A Case Study Of The Accounting For Equity Investment By Youjiu Game Company

As the development of market economy,equity investment is becoming more and more common in the business activities of enterprises.Its advantages in promoting optimal allocation of enterprise resources,dispersing business risks and expanding business scope are becoming more and more obvious.Equity investment has gradually become one of the important channels for enterprises to cope with complex and changeable market competition.Nowadays,the situation of equity investment among enterprises is becoming more and more complicated,due to the increasing frequency of equity investment activities.The resulting problems of accounting and information disclosure are widely concerned.Therefore,the importance of regulating the accounting of equity investment is becoming increasingly prominent.In order to standardize the equity investment and management activities of enterprises,and also to make the accounting standards of enterprises more consistent with the international,the Ministry of Finance Updated and implemented Accounting Standards for Business Enterprises No.2-Long-term Equity Investments and Accounting Standards for Business Enterprises No.22-Recognition and Measurement of Financial Instruments in 2014 and 2017 respectively.However,there are many factors affecting the accounting of equity investment,so the accounting process is very complex,and its economic consequences cannot be ignored.Meanwhile,during the equity investment period,when the enterprise changes due to merger,increase or decrease of share ratio and other investment activities,the degree of influence on the investee may change,this may lead to the conversion of follow-up measurement methods of equity investment.Different conversion type corresponds to different accounting treatments,and finally will have different degree of influence on enterprise finance,and thus further increased the equity investment accounting difficulty.However,the specific provisions on the conversion of follow-up measurement methods of equity investment in the current standards are scattered in different standards,and lack of systematic analysis on the theoretical level,and also lack of comprehensive and effective analysis in the guidelines.At the same time,the definition of some items of the conversion of follow-up measurement methods is not clear in the current standard,which also increases the difficulty of accounting practice,and also increases the risk of being easily exploited by enterprises.Based on the construction of accounting standards,this paper firstly systematized the equity investment dispersed in different regulations,and presented the problems of equity investment from the theoretical level,such as the complex accounting methods,the lack of operability due to the principle-oriented of accounting standards,and the existence of many professional judgments.Then this paper chose Shanghai Youjiu Game Company as the case study object,and the economic situation of the case company before and after the transformation of equity investment accounting method was mainly analyzed.Finally,based on the case study,the criterion problems related to the accounting of equity investment presented in the theoretical analysis stage were being further explained and demonstrated quantitatively.After the case study,this paper further explained and demonstrated the criterion problems related to the accounting of equity investment.Equity investment accounting regulations are complex,and there is room for professional judgment in the classification and accounting measurement of equity investment.This situation will easily be used or manipulated by company management for special purposes.Based on the research conclusions of above,it is suggested that financial statement users should pay special attention to the causes of investment income in corporate financial statements,and pay more attention to the disclosure of equity investment related information in the notes of financial statements,so as to improve the ability to analyze and judge the true profitability of enterprises.The regulatory authorities should further strengthen the disclosure and quality requirements of accounting information related to equity investment.The regulators should further restrain enterprises from manipulating profits by using accounting policies.The standard setters should further standardize the conditions for the conversion of follow-up measurement methods of equity investments,so as to improve the operability of accounting standards in accounting practice,and consider raising the conversion threshold appropriately,so as to further reduce the space of profit manipulation by using of accounting policies.