The preparatory period refers to the period from the date when the enterprise is approved for preparatory work to the date when it starts production and operation (including trial production and trial operation).
Scope of start-up costs
(a) the specific content of the start-up costs
1, the expenses of the preparatory staff
(1) the labor costs of the preparatory staff: specifically, including the preparatory staff of the wages and bonuses and other wage expenses, as well as social insurance should be paid. In the preparatory period, such as medical expenses and other welfare costs, if the preparatory period is relatively short can be actually charged, the preparatory period is longer, according to the 14% of the total wage bill to be resolved by the accrual of employee welfare costs.
(2) travel expenses: including in-town transportation and out-of-town travel.
(3) Board of Directors fees and joint committee fees
2, the cost of business registration, notarization: mainly including registration fees, capital verification fees, tax registration fees, notary fees and so on.
3, the cost of raising capital: mainly refers to the handling fees paid for fundraising, as well as exchange gains and losses not included in fixed assets and intangible assets and interest.
4, personnel training costs: mainly the following two cases
(1) the introduction of equipment and technology needs to be digested and assimilated, and selected some workers in the preparation of the construction of the period to go out for further training and learning costs.
(2) to hire experts for technical guidance and training of labor and related costs.
5, amortization of business assets, scrap and destruction
6, other costs
(1) office expenses, advertising costs, socializing and entertainment costs during the preparatory period.
(2) Stamp duty
(3) Feasibility study expenses confirmed by the investor to be borne by the enterprise
(4) Other expenses related to the preparation of the construction, such as information research, litigation costs, printing costs, communication costs, and celebration of gifts and other expenses.
(b) Expenses not included in the scope of start-up costs
1, the costs incurred to acquire various assets. Including the purchase and construction of fixed assets and intangible assets is to pay the transportation costs, installation costs, insurance costs and related labor costs incurred in the purchase and construction.
2, the provision should be borne by the investing parties. Such as the investment parties for the preparation of the construction of the enterprise investigation, negotiation of travel expenses, consulting fees, hospitality and other expenditures. Our government also stipulates that the Sino-foreign joint venture negotiations, foreign businessmen are required to negotiate the hospitality costs incurred by the business shall not be listed as start-up costs, by the invitation of the enterprise to bear.
3, for the training of employees and the purchase of fixed assets, intangible assets and other expenditures shall not be listed as start-up costs.
4, the interest paid by the investor on the capital invested to raise funds on its own is included in the start-up costs, which should be borne by the investor.
5, cash in foreign currency deposited in the bank and paid fees, the cost should be borne by the investor.
(C) the determination of the preparatory period
The determination of the preparatory period of the enterprise in China by the tax law has a greater impact. For example, the "Foreign Income Tax Law Implementation Rules" provides that "foreign-funded enterprises for the preparation period for the enterprise was approved for the date of preparation for the start of production, operation (including trial production) of the date of the end of the period". The "date of approval for preparatory work" referred to above specifically refers to the date when the investment agreement and contract signed by the enterprise are approved by the government of China. The "date of commencement of production and operation (including trial production)" refers to the end of the preparatory period from the date on which the enterprise's equipment starts to operate, and the enterprise starts to supply materials to manufacture products or sell the same first commodity. Other enterprises may refer to this provision.
(D) start-up costs are generally amortized over five years, the new enterprise accounting system provides for start-up costs amortized
Start-up costs of the accounting treatment
"Enterprise Accounting System" (Caihui [2000] No. 25) on the amortization of start-up costs of the period for a major adjustment. The original industry accounting system provides that the start-up costs incurred by the enterprise should be amortized in equal installments over a period not exceeding five years from the month of production and operation. Article 50 of the Accounting System for Enterprises stipulates that: "Except for the purchase and construction of fixed assets, all expenses incurred during the preparatory period shall first be summarized in long-term amortized expenses, and shall be charged to profit or loss in the month of commencement of production and operation at one time from the month in which the enterprise commences production and operation. If the enterprise's long-term amortized expense item cannot benefit the subsequent accounting period, the amortized value of the item not yet amortized shall be fully transferred to the profit and loss of the current period." It can be seen that the accounting treatment of start-up expenses, both in terms of the setting up of accounting items and the period of amortization, has changed significantly from the original industry financial system. There is a big difference between this new provision and the current income tax regulations. Article 34 of the Implementing Rules of the Provisional Regulations on Enterprise Income Tax provides that start-up expenses incurred by an enterprise during the preparatory period shall be deducted in installments over a period of not less than five years from the month following the month in which production or operation commences. Therefore, the one-time amortization of the start-up expenses incurred by an enterprise in the month of production and operation shall be deducted evenly over a period of five years starting from the month following the month of production and operation. Taxpayers in the year-end income tax declaration, should do a good job of tax adjustments, and the establishment of "pre-tax deduction of start-up costs ledger" or register, for the next year to accurately declare the amount of pre-tax deductions (reductions) to lay a good foundation.
Example: a joint-stock company in July 2001 to start production operations, the total amount of start-up costs incurred in the previous period of 960,000 yuan, July amortization of start-up costs, the accounting entries are as follows:
Borrowing: administrative expenses - amortization of start-up costs of 960,000 yuan
Credits: Long-term amortized expenses --Start-up costs 960,000 yuan
This year's allowable pre-tax deduction = 960,000 yuan ÷ 5 years ÷ 12 months × 5 months = 80,000 yuan, should be adjusted income = 96-8 = 88 (million yuan);
2002-2005 should be adjusted every year Income = 96 ÷ 5 = 192 (million dollars);
2006 should be reduced income = 960,000 yuan ÷ 5 years ÷ 12 months × 7 months = 112 (million dollars).
The tax adjustment ledger for start-up expenses is set up as follows:
Pre-tax deduction ledger for start-up expenses
Unit: 10,000 yuan
Instructions for filling in the ledger:
1. Year: Amortization date, the year and month when production and operation began, and subsequent years in the order of analogy.
2. Accounting amortization: the total amount of one-time amortization of start-up costs on accounting.
3. Tax deduction: the amount allowed to be deducted before tax in the current year according to the tax law.
4. Tax adjustments: tax adjustments = accounting amortization - pre-tax deductions. The result is a positive number for the increase in income and a negative number for the decrease in income.
5. Not yet deducted: the amount allowed to be deducted in future years before tax. The first year is not yet deducted according to the current year's tax adjustments to fill in the amount of the next year is not yet deducted = not yet deducted in the previous period - the current year's pre-tax deductions.
Accounting for Start-up Expenses
Start-up expenses refer to the expenses incurred by the enterprise during the preparatory period, including the salaries of personnel during the preparatory period, office expenses, training expenses, travel expenses, printing expenses, registration fees, as well as exchange gains and losses and interest expenses not included in the cost of acquisition and construction of fixed assets and intangible assets. The preparatory period refers to the period from the date the enterprise is approved for preparatory work to the date of the start of production and operation (including trial production and trial operation).
The following costs incurred by the enterprise shall not be included in the start-up costs:
(1) expenses borne by investors;
(2) expenses incurred for the acquisition of fixed assets and intangible assets;
(3) exchange gains and losses and interest expenses during the preparatory period shall be included in the value of the assets.
"Enterprise Accounting System" (Caihui [2000] No. 25) on the amortization period of the start-up costs have made significant adjustments. The original industry accounting system provides that the start-up costs incurred by the enterprise should be amortized in equal installments over a period of no more than five years from the month of production and operation. Article 50 of the Accounting System for Enterprises stipulates that: "Except for the purchase and construction of fixed assets, all expenses incurred during the preparatory period shall first be summarized in long-term amortized expenses, and shall be charged to profit or loss in the month of commencement of production and operation at one time from the month in which the enterprise commences production and operation. If the enterprise's long-term amortized expense item cannot benefit the subsequent accounting period, the amortized value of the item not yet amortized shall be fully transferred to the profit and loss of the current period." It can be seen that the accounting treatment of start-up expenses, both in terms of the setting up of accounting items and the period of amortization, has changed significantly from the original industry financial system. This new provision is a major difference with the current income tax regulations. *** with the study!