This edition of China Accounting Alert provides news and updates about IFRS, financial reporting in Mainland China and EY publications.

IASB news and updates

► IASB Update for April 2019

The April 2019 issue of the IASB Update contains the IASB staff summary of the

IASB meeting held from 9 to 11 April 2019 when the board discussed:

► Amendments to IFRS 17 Insurance Contracts

► Business Combinations under Common Control

► Accounting Policies and Accounting Estimates (Amendments to IAS 8)

► Implementation matters

► Disclosure Initiative—Accounting Policies

► Research programme update

► Management Commentary

► Primary Financial Statements

► Goodwill and Impairment

► Dynamic Risk Management

May 2019

China Accounting Alert

2China Accounting Alert

Mainland news and updates

► MOF issues the revised presentation of financial

statements for general business enterprises for 2019

Regarding the phased implementation of Accounting

Standard for Business Enterprises No.21 – Leases (Cai

Kuai [2018] No.35, the “new lease standard”) starting

1 January 2019, and the implementation issues

related to Accounting Standards for Business

Enterprises (“ASBEs”), the Ministry of Finance (the

“MOF”) has issued Notice on Issuing the Revised

Presentation of Financial Statements for General

Business Enterprises for 2019 (the “Notice”). The

Notice is applicable to 2019 interim financial

statements, and financial statements for the year of

2019 and subsequent periods of non-financial

enterprises applying ASBEs.

Financial enterprises applying ASBEs should prepare

financial statements in accordance with Notice of the

Ministry of Finance on Issuing the Revised Presentation of

Financial Statements for Financial Institutions for 2018

(Cai Kuai [2018] No.36), and adjust the related items,

other than those specific to financial enterprises, based on

the presentation of financial statements required by the

Notice. Notice of the Ministry of Finance on Issuing the

Revised Presentation of Financial Statements for General

Business Enterprises for 2018 (Cai Kuai [2018] No.15)

issued by the MOF on 15 June 2018 is repealed

simultaneously.

For further details about the major changes in the

presentation of financial statements, please refer to EY

WeChat : A Farewell to Annual Financial Statements, and

Welcome to Interim Financial Statements! The Updated

Presentation of Financial Statements for 2019!

► MOF revises Accounting Standard for Business

Enterprises No.7 - Exchange of Non-Monetary Assets

In order to regulate the accounting for the exchange of

non-monetary assets and improve the quality of

accounting information, the MOF has revised Accounting

Standard for Business Enterprises No.7 - Exchange of Non-

Monetary Assets (the "revised standard"), which is

applicable to all enterprises applying ASBEs.

The revised standard generally maintains the original

measurement principle, further clarifies the scope of the

standard, standardizes the timing of recognition and

derecognition of assets received and assets surrendered,

refines the specific accounting treatment of the exchange

of non-monetary assets under different measurement

bases, and fully considers consistency among different

standards.

► For the exchange of non-monetary assets between 1

January 2019 and the effective date, adjustments

should be made in accordance with the revised

standard.

► For the exchange of non-monetary assets prior to 1

January 2019, retrospective application is not

required by the revised standard.

The revised standard will become effective starting 10

June 2019.

For further details about the main content of the revised

standard, please refer to EY WeChat: Results of Internal

Coordination of Accounting Standards for Business

Enterprises: Issuance of Revised Accounting Standard for

Business Enterprises No.7 - Exchange of Non-Monetary

Assets.

For non-financial enterprises

Non-financial enterprises that have not implemented the new financial instrument standards (1), the new revenue standard (2) and the new lease standard

Format 1 (3)

Non-financial enterprises that have implemented the new financial instrument standards, the new revenue standard and the new lease standard

Format 2 (3)

Non-financial enterprises that have implemented the new financial instrument standards, but have not implemented the new revenue standard and the new lease standard

Format 1 and Format 2 combined with adjustments

Non-financial enterprises that have implemented the new financial instrument standards and the new revenue standard, but have not implemented the new lease standard

Format 1 and Format 2 combined with adjustments

Notes:

(1) The “new financial instrument standards” refer to Accounting Standard for Business Enterprises No.22 – Financial Instruments: Recognition and Measurement (Cai Kuai [2017] No.7), Accounting Standard for Business Enterprises No.23 – Transfer of Financial Assets (Cai Kuai [2017] No.8), Accounting Standard for Business Enterprises No.24 – Hedge Accounting (Cai Kuai [2017] No.9) andAccounting Standard for Business Enterprises No.37- Financial Instruments: Presentation (Cai Kuai [2017] No.14).

(2) The “new revenue standard” refers to Accounting Standard for Business Enterprises No.14 – Revenue (Cai Kuai [2017] No.22).

(3) “Format 1” and “Format 2” correspond to Appendix 1 and Appendix 2 of the Notice, respectively.

3China Accounting Alert

► The Accounting Regulatory Department of the MOF

releases its interpretation on issues related to the

application of the Requirements on the Accounting

Treatments for VAT to Announcement on Related

Policies of Deepening the VAT Reform

Recently, the MOF, State Taxation Administration and

General Administration of Customs have issued

Announcement on Related Policies of Deepening the VAT

Reform (Announcement No.39 of the MOF, State Taxation

Administration and General Administration of Customs,

2019) (“Announcement No.39”), which stipulates that

“from 1 April 2019 to 31 December 2021, taxpayers in

the production and living service industry are allowed to

add 10% based on the input VAT deductible in the current

period to deduct the tax amount payable” (the

“Provision”). The Accounting Regulatory Department of

the MOF has released Interpretation on Issues related to

the application of the Requirements on the Accounting

Treatments for VAT to Announcement No.39. The

interpretation on issues related to the application of the

Requirements on the Accounting Treatments for VAT (Cai

Kuai [2016] No.22) to the Provision is as follows:

For taxpayers in the production and living service industry,

when acquiring assets or receiving services, VAT-related

businesses should be accounted for in accordance with

the Requirements on the Accounting Treatments for VAT;

when paying VAT, the amount payable should be debited

to “Taxes payable - Unpaid VAT” and other accounts; the

amount paid should be credited to "Cash in banks", and

the additional deduction should be credited to “Other

income”.

EY publications

► IFRS Developments Issue 147: Curing of a credit

impaired financial asset

The IFRS Interpretations Committee (IFRIC) published a

final agenda decision confirming that reversals of

impairment losses related to previously unrecognized

interest on credit-impaired financial assets must be

presented as reversals of impairment. Further details

about the final agenda decision are found in IFRS

Developments Issue 147.

► IFRS Developments Issue 148: IBOR reform: the IASB’s

proposals, part 3

On 3 May 2019, the IASB published Exposure Draft,

Interest Rate Benchmark Reform - Proposed Amendments

to IFRS 9 Financial Instruments and IAS 39 Financial

Instruments: Recognition and Measurement, providing

relief to allow hedge accounting to continue despite the

uncertainties resulting from the transition from IBOR to

risk-free rates. In IFRS Developments Issue 148, we

summarize the IASB’s proposals and share EY views.

Comments on the Exposure Draft are due by 17 June

2019.

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China Accounting Alert is our monthly executive update for Mainland China and Hong Kong on recent developments in local and international financial reporting, and related hot topics and emerging issues. China Accounting Alert is designed to help keep you one step ahead by providing easy access to the information you need, all in one place. It is not intended to be a substitute for reading the financial reporting standards or other appropriate authoritative guidance, to which reference should be made for a full understanding of the relevant subject matters.

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