Accounting Standards for Business Enterprises No. 7 - Exchange of Non-monetary Assets

Accounting Standards for Business Enterprises No. 7 - Exchange of Non-monetary Assets

Cai Kuai [2006] No.3

Feburary 15, 2006

Chapter I General Provisions

Article 1 With the goal of normalizing the determination and measurement of non-monetary asset exchanges as well as disclosure of the relevant information, this document is formulated on the basis of the Enterprise Accounting Standards - Basic Standards.

Article 2 The "exchange of non-monetary assets" refers to the exchange of non-monetary assets between two parties that includes the transactions of inventories, fixed assets, intangible assets, or long-term equity investments. Such an exchange involves no or few monetary assets (i.e. boot).
"Monetary assets" refer to the liquid currency possessed by enterprises or assets on which fixed or determinable amounts of currency may be drawn, including cash, bank deposits, accounts and notes receivable, and bond investments to be held to maturity.
"Non-monetary assets" refers to the any assets other than monetary assets.

Chapter II Determination and Measurement

Article 3 When the exchange of a non-monetary asset concurrently satisfies the following conditions, the cost of the received asset shall be its fair value including the relevant applicable taxes; any difference between the fair value and the book value of the relinquished asset shall be recorded as profit or loss for the current period:
1.
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