How To Deal With The Investment Real Estate Income Tax Measured By Fair Value?

Investment real estate refers to the real estate held for rent or capital appreciation or both.

It mainly includes the land tenure, the land use right and the rental buildings that have been held and ready for increment.

In general, enterprises should adopt cost mode to carry out subsequent measurement of investment real estate, and fair value can also be used for subsequent measurement of investment real estate.

However, the same enterprise can only adopt one mode to carry out subsequent measurement of all investment real estate and not adopt two measurement modes at the same time.

The following measurement of investment real estate should be noted:

1, the measurement model of investment property of an enterprise must not be changed arbitrarily once it has been determined.

2, the conversion from the cost mode to the fair value mode should be handled as an accounting policy change, and the initial retained earnings (undistributed profits) should be adjusted during the change of the fair value and the book value when the measurement mode is changed.

3, the investment real estate that has been measured by the fair value model must not be converted from the fair value mode to the cost mode, that is, irreversible.

4. If the fair value method is adopted for subsequent measurement, the depreciation value of the investment real estate or amortization shall not be adjusted. The book value should be adjusted on the basis of the fair value of the investment real estate on the balance sheet date. The difference between the fair value and the original book value shall be recorded in the profit and loss during the current period (the profit and loss of the fair value change).

The rental income derived from investment real estate is recognized as other business income.

The fair value model is not used to carry out the impairment test for the investment real estate.

5, according to the provisions of the accounting standards for Enterprises No. eighteenth - income tax, in the case of calculating the income tax by the balance sheet liability method, enterprises should generally calculate the income tax on each balance sheet date.

Hongchang company is a real estate development company.

The fair value model is used for subsequent measurement.

(1) in January 1, 2015, Hongchang purchased a street building which has reached a predetermined level of use with a total price of 400 million yuan.

The total area of the street building is 20 thousand square meters, the unit price per square metre is 20 thousand yuan, the estimated service life is 50 years, and the net residual value is expected to be zero.

Hongchang company plans to rent the street building outside.

(2) in 2015, Hongchang company rented the above street buildings.

The income is 10 million yuan, and the cost is incurred (excluding depreciation 2 million yuan).

Due to changes in the market, Hongchang company sold 20% of the total area of the street building, earning 84 million yuan, and sold the street building in December 31, 2015 for the pfer of property.

In December 31, 2015, the fair value of the street building was 22 thousand yuan per square metre.

Other information:

All revenues and expenditures of Hongchang company are settled by bank deposits.

According to the tax law, when calculating the current income tax, the investment real estate held by the investor can be deducted in accordance with the purchase cost and the depreciation amount calculated on the basis of the average life expectancy of 50 years from the date of purchase to the time of disposal.

The change does not include the amount of taxable income; when the actual disposal is taken, the cost of disposal is deducted from its historical cost minus the difference of the taxable income after the depreciation calculated according to the tax law, and the income tax rate applicable to Hongchang company is 25%.

Hongchang company does not have any other income or cost in the current period. The 2 million yuan expenses incurred in the current period can be deducted before tax. There is no loss or other temporary differences.

Other related taxes and charges other than income tax are not considered.

Request (1) prepare honghang company in January 1, 2015 and December 31st and investment real estate purchase, fair value change, rental, sale related entries.

It requires (2) to calculate the book value, tax base and temporary difference of the investment real estate in December 31, 2015.

It requires (3) to calculate the current income tax of Hongchang company in 2015, and to prepare an entry entry related to the recognition of income tax expenses.

Case analysis:

(1) prepare the entry of Hongchang company in January 1, 2015 and December 31st related to the purchase of investment real estate, fair value change, rental and sale.

In January 1, 2015, Hongchang company purchased 400 million yuan for the street building.

Borrow: investment real estate 40000

Loan: bank deposit 40000

In December 31, 2015, the fair value of the street buildings increased to 440 million yuan (=2.2 million square meters x 20 thousand square meters), and appreciated 40 million yuan.

The remaining 80% part of the real estate sector:

Borrow: investment real estate 3200

Loan: fair value change gains and losses 3200

Hongchang company achieves rental income and cost:

Borrow: bank deposit 1000

Loan: other business income 1000

Borrow: other business cost 200

Loan: bank deposit 200

The accounting entries of Hongchang company in December 31, 2015 for the sale of investment real estate are as follows:

Borrow: bank deposit 8400

Loan: main business income 8400

The main business cost is 8000 (40000 * 20%).

Fair value change gains and losses 800 (4000 * 20%)

Loans: investment real estate 8800 (44000 x 20%)

(2) calculate the book value, tax base and temporary difference of the investment real estate in December 31, 2015.

The book value of the remaining part of the street building is 352 million yuan =44000 * 80%.

The tax base for the rest of the street building is 313 million 600 thousand yuan = (40000 - 40000/50) * 80%=39200 * 80%

Temporary difference =35200-31360=3840 (10000 yuan)

(3) calculate the current income tax of Hongchang company in 2015, and compile an entry entry related to the recognition of the income tax expense.

The current income tax of Hongchang company is as follows:

(taxable income - deductible cost) * applicable tax rate

= (sales revenue - selling cost + rental income - cost - depreciation) * * 25%= (8400 – 39200 x 20%+1000 – 200-40000/50) x 25%= (8400 – 7840+800-800) x 25%=560 x 25%=140 (10000 yuan)

Deferred income tax liabilities =3840 * 25%=960 (10000 yuan)

Income tax related entries are as follows:

Borrow: income tax expense 1100

Loan: tax payable - income tax payable 140

Deferred income tax liability 960