The Financial Impact Of Accounting Method Changes Of Long-term Equity Investment

In March 2014, the Ministry of Finance issued a new revision of’The Accounting Standards for Enterprises No.2 - The Long-term Equity Investment’. The new revision of The Accounting Standards for Enterprises in 2014 will further than that in 2006 regulate the relevant accounting treatment of the long-term equity investment.With the development and mature of China’s capital market, long-term equity investment activities have increasingly become the focus of enterprises. Long-term equity investment is one of the key points and difficulties of accounting, and the accounting changes greatly affect the enterprise’s financial activities and financial data. This article is based on this background.This paper studied the financial impact of accounting method changes of long-term equity investment on enterprises, using the method of normative research combined with, case analysis. First of all, this article introduced the background and the significance, research methods and the framework, and the innovative points and the limitations; Secondly, the article reviewed the predecessors’ research literature in retrospect; Thirdly, the article summarized the accounting method changes of the long-term equity investment in 2014 and analyzed the reasons of its changes; And then, this paper specifically analyzed the impact of accounting method changes of long-term equity investment in 2014 on the enterprises combined with the Foton case, such as the change of the long-term equity investment accounting scope, the follow-up measurement of investment gains and losses when disposed, and the mode conversion between cost method, the equity method and financial tools; Finally, the article put forward some suggestions in view of the long-term equity investment, through the normative research combined with case analysis.