部 中华人民共和国财政部
发布日期：1985-03-04
执行日期：1985-03-04
(Promulgated on March 4, 1985 by the Ministry of Finance of thePeople's Republic of China)
Whole document
The Accounting Regulations of the People's Republic of China for
the Joint Ventures Using Chinese and Foreign Investment
(Promulgated on March 4, 1985 by the Ministry of Finance of the
People's Republic of China)
Chapter I General Provisions
Article 1
The present regulations are formulated to strengthen the accounting
work of the joint ventures using Chinese and foreign investment, in
accordance with the provisions laid down in The Law of the People's
Republic of China on Joint Ventures Using Chinese and Foreign Investment ,
The Income Tax Law of the People's Republic of China Concerning Joint
Ventures With Chinese and Foreign Investment and other relevant laws and
regulations.
Article 2
These regulations are applicable to all joint ventures using Chinese
and foreign investment (hereinafter referred to as joint ventures)
established within the territory of the People's Republic of China.
Article 3
The public finance departments or bureaus of provinces, autonomous
regions and municipalities directly under the Central Government as well
as the business regulatory departments of the State Council shall be
permitted to make necessary supplements to these regulations on the basis
of complying with these regulations and in the light of specific
circumstances, and submit the supplements to the Ministry of Finance for
the record.
Article 4
A joint venture shall work out its own enterprise accounting system in
accordance with these regulations and the supplementary provisions made by
the public finance department or bureau of the province, autonomous
region or municipality, or by the relevant business regulatory departments
of the State Council, and in the light of the specific circumstances and
submit its own system to the enterprise regulatory department, local
public finance department and tax authority for the record.
Chapter II Accounting Office and Accounting Staff
Article 5
A joint venture shall set up a separate accounting office with
necessary accounting staff to handle its financial and accounting work.
Article 6
A joint venture of large or medium size shall have a controller to
assist the president and take the responsibility in leading its financial
and accounting work. A deputy controller may also be appointed when
necessary.
A joint venture of relatively large size shall have an auditor
responsible for review and examination of its financial receipts and
disbursements, accounting documents, accounting books, accounting
statements and other relevant data and those of its subordinate branches.
Article 7
The accounting office and accounting staff of a joint venture shall
fulfill their duties and responsibilities with due care, make accurate
calculation, reflect faithfully the actual conditions, and supervise
strictly over all economic transactions, protect the legitimate rights
and interests of all the participants of the joint venture.
Article 8
Accounting staff who are transferred or leaving their posts shall
clear their responsibility transfer procedures with those who are assuming
their positions, and shall not interrupt the accounting work.
Chapter III General Principles for Accounting
Article 9
The accounting work of a joint venture must comply with the laws and
regulations of the People's Republic of China.
Article 10
The fiscal year of a joint venture shall run from January 1 to
December 31 under the Gregorian calendar.
Article 11
A joint venture shall adopt the debit and credit double entry
bookkeeping.
Article 12
The accounting documents, accounting books, accounting statements and
the other accounting records of a joint venture shall be prepared
accurately and promptly according to the transactions actually taken
place, with all required routines done and contents complete.
Article 13
All the accounting documents, accounting books and accounting
statements prepared by a joint venture must be written in Chinese. A
foreign language mutually agreed by the participants of the joint venture
may be used concurrently.
Article 14
In principle, a joint venture shall adopt Renminbi as its bookkeeping
base currency. However, a foreign currency may be used as the bookkeeping
base currency upon mutual agreement of the participants of a joint
venture.
If actual receipts or disbursements of cash, bank deposits, other cash
holdings, claims, debts, income and expenses, etc., are made in currencies
other than the bookkeeping base currency, record shall also be made in the
currencies of actual receipts or disbursements.
Article 15
A joint venture shall adopt the accrual basis in its accounting. All
revenues realized and expenses incurred during the current period shall be
recognized in the current period, regardless of whether the receipts or
disbursements are made. The revenues or expenses not attributable to the
current period shall not be recognized as current revenue or expenses,
even if they are currently received or disbursed.
Article 16
The revenues and expenses of a joint venture must be matched in its
accounting. All the revenues and relevant cost and expenses of a period
shall be recognized in the period and shall not be dislocated, advanced
or deferred.
Article 17
All the assets of a joint venture shall be stated at their original
costs and the recorded amounts are generally not adjusted whether there is
any fluctuation in their prices.
Article 18
A joint venture shall draw clear distinction between capital
expenditures and revenue expenditures. All expenditures incurred for the
increase of fixed assets and intangible assets are capital expenditures.
All expenditures incurred to obtain current revenue are revenue
expenditures.
Article 19
Accounting methods adopted by a joint venture shall be consistent from
one period to the other and shall not be arbitrarily changed. Changes, if
any, shall be approved by the board of directors and submitted to the
local tax authority for examination. Disclosure of the changes shall be
made in the accounting report.
Chapter IV Accounting for Paid-in Capital
Article 20
The participants of a joint venture shall contribute their share
capital in the amount, ratio and mode of capital contribution within the
stipulated time limit as provided in the joint venture contract. The
accounting for paid-in capital by a joint venture shall be based on the
actual amount contributed by each of its participants.
(1) For investment made in cash, the amount and date as received or as
deposited into the Bank of China or other banks where the joint venture
has opened its bank account shall be the basis for recording the capital
contribution.
The foreign currency contributed by a foreign participant shall be
converted into Renminbi or further converted into a predetermined foreign
currency at the exchange rates quoted on the day of the cash payment by
the State Administration of Foreign Exchange Control of the People's
Republic of China (hereinafter referred to as the State Administration of
Foreign Exchange Control). Should the cash Renminbi contributed by a
Chinese participant be converted into foreign currency, it shall be
converted at the exchange rate quoted by the State Administration of
Foreign Exchange Control on the day of the cash payment.
(2) For investment in the form of buildings, machinery, equipment,
materials and supplies, the amount shown on the examined and verified
itemization list of the assets as agreed upon by each participant
according to the joint venture contract and the date of the receipt of the
assets shall be the basis of accounting.
(3) For investment in the form of intangible assets, i.e.,
proprietary technology, patents, trademarks, copyrights and other
franchises, etc., the amount and date as provided in the agreement or
contract shall be the basis of accounting.
(4) For investment in the form of the right to use sites, the amount
and date as provided in the agreement or contract shall be the basis of
accounting.
The capital contributed by each participant shall be recorded into the
accounts of the joint venture as soon as received.
Article 21
The capital amount contributed by the participants of a joint venture
shall be verified by Certified Public Accountants registered with the
government of the People's Republic of China, who shall render a
certificate on capital verification, which shall then be taken by the
joint venture as the basis to issue capital contribution certificates to
the participants.
Chapter V Accounting for Cash and Current Accounts
Article 22
A joint venture shall open its deposit accounts in the Bank of China
within the territory of the People's Republic of China or the other banks
approved by the State Administration of Foreign Exchange Control or by one
of its branches. All foreign exchange receipts must be deposited with the
bank in the foreign currency deposit accounts and all foreign exchange
disbursements must be made from the accounts.
Article 23
A joint venture shall set up journals to itemize cash and bank
transactions in chronological order. A separate journal shall be set up
for each currency if there are several currencies.
Article 24
The accounts receivable, accounts payable and other receivable and
payable of a joint venture shall be recorded in separate accounts set up
for different currencies. Receivable shall be collected and payable shall
be paid in due time and shall be confirmed with the relevant parties
periodically. The causes of uncollectable items shall be investigated and
the responsibilities thereof shall be determined. Any item proved to be
definitely uncollectable through strict management review shall be written
off as bad debts after approval is obtained through reporting procedures
specified by the board of directors. No reserve for bad debts shall be
accrued.
Article 25
In a joint venture using Renminbi as its bookkeeping base currency,
its foreign currency deposits, foreign currency loans and other accounts
denominated in any foreign currency shall be recorded not only in the
original foreign currency of the actual receipts and payments, but also in
Renminbi converted from foreign currency at an ascertained exchange rate
(as certain according to the exchange rate quoted by the State
Administration of Foreign Exchange Control).
All additions of foreign currency deposits, foreign currency loans and
other accounts denominated in foreign currencies shall be recorded in
Renminbi converted at their recording exchange rates. While deductions
shall be recorded in Renminbi converted at their book exchange rates.
Differences in the Renminbi amount resulting from the conversion at
different exchange rates shall be recognized as foreign exchange gains or
losses (hereinafter referred to as exchange gains or losses ) and
included in the current income.
The recording exchange rate for the conversion of foreign currency to
Renminbi may be the rate prevailing on the day of the transaction or on
the first day of the month, etc. The book exchange rate may be calculated
by the first-in first-out method, or by the weighted average method, etc.
However, for the decrease of accounts denominated in a foreign currency,
the original recording rate may be used as the book rate. Whichever rate
is adopted, there shall be no arbitrary change once it is decided. If any
change is necessary, it must be approved by the board of directors and
disclosed in the accounting report.
The differences in Renminbi resulting from the exchange transactions
of different currencies shall also be recognized as exchange gains or
losses.
The exchange gains or losses recognized in the account shall be the
realized amounts. In case of exchange rate fluctuation, the Renminbi
balances of the foreign currency accounts shall not be adjusted.
Article 26
In a joint venture using a foreign currency as its bookkeeping base
currency, its Renminbi deposits, Renminbi loans and other accounts
denominated in Renminbi shall be recorded not only in Renminbi but also in
the foreign currency converted at the exchange rate adopted by the
enterprise. Differences in the foreign currency amount resulting from the
conversion shall also be recognized as exchange gains or losses as
stipulated in Article 25.
A joint venture using a foreign currency as its bookkeeping base
currency shall compile not only annual accounting statements in the
foreign currency but also separate accounting statements in Renminbi
translated from the foreign currency at the end of a year. However, the
joint venture's Renminbi bank deposits, Renminbi bank loans and the other
accounts denominated in Renminbi shall still be accounted for in their
original Renminbi amounts, and be combined with the other accounts
converted into Renminbi from the foreign currency. The differences between
the original Renminbi amounts of the Renminbi items and their Renminbi
amounts from currency translation shall not be recognized as foreign
exchange gains or losses, but shall be shown on the balance sheet with an
additional caption as currency translation differences .
Chapter VI Accounting for Inventories
Article 27
The inventories of a joint venture refer to merchandise, materials and
supplies, containers, low-value and perishable articles, work in process,
semi-finished goods, finished goods, etc., in stock, in processing or in
transit.
Article 28
All the inventories of a joint venture shall be recorded at the actual
cost.
(1) The actual cost of materials and supplies, containers and
low-value and perishable articles purchased from outside, shall include
the purchase price, transportation expenses, loading and unloading
charges, packaging expenses, insurance premium, reasonable loss during
transit, selecting and sorting expenses before taken into storage, etc.
The cost of imported goods shall further include the custom duties and
industrial and commercial consolidated tax, etc.
For merchandise purchased by a commercial or service type enterprise,
the original purchase price shall be taken as the actual cost for
bookkeeping.
(2) The actual cost of self manufactured materials and supplies,
containers, low-value and perishable articles, semi-finished goods and
finished goods shall include the materials and supplies consumed, wages
and relevant expenses incurred during the manufacture process.
(3) The actual cost of materials and supplies, containers, low-value
and perishable articles, semi-finished and finished goods completed
through outside processing shall include the original cost of the
materials and supplies or semi-finished goods consumed, the processing
expenses, inward and outward transportation expenses and sundry charges.
The merchandise of the commercial or service type enterprises
processed under contract with outside units shall be recorded at the
purchase price after processing, including the original purchase price of
the merchandise before processing, processing expenses and the industrial
and commercial consolidated tax attributable.
Article 29
The receipt, issuance, requisition and return of the inventories of a
joint venture shall be timely processed through accounting procedures
according to the actual quantity and shall be itemized in the subsidiary
ledger accounts with established columns for quantity and amount, so as to
strengthen the inventory control. The merchandise, materials, etc., in
transit, shall be accounted for through subsidiary ledgers and their
condition of arrival shall be inspected at all times. For those goods not
arrived in due time, the relevant department shall be urged to take
action. As to those goods that have arrived but not yet been checked or
taken into storage, their acceptance test and warehousing procedures shall
be carried out in a timely manner.
Article 30
The actual cost or original purchase price of inventories issued or
requisitioned from the store of a joint venture may be accounted for by it
under one of the following methods: first-in first-out, moving average,
weighted average, specific identification, etc. Once the accounting
method is adopted, no arbitrary change shall be allowed. In case a change
of accounting method is necessary, it shall be submitted to the local tax
authority for approval and disclosed in the accounting report.
Article 31
In the joint ventures using planned cost in daily accounting for
materials and supplies, finished goods, etc., the planned cost of those
issued from stock, shall be adjusted into actual cost at the end of each
month.
For the commercial and service type enterprises using selling price in
daily accounting for merchandise, the cost of goods sold shall be
adjusted from selling price to original purchase price at the end of a
month.
Article 32
A joint venture shall take physical inventory of its stock
periodically, at least once a year. If any overage, shortage, damage,
deterioration, etc., is found, the relevant department shall investigate
the cause and write out a report. Accounting treatment shall be made as
soon as the report is approved through strict management review and the
reporting procedures specified by the board of directors. The treatment
shall generally be completed before the annual closing of the final
accounts.
(1) The inventory shortage (minus inventory overage) and damage (minus
salvage) of materials and supplies, work in process, semi-finished goods,
finished goods, and merchandise, etc., shall be charged to the current
expenses, except the amount, if any, that should be indemnified by the
persons in fault.
(2) The net loss resulting from natural disasters shall be charged to
non-operating expenses after deducting the salvage value recoverable and
insurance indemnity.
Article 33
If there is any inventory in a joint venture to be disposed of at a
reduced price due to obsolescence, it shall be reported for approval
according to the procedures specified by the board of directors, and the
net loss on disposal shall be recognized as loss on sales. If the disposal
is not yet done before the annual closing of the final accounts,
disclosure shall be made in the annual accounting report for the actual
cost per book, the net realizable value and the probable loss thereof.
Article 34
Disclosure shall be made in the annual accounting report of a joint
venture on the actual cost per book, net realizable value and probable
loss of its inventories of which the net realizable value is lower than
the actual cost per book due to the decline of the market price.
Chapter VII. Accounting for Long-term Investment and Long-term Liabilities
Article 35
The investment of a joint venture in other units shall be accounted
for at the amount paid or agreed upon at the time of the investment, and
shall be shown on the balance sheet with a separate caption as long-term
investment .
Income and loss derived from long-term investments shall be recognized
as non-operating income or non-operating expense.
Article 36
The bank loans borrowed by a joint venture for capital construction
during its preparation period or for increasing fixed assets, expanding
its business, or making renovation and reform of its equipment after its
operation started, shall be accounted for at the amount and on the date of
the loan and shall be presented in the balance sheet with a separate
caption as long-term bank loans .
The interest expenses on the long-term bank loans incurred during the
construction period shall be charged to construction cost and capitalized
as a part of the original cost of the fixed assets; but interest expenses
incurred after the completion of the construction and the transfer of
fixed assets for operation purpose shall be charged to current expenses.
Chapter VIII Accounting for Fixed Assets
Article 37
A joint venture shall prepare a fixed assets catalogue as the basis of
accounting according to the criteria of fixed assets laid down in The
Income Tax Law Concerning Joint Ventures With Chinese and Foreign
Investment and in consideration of its specific circumstances.
Article 38
The fixed assets of a joint venture shall be grouped into five broad
categories as follows: building and structures; machinery and equipment;
electronic equipment; transport facilities (trains or ships, if any, shall
be grouped separately); and other equipment. The joint venture may further
group them into sub-categories according to the needs of its management.
Article 39
The fixed assets of a joint venture shall be recorded at their
original cost.
For fixed assets contributed as investment, the original cost shall be
the price of the assets agreed upon by all the participants of the joint
venture at the time of investment.
For fixed assets purchased, the original cost shall be the total of
the purchase price plus freight, loading and unloading charges, packaging
expenses and insurance premium, etc. The original cost of the fixed assets
that need installation work, shall include installation expenses. The
original cost of imported equipment shall further include the custom
duties, industrial and commercial consolidated tax, etc., paid as
required.
For fixed assets manufactured or constructed by the joint venture
itself, the original cost shall be the actual expenditures incurred in the
course of manufacture or construction.
Expenditures of a joint venture on technical innovation and reform
that result in the increase of the fixed assets' value shall be recorded
as increments of the original cost of the fixed assets.
Article 40
Depreciation on the fixed assets of a joint venture shall generally be
accounted for on an average basis under the straight line method.
(1) Depreciation on fixed assets shall be accounted for on the basis
of the original cost and the group depreciation rate of the fixed assets.
Depreciation rate of the fixed assets shall be calculated and
determined on the basis of the original cost, estimated residual value
and the useful life of the fixed assets.
A joint venture shall determine the specific useful lives and
depreciation rates for different groups of fixed assets according to the
minimum depreciation period and the estimated residual value of the fixed
assets as provided in The Income Tax Law Concerning Joint Ventures With
Chinese and Foreign Investment .
(2) In case a joint venture needs accelerated depreciation or change
of depreciation method for special reasons, application shall be submitted
by the joint venture to the tax authority for examination and approval.
(3) Generally, depreciation of the fixed assets of a joint venture
shall be accounted for monthly according to the monthly depreciation rates
and the monthly beginning balances of the original cost per book of the
fixed assets in use. For fixed assets put in use during a month,
depreciation shall not be calculated for the month but shall be started
from the next month. For fixed assets reduced or stopped to be used during
the month, depreciation shall still be calculated for the month and be
stopped from the next month.
(4) For the fixed assets fully depreciated but still useful,
depreciation shall no longer be calculated. For the fixed assets discarded
in advance, no retroactive depreciation shall be made either.
For the fixed assets declared scrap in advance or transferred out, the
difference between the net proceeds obtained from disposal (less
liquidation expenses) and the net value of the fixed assets (original cost
less accumulated depreciation) shall be recognized as non-operating
income or non-operating expenses of a joint venture.
Article 41
For the purchase, sales, disposal, discarding and internal transfer,
etc., of the fixed assets, a joint venture must execute accounting
routines and set up fixed assets subsidiary ledger for the relevant
accounting so as to strengthen the control of fixed assets.
Article 42
Physical inventory must be taken of the fixed assets of a joint
venture at least once a year. If any overage, shortage or damage of the
fixed assets is found, the cause shall be investigated and a report be
written out by the relevant department. Accounting treatment shall be made
as soon as the report is approved through strict management review and the
reporting procedures specified by the board of directors. Generally, this
work shall be finished before the annual closing of the final accounts.
(1) For fixed assets overage, the replacement cost shall be taken as
the original cost, the accumulated depreciation shall be estimated and
recorded according to the existing usability and wear and tear of the
assets, and the difference between the original cost and the accumulated
depreciation shall be credited to non-operating income.
(2) For fixed assets shortage, the original cost and accumulated
depreciation shall be written off and the excess of original cost over
accumulated depreciation shall be charged as non-operating expenses.
(3) For damaged fixed assets, the net loss after the original cost
deducted by the accumulated depreciation, recoverable salvage value and
the indemnity receivable from the persons in fault or from the insurance
company, shall be charged as non-operating expenses.
Chapter IX Accounting for Intangible Assets and Other Assets
Article 43
The intangible assets and other assets of a joint venture include
proprietary technology, patents, trademarks, copyrights, right to use
sites, other franchises and organization expenses, etc.
For intangible assets contributed as investment by the participants of
a joint venture, the original cost shall be the value provided in the
agreement or contract. The original cost of purchased intangible assets
shall be the amount actually paid. Monthly amortization of an intangible
asset shall be made over its useful life from the year when it come into
use. The one without specified useful life may be amortized over ten
years. The amortization period shall not be longer than the duration of a
joint venture.
Article 44
The expenses incurred by a joint venture during its preparation period
(not including expenditures for acquiring fixed assets and intangible
assets and the interest incurred during the construction period to be
included in the construction cost) may be accounted for as organization
expenses according to the provisions of the agreement and with the consent
of all participants, and shall be amortized after the production or
operation starts. The annual amortization shall not exceed 20 percent of
the expenses.
Article 45
The expenditures incurred by a joint venture on major repair and
improvement of the fixed assets held under lease shall be amortized over
the period benefited from such expenditures. However, the amortization
period shall not be longer than the lease term of the fixed assets.
Chapter X Accounting for Cost and Expenses
Article 46
The joint ventures shall maintain complete original records, practise
norm control, adhere strictly to the procedures of measuring, checking,
receiving, issuing, requisitioning and returning of goods and materials,
strengthen the control of and accounting for cost and expenses.
Article 47
All expenditures of a joint venture related to production or operation
shall be recognized as its cost or expenses.
Materials consumed by a joint venture in the course of production or
operation shall be correctly calculated and charged to cost or expenses
according to the quantity actually consumed and the price per book.
Wages and salaries of the staff and workers shall be calculated
according to the provisions in the contract and the decisions of the board
of directors on the system of wage standard, wage form, bonus and
allowance, etc., as well as the attendance records, time cards and
production records, and charged to the cost or expenses. Payment as
required on labour insurance, health and welfare benefits and government
subsidies, etc., for the Chinese staff and workers, shall also be charged
to cost or expenses as the same item as wages and salaries.
All other expenses incurred by a joint venture in the course of
production or operation shall be charged to cost or expenses according to
the amount actually incurred. The expenses attributable to the current
period but not yet paid shall be recognized as accrued expenses and
charged to the cost or expenses of the current period; however, the
expenses paid but attributable to the current and future periods shall be
recognized as deferred charges and amortized to the cost or expenses of
the relevant periods.
Article 48
A joint venture shall summarize all the expenses incurred in the
course of production or operation according to the specified cost and
expense items.
(1) The production cost items of an industrial joint venture shall
generally be classified into: direct materials, direct labour, and
manufacturing overhead. A joint venture may set up additional items for
fuel and power, outside processing cost, special instruments, etc.,
according to its actual needs.
Manufacturing overhead refers to those expenses arising from
organizing and controlling production by workshops and factory
administrative departments, including expenses for salaries and wages,
depreciation, repairs and maintenance, materials consumed, labour
protection, water and electricity, office supplies, traveling,
transportation, insurance and so on.
Selling and general administrative expenses of an industrial joint
venture shall be accounted for separately and shall not be included in the
production cost of products.
Selling expenses refer to those expenses incurred in selling products
and attributable to the enterprise, including expenses for
transportation, loading and unloading, packaging, insurance, traveling,
commission and advertising, as well as salaries and wages and other
expenses of specially established sales organs, etc.
General and administrative expenses include company headquarters
expenses (salaries wages, etc.), labour union dues, interest expense
(less interest income), exchange loss (less exchange gains), expenses of
board of directors' meetings, advisory fee, entertainment expenses, taxes
(including urban building and land tax, license tax for vehicles and
vessels, etc.), amortization of organization expenses, expenses for staff
and workers' training, research and development expenses, fee for the use
of site, fee for the transfer of technology, amortization of intangible
assets and other administrative expenses.
(2) Expenses of the commercial enterprises incurred in the course of
operation include purchasing expenses, selling expenses and administrative
expenses.
Purchasing expenses include those expenses incurred in the process of
merchandise purchase, such as expenses for transportation, loading and
unloading, packaging, insurance, reasonable loss during transit,
selecting and sorting before warehousing.
Selling expenses include those expenses incurred in the course of
merchandise sales and attributable to the joint venture, such as expenses
for transportation, loading and unloading, packaging, insurance,
traveling, commission, advertising, and salaries and wages and other
expenses of sales organs, etc.
Administrative expenses include those expenses incurred in the course
of merchandise storage, and the expenses of the enterprise administrative
departments, such as expenses for salaries and wages, depreciation,
repairs and maintenance, materials consumed, labour protection, office
supplies, traveling, transportation, insurance, labour union dues,
interest expense (less interest income), exchange loss (less exchange
gains), expenses of board of directors' meetings, advisory fee,
entertainment, taxes, fee for the use of sites, expenses for staff and
workers' training and other administrative expenses.
(3) Expenses of the service type enterprises incurred in the course of
operation include operating expenses and administrative expenses.
The operating expenses include various expenses incurred in business
operation and may be summarized separately for different kinds of service.
The administrative expenses include various expenses incurred for the
administration of the enterprise.
A joint venture other than the above mentioned types shall account for
its expenses with reference to the above provisions.
Article 49
A joint venture must distinguish the cost and expenses of the current
period from that of the ensuing period. Neither accrual nor amortization
shall be made arbitrarily. The cost and expenses of different internal
departments shall be distinguished from each other and shall not be mixed
up. An industrial joint venture shall distinguish the cost of work in
process from the cost of finished goods and the cost of one product from
that of the other. Neither the cost of work in process nor the cost of
finished goods shall be arbitrarily increased or decreased.
Article 50
A joint venture shall select the methods of costing and of expense
allocation appropriate to the characteristics of its production and
operation, its type of product and its purpose of service.
An industrial joint venture may select one or more than one of the
following methods for its cost accounting: product type costing, job order
costing, process costing, product category costing, norm costing and
standard costing.
For an enterprise adopting the norm costing or the standard costing in
accounting for product cost, the variances between actual cost and norm
cost or between actual cost and standard cost shall generally be allocated
according to the proportion of the products sold during a month and the
products held at the end of the month.
Once the cost accounting method or the cost variance allocation method
is adopted, no arbitrary change shall be allowed. If a change is
necessary, it shall be approved by the board of directors, reported to the
local tax authority for examination and disclosed in the accounting
report.
Article 51
A joint venture shall strengthen the control over cost and expenses,
establish responsibility cost system, formulate plans on cost and
expenses, control the expenditures at all times in accordance with the
plans, evaluate the condition in implementing the plans periodically,
analyze the cause of fluctuation in cost and expenses, take appropriate
actions to reduce the cost and expenses and to improve the operation and
administration of the enterprise.
Chapter XI Accounting for Sales and Profit
Article 52
The sales of merchandise, products and services of a joint venture
shall be regarded as realized after merchandise and products are shipped,
services are rendered, invoices, bills and the bills of lading issued by
shipping agency and all other shipping documents are sent to the buyers or
are accepted by the bank for collection.
Under the condition of delivery upon payment, if the sales proceeds
are received, invoices and delivery orders are sent to the buyers, sales
shall be regarded as realized whether the goods are actually issued or
not.
Article 53
All the sales of a joint venture realized in a month shall be
recognized in the month, and the relevant cost of the sales and expenses
shall be transferred simultaneously. Revenue from sales must be matched
with the cost of sales and expenses attributable. It is not allowed to
recognize merely the sales revenue and disregard the relevant cost of
sales and expenses. On the other hand, it is not allowed to charge the
cost of sales and expenses without recognizing the relevant revenue from
sales.
Article 54
The sales returns of a joint venture occurred in a month shall reduce
the sales revenue and cost of sales of the month, regardless of to which
year the returned sales belong.
Sales allowances given to the buyers through negotiation due to
unsatisfactory quality of the merchandise or products sold or due to some
other reasons shall be deducted from sales revenue of the current month.
Article 55
A joint venture shall account for its profit every month. The joint
ventures in agriculture, animal husbandry, aquaculture and other
businesses that cannot account for profit monthly shall at least do their
accounting for profit at the end of a fiscal year.
Article 56
The elements of the profit of a joint venture are as follows:
(1) The profit of an industrial joint venture includes profit from
sales of products, profit on other operation, non-operating income and
expenses.
Profit from sales of products refers to the profit derived from the
products sold by the joint venture (including finished goods,
semi-finished goods and industrial services).
Profit from other operations refers to the profit of a joint venture
derived from rendering non-industrial services (such as transportation,
etc.) and from sales of surplus materials and purchased merchandise,
etc.
Non-operating income and expenses refer to the various gains and
losses other than profit from sales of products and from other operations,
including income from investment, loss on investment, income on disposal
of fixed assets, loss on disposal of fixed assets, penalty and fines
received, penalty and fines paid, donations contributed, bad debts,
extraordinary losses, etc.
(2) The profit of a commercial enterprise includes profit from sales,
profit from other operations and non-operating income and expenses.
Profit from sales refers to the profit derived from selling
merchandise.
Profit from other operations refers to the profit derived from
operations other than sales of merchandise (such as occasional repairs,
rental, etc.)
Non-operating income and expenses refer to gains and losses other than
profit from sales and from other operations including income from
investment, loss on investment, income on disposal of fixed assets, loss
on disposal of fixed assets, penalty and fines received, penalty and
fines paid donations contributed, bad debts, extraordinary losses, etc.
(3) Profit of a service type enterprise includes net operating income
and non-operating income and expenses.
Article 57
The profit distributable by a joint venture shall be the excess of its
net profit over income tax payable and the required provisions of reserve
fund, staff and workers' bonus and welfare fund and enterprise expansion
fund. It shall be distributed to the participants of the joint venture in
proportion to their shares of contributed capital if the board of
directors decides to make the distribution.
The reserve fund may be used as provisional financial cushion against
the possible loss of a joint venture. The staff and workers' bonus and
welfare fund shall be restricted to the payment of bonus and collective
welfare for staff and workers. The enterprise expansion fund may be used
to acquire fixed assets or to increase the working capital in order to
expand the production and operation of the joint venture.
Article 58
If a joint venture carries losses from the previous years, the profit
of the current year shall first be used to cover the losses. No profit
shall be distributed unless the deficit from the previous years is made
up.
The profit retained by a joint venture and carried over from the
previous years may be distributed together with the distributable profit
of the current year, or after the deficit of the current year is made up
therefrom.
Article 59
A joint venture shall compile a profit distribution program at the end
of a year, based on the profit or losses realized in the year and the
retained profit or deficit carried over from the previous years, and
submit the program to the board of directors for discussion and decision.
The distribution shall be recorded in the books of account and recognized
in the annual final accounts after the decision is made.
Chapter XII Classification of Accounts and Accounting Statements
Article 60
The rules on the classification of accounts and on the accounting
statements of the joint ventures shall be formulated by the Ministry of
Finance of the People's Republic of China, or by the relevant business
regulatory departments and submitted to the Ministry of Finance for
examination and approval.
A joint venture may supplement or omit the stipulated ledger accounts
and the stipulated items of the accounting statements according to its
specific circumstances, provided that it does not go against the
accounting requirements and the summarization of the indexes in the
accounting statements.
Article 61
The accounts of the joint ventures shall generally be classified
according to the operation and management needs into four broad
categories: Assets, liabilities, capital, profit loss. Profit and loss
accounts may also be classified into income accounts and expenses
accounts. For industrial joint ventures, another category may be added
for cost accounts. The ledger accounts of a joint venture shall be coded
according to their classification.
Article 62
The accounting statements of a joint venture shall include:
(1) Balance sheet;
(2) Income statement;
(3) Statement of changes in financial position;
(4) Relevant supporting schedules.
A joint venture may add additional information in its accounting
statements after it is approved by all its participants, in order to meet
the need of the foreign participant's head office in consolidation of
financial statements.
Article 63
When a joint venture with subsidiary enterprises combines its
accounting statements with those of its subsidiaries, its funds
appropriated to and its current accounts with its subsidiaries shall be
offset against the corresponding items in the accounting statements of the
subsidiaries.
Article 64
On submitting its annual accounting statements, a joint venture shall
attach a descriptive overview of its financial condition, primarily
explaining:
(1) condition of production and operation;
(2) condition of realization and distribution of profit;
(3) condition of changes in capital and its turnover;
(4) condition of foreign exchange receipts and disbursements and their
equilibrium;
(5) condition of the payment of industrial and commercial consolidated
tax, income tax, fee for the use of site and fee for the transfer of
technology;
(6) condition of overage, shortage, deterioration, spoilage, damage
and write-off of different properties and supplies;
(7) other issues necessary for disclosure.
On submitting its quarterly statements, the joint venture shall also
explain special conditions, if any.
Article 65
The quarterly and annual accounting statements of a joint venture
shall be submitted to each participant of the joint venture, local tax
authority, the relevant business regulatory department of the joint
venture and the public finance department at the same level. The annual
accounting statements shall also be submitted to the original examination
and approval authority.
The quarterly accounting statements of a joint venture shall be
submitted within 20 days after the end of each quarter, and the annual
accounting statements shall be submitted together with the audit report
made by the Certified Public Accountants within four months after the end
of a year.
Article 66
The accounting statements of a joint venture shall be examined and
signed by its president and controller and shall be under the seal of the
joint venture.
Chapter XIII Accounting Documents Accounting Books
Article 67
A joint venture must acquire or fill out original documents for every
transaction occurred. All the original documents must carry faithful
contents, evidences of all the required procedures and accurate figures.
Original documents from an outside unit must be signed and sealed by the
unit. The original documents shall be verified and signed by the head of
the department and the person responsible for handling the transaction.
A joint venture shall check and inspect the original documents
seriously. Any falsified or altered original document, or any fraudulent
application or request or other similar events must be rejected and
reported to the relevant party. The original documents with incomplete
contents, insufficient evidences of required procedures or inaccurate
figures shall be returned, amended or refilled. Only the original
documents examined and proved correct can be taken as the basis for
preparing accounting vouchers.
Article 68
The accounting vouchers of a joint venture include receipt voucher,
payment voucher, and transfer voucher. All vouchers must be filled out
with required contents and can be taken as the basis in bookkeeping only
after signed by the prepare, the designated verifier and the chief officer
of the financial and accounting office. A receipt or payment voucher shall
also be signed by the cashier.
Each kind of the accounting vouchers shall be filed according to its
sequential number and bound into books monthly together with the original
documents attached thereto, and shall be kept in safety without any loss
or damage. For the important documents concerning claims and debts that
need separate safe-keeping, cross reference shall be made on the original
documents of the transaction and on the related vouchers.
Article 69
A joint venture shall number sequentially all documents issued to the
outside, and retain its duplicate copy (or copies) or the stub. An
original of such document with clerical error or withdrawn for
cancellation shall be kept together with the duplicate or stub of the same
sequential number. If the original copy is missing or unable to be
recovered, the reason shall be noted on the duplicate or stub.
Article 70
All the blank forms of important documents, such as check books, cash
receipts, delivery orders, etc., shall be registered in a special
registration book by the financial and accounting office. Requisition of
those blank forms shall be approved by the chief officer or a designated
person of the financial and accounting office, and the person making the
requisition shall sign on the registration book for receiving the forms.
Article 71
A joint venture shall set up three kinds of primary accounting books,
namely, journals, general ledger and subsidiary ledgers, as well as
appropriate supplementary memorandum books.
All the books shall be kept with complete records, accurate figures,
clear description and prompt registration, on the basis of the examined
original documents and vouchers or summaries of vouchers that are proved
correct.
No record in the books of a joint venture shall be scraped, mended,
altered or eliminated by correction fluid. When an error is made,
amendment shall be made by crossing off the error or by preparing
additional vouchers according to the nature and circumstances of the
error. When the crossing method of amendment is used, the person making
the correction shall sign on the place of amendment.
Article 72
A joint venture keeping its accounts by electronic computer shall
maintain properly its accounting records stored in or printed out by the
computer and shall regard such records as accounting books. The tapes,
discs, etc., shall be kept and no deletion shall be allowed unless the
records in them are printed out in visible form.
Chapter XIV Audit
Article 73
A joint venture shall engage the Certified Public Accountants
registered with the government of the People's Republic of China to audit
its annual accounting statements and the books of account of the year and
to issue an auditor's report, according to the provisions of The Income
Tax Law Concerning Joint Ventures With Chinese and Foreign Investment .
Article 74
Each participant of a joint venture may audit the accounts of the
joint venture. The expenses thereon shall be paid by the participant
making the audit. Any problem noted in the audit that needs to be resolved
by the joint venture shall be submitted to the joint venture in a timely
manner for discussion and resolution.
Article 75
A joint venture shall furnish its auditors with all the documents,
books and other relevant data as needed by them. The auditors shall be
responsible for maintaining confidentiality.
Chapter XV Accounting Files
Article 76
The accounting files of a joint venture, including accounting
documents, accounting books, accounting statements, etc., must be
appropriately kept within the territory of the People's Republic of China.
No loss nor spoilage shall be allowed.
Article 77
The annual accounting statements and all other important accounting
files relevant to the rights and interests of all the participants of a
joint venture, such as joint venture agreement, joint venture contract,
articles of association of the joint venture, resolutions of the board of
directors, investment appraisal list, certificate on capital verification,
auditing report of the Certified Public Accountants, long term economic
contracts, etc., must be kept permanently. General accounting documents,
accounting books and monthly and quarterly accounting statements shall be
kept for at least 15 years.
Article 78
If the accounting files need to be destroyed after the expiration of
the retention period, an itemized list of the files to be destroyed shall
be prepared and reported to the board of directors, business regulatory
department and tax authority for approval. No files can be destroyed
unless such list is approved. The list of destroyed accounting files must
be kept permanently.
Chapter XVI Dissolution and Liquidation
Article 79
When a joint venture declare dissolution and goes into liquidation on
or before the expiration of the joint venture contract, a liquidation
committee shall be formed to conduct an overall check of the assets of the
joint venture and its claims and debts, to prepare a balance sheet and a
detailed list of assets, to suggest a basis for the valuation and
calculation of the assets and to formulate a plan for liquidation. After
the approval is obtained through reporting to the board of directors for
its discussion, the liquidation committee shall make disposal of the
assets, collect the claims, pay taxes and clear debts, and resolve all
remaining problems appropriately.
Article 80
The liquidation expenses of a joint venture and the remuneration to
its liquidation committee members shall be given priority in making
payments from the existing assets of the joint venture.
Article 81
The net liquidation income, i.e., the liquidation income in the
process of the liquidation of a joint venture less the liquidation
expenses and various liquidation losses, shall be dealt with as the profit
of the joint venture.
Article 82
The assets of a joint venture left over after the clearance of all its
debts shall be distributed among the participants of the joint venture
according to the proportion of each participant's investment contribution,
unless otherwise provided by the agreement, contract or articles of
association of the joint venture.
Article 83
The accounting statements on dissolution and liquidation of a joint
venture shall be valid only after an examination is made and a certificate
is issued by the Certified Public Accountants registered with the
government of the People's Republic of China.
Article 84
After the dissolution of a joint venture, its accounting books and all
other documents shall be left in the care of the Chinese participant.
Chapter XVII Other Provisions
Article 85
The present regulations are formulated by the Ministry of Finance of
the People's Republic of China. If there is any change in the laws,
regulations and other relevant provisions of the People's Republic of
China on which these regulations are based, the new provisions shall
govern. If the present regulations need corresponding amendment, it shall
be made by the Ministry of Finance of the People's Republic of China.
Article 86
For the joint ventures established in the special economic zones, if
there are special provisions in the laws or regulations adopted by the
National People's Congress of the People's Republic of China or its
Standing Committee, or by the State Council, such provisions shall be
followed.
Article 87
The right to interpret these regulations resides in the Ministry of
Finance of the People's Republic of China.
Article 88
The present regulations shall be implemented on and after July 1,
1985.
财政部 中华人民共和国财政部