In accordance with the "Basic Standards of Accounting Standards for Business Enterprises," the Ministry of Finance issued Accounting Standard No. 38 for Business Enterprises—Initial Implementation of Accounting Standards for Business Enterprises on 2006/2/15, which became effective on 2007/1/1.
1. Overview of Guidelines
First-time adoption of the Enterprise Accounting Standards refers to an enterprise's initial implementation of the Enterprise Accounting Standards system. On the date of first-time adoption, the enterprise shall reclassify, recognize, and measure all assets, liabilities, and equity in accordance with the requirements of the Enterprise Accounting Standards, and prepare an opening balance sheet.
II. Main Coordination Provisions
Retrospective Adjustment Items
- • Long-term equity investments: Full elimination of the investment difference arising from business combinations under common control.
- • Investment Property: Measured at fair value when there is conclusive evidence that the fair value model can be applied.
- • Disposal costs: If the recognition criteria for a provision are met, increase the asset cost and recognize a liability.
- • Termination benefits: Recognize liability and adjust retained earnings if conditions are met.
- • Income tax: Retrospective adjustment of temporary differences using the balance sheet liability method
- • Financial Assets: Reclassified into four categories and measured accordingly
3. Presentation Requirements
The first annual financial statements must include comparative information prepared in accordance with the Enterprise Accounting Standards for the prior year. Subsidiaries that were previously excluded but should be consolidated must now be included; those previously included but should not be consolidated must be excluded.
Regulatory Document Attachment
Accounting Standards for Business Enterprises No. 38 — First-time Adoption of Accounting Standards for Business Enterprises (PDF)