Research On Accounting Treatment Of Investment Real Estate Of Listed Companies

Investment property has been the main business of some listed companies gradually. Transitions of relevant accounting systems are carded in the paper. Meanwhile, the measurement methods of fair value are summarized. By comparing the influence on net profit from the difference between domestic and foreign accounting standard and retrospective adjustment method applied in accounting policies, the difference generated from the application of different accounting policies on the same item during the same accounting period by the same management board is analyzed.In recent years, some listed companies intend to cancel the warning of delisting risk based on gain from changes in fair value after the completion of constructing investment properties. According to the improved project which completed by International Accounting Standards Board in2007, a discussion is made in this paper. As of the relationship between finance lease and investment property, it is suggested that the Improved International Accounting Standard of2003can be used for reference:the property interest owned by the lessee under the operating lease can be capitalized as investment property under certain conditions to adapt to the operating mode of principal tenant in current listed companies. Upon analyzing the interim financial reports of listed companies, it is found that gains from changes in fair value of investment properties are not confirmed in either quarterly reports or semi-annual reports.The difference of investment property measurement modes between parent companies and subsidiaries is studied in the paper. Through the analysis on several cases, according to relevant regulations of Accounting Standards for Business Enterprises, it is believed that if there is difference of investment property measurement modes between parent companies and subsidiaries, the accounting treatment in the individual financial statements and consolidated financial statements can be different. However, the fair value in subsidiaries adjusting as historical cost in consolidated financial statements cannot provide more reliable and relevant accounting information. Some listed companies transform the fair value mode to cost mode due to the demand of consolidated financial statements, which is worthy of discussion. Meanwhile, the amount of investment property measured at historical cost in domestic subsidiaries, which is adjusted as fair value in the consolidated financial statements of foreign parent companies, should comply with the principle of simultaneously disclosure in domestic and foreign area.It is suggested in the paper that the Accounting Standards for Business Enterprises should be modified in time, which demands that the enterprises of cost mode should also confirm the fair value of investment property for disclosure objective to eliminate the difference with International Financial Reporting Standards in reporting link.