| Article 13 |
Assets shall be properly classified. Current assets shall be distinguished from non-current assets.
For assets, the total amount expected to be recovered no more than 12 months after the balance sheet date and the total amount expected to be recovered more than 12 months after the balance sheet date shall be separately presented in financial statements or disclosed in the notes.
The classification of asset accounts in the balance sheet, content of account entries, and matters to be noted are as follows:
1. Current assets: Assets resulting from an enterprise's operating activities that are expected to be realized in cash, consumed, or offered for sale in the enterprise's normal operating cycle; assets held primarily for the purpose of being traded; assets expected to be realized in cash within 12 months after the balance sheet date; or cash and cash equivalents. Not included, however, are assets that are earmarked to be exchanged or used to settle a liability more than 12 months after the balance sheet date, or whose use is otherwise restricted.
(1) Cash and cash equivalents: Cash on hand, bank deposits, petty cash revolving fund, and short-term, highly liquid investments that are readily convertible into known amounts of cash and are so near maturity that they represent only an insignificant risk of any change in value attributable to changes in interest rates.
Non-current bank deposits shall be separately presented. If the maturity date is longer than one year, such shall be noted. An asset earmarked for a specific purpose or subject to restrictions on its use, and customer margin account deposits that are required not to be used for purposes other than intended, shall not be classified into this account.
If time deposits (including negotiable certificates of deposit) are pledged as collateral for a debt, and if the secured debt is a long-term liability, such deposits shall be reclassified as "other assets." If the secured debt is a current liability, the deposits shall be reclassified as "other current assets." A footnote shall be provided to indicate the existence of any such security. Where time deposits are lodged as a refundable deposit, they shall be classified as current assets or other assets depending on whether they are short-term or long-term. Any compensating balances, if incurred due to short-term loans, shall be classified as current assets, and shall be explained in footnotes. Any compensating balances incurred due to long-term liability shall be classified as other assets or long-term investments rather than current assets.
(2) Financial assets at fair value through profit or loss–current: Assets that meet either of the following conditions:
(i) Financial assets held for trading.
(ii) Financial assets, except those designated as hedged items under hedge accounting, which upon initial recognition are designated to be measured at fair value, with changes in fair value recognized through profit or loss.
"Financial assets held for trading" means financial assets designated as held for trading by an enterprise upon initial recognition. Financial instruments shall be classified as financial assets held for trading if:
(i) They were acquired principally for the purpose of sale in the near term.
(ii) They are part of a portfolio of identified financial instruments that are jointly administered and for which there is evidence of a recent actual pattern of short-term profit-taking.
(iii) They are derivative financial assets that are not designated and effective hedging instruments.
Financial assets held for trading shall be recorded separately as securities held for trading, open-end funds, money market instruments, option contracts, or futures margins.
"Futures margin – securities" means securities posted as trading margins or premiums by an FCM conducting futures proprietary trading or by a domestic enterprise specializing in futures brokerage business that engages in futures trading with its own funds.
"Futures margin – securities valuation adjustment" means an adjustment to the valuation of securities posted as trading margins or premiums by an FCM conducting futures proprietary trading or by a domestic enterprise specializing in futures brokerage business that engages in futures trading with its own funds, that is set aside for measurement at fair value.
"Futures margin – own funds" means the difference between margins and premiums paid for futures trading (whether by an FCM conducting futures proprietary trading, or by a domestic enterprise specializing in futures brokerage business that engages in futures trading with its own funds) and the corresponding settlement prices.
"Bought options" means premiums paid by an FCM to buy option contracts or futures option contracts.
Financial assets at fair value through profit or loss shall be measured at fair value. Except for any emerging stocks that may be included in holdings (which shall be valued under the cost method), the term "fair value" means the closing price on the balance sheet date. For an open-end fund, the term "fair value" means the net asset value of that fund on the balance sheet date.
Financial assets at fair value through profit or loss shall be identified as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "financial assets at fair value through profit or loss – non-current" under the "funds and investments" section.
(3) Available-for-sale financial assets－current: Non-derivative financial assets that meet one of the following conditions:
(i) Are designated as available-for-sale.
(ii) Fall within none of the following financial asset classes:
(a) Financial assets at fair value through profit or loss.
(b) Held-to-maturity financial assets.
(c) Bond investments for which no active market exists.
(d) Receivables.
Available-for-sale financial assets shall be identified as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "available-for-sale financial assets – non-current" under the "funds and investments" section.
Except as otherwise provided, available-for-sale financial assets shall be measured at fair value, with valuation gains or losses to be recognized in shareholders' equity. For exchange- or OTC-listed securities, the term "fair value" means the closing price on the balance sheet date. For an open-end fund, the term "fair value" means the net asset value of that fund on the balance sheet date.
(4) Held-to-maturity financial assets – current: Held-to-maturity financial assets that mature within one year.
Held-to-maturity financial assets shall be measured at amortized cost.
(5) Bond investments for which no active market exists – current: The current portion of bond investments for which no active market exists.
(6) Customer margin accounts: The difference between margins and premiums duly collected from a futures trader by an FCM in the course of futures brokerage business, and the corresponding fair-value price.
Where the balance in a customer margin account does not reconcile with that of the futures traders' equity, the reason for such discrepancy shall be indicated in the notes.
(7) Futures margin receivable: Amount to be collected by an FCM because a debit balance has arisen on a futures traders' equity.
Futures margins receivable determined to be uncollectible shall be written off.
At the time of closing, futures margins receivable that may become uncollectible shall be estimated (with an appropriate allowance for bad debts provided) and recorded at their net amount.
(8) Deposits for securities borrowed: Deposits in connection with the borrowing of securities from the holders, or with short selling on an exchange market, in securities borrowing and lending transactions.
(9) Collateral for securities borrowed: Collateral deposited for borrowing securities from the holders, or for short selling on an exchange market, in securities borrowing and lending transactions.
(10) Notes receivable: All notes receivable.
The fair value of notes receivable shall be calculated using an imputed rate of interest. Notwithstanding the foregoing, notes receivable maturing within one year need not be valued at fair value if the difference between their fair value and value at maturity is insignificant, and if they are frequently traded.
Discounted or transferred notes receivable shall be deducted and a note shall be provided.
Notes receivable resulting from operating activities shall be recorded separately from notes receivable that result from non-operating activities.
Notes receivable from related parties shall be recorded individually.
Where notes have been provided as security, this fact shall be noted.
Notes receivable determined to be uncollectible shall be written off.
At the time of closing, notes receivable that may become uncollectible shall be estimated (with an appropriate allowance for bad debts provided) and recorded at their net amount.
(11) Accounts receivable: Claims resulting from the conduct of business.
The fair value of accounts receivable shall be calculated using an imputed rate of interest. Notwithstanding the foregoing, accounts receivable maturing within one year need not be valued at fair value if the difference between their fair value and value at maturity is insignificant, and if they are frequently traded.
Accounts receivable from related parties shall be recorded individually.
Accounts receivable determined to be uncollectible shall be written off.
At the time of closing, accounts receivable that may become uncollectible shall be estimated (with an appropriate allowance for bad debts provided) and recorded at their net amount.
(12) Other receivables: Receivables other than notes receivable and accounts receivable, including claims arising from out-trades.
Other receivables determined to be uncollectible shall be written off.
At the time of closing, other receivables that may become uncollectible shall be estimated (with an appropriate allowance for bad debts provided) and recorded at their net amount.
Any other type of receivable that accounts in aggregate for more than 5 percent of the total amount of current assets shall be recorded separately, categorized by counterparty or the nature of the items.
(13) Other financial assets – current: Financial assets not recorded individually on the balance sheet shall be classified as "other financial assets" and shall be identified as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "other financial assets-non-current" under the "funds and investments" section.
When financial assets account in aggregate for 5 percent or greater of the total amount of current assets, they shall be recorded individually on the balance sheet.
(14) Prepayments: All prepaid amounts and expenses.
Contractually stipulated amounts prepaid for the purchase of fixed assets, and construction costs for construction in progress intended for business operations, shall be presented under fixed assets, not under prepayments.
(15) Long-term equity investments held for disposal: Equity investments in subsidiaries that are scheduled for sale within 12 months after the balance sheet date.
(16) Non-current assets held for sale: A non-current asset or an asset included within a disposal group classified as held for sale, that is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such assets or disposal groups and whose sale is highly probable to be completed within one year.
Non-current assets held for sale and disposal groups held for sale shall be measured, presented, and disclosed in accordance with Statement of Financial Accounting Standards No. 38.
(17) Other current assets: All current assets not falling within the above categories.
With the exception of "cash" and "other financial assets – current", any of the above categories of current assets that accounts in aggregate for not more than 5 percent of the total amount of current assets may be incorporated into "other current assets".
2. Funds and investments: All special funds, and all long-term investments made for the purpose of ordinary business operations. When either total financial assets or the aggregate amount of investments accounts for 5 percent or more of the total amount of funds and investments, it shall be recorded individually on the balance sheet.
(1) Available-for-sale financial assets – non-current: The non-current portion of available-for-sale financial assets.
Except as otherwise provided, available-for-sale financial assets shall be measured at fair value, with valuation gains or losses to be recognized in shareholders' equity. For exchange- or OTC-listed securities, the term "fair value" means the closing price on the balance sheet date. For an open-end fund, the term "fair value" means the net asset value of that fund on the balance sheet date.
Holdings in shares that are neither exchange-listed nor OTC-listed and that do not represent significant influence shall be classified as available-for-sale financial assets, to be measured at cost at period-end.
(2) Held-to-maturity financial assets – non-current: Financial assets with fixed or determinable payments and fixed maturity that a company has the positive intention and ability to hold to maturity. Held-to-maturity financial assets shall be measured at amortized cost. Held-to-maturity investments maturing within one year shall be reclassified as "held-to-maturity investments – current" under "current assets".
(3) Bond investments for which no active market exists – non-current: Investments in bonds with fixed or determinable payments that are not quoted in an active market and that meet both of the following conditions:
(i) Are not designated as measured at fair value, and changes in fair value are not recognized through profit or loss.
(ii) Are not designated as available for sale.
Bond investments for which no active market exists shall be measured at amortized cost. They shall be identified as either current or non-current, depending on their liquidity.
(4) Funds: Assets set aside for specified uses, such as sinking funds, improvement and expansion funds, and contingency funds.
The proposal and rules based on which a fund is set aside shall be indicated.
A benefit fund set aside in accordance with the Employee Welfare Fund Act shall be classified as an expense.
(5) Long-term equity investments accounted for under the equity method: Investments in a certain type of business or other investments, as approved by the FSC.
The valuation basis for a long-term investment shall be indicated, and long-term investments shall be recorded separately, categorized by the nature of the investments.
The long-term equity investments shall be valued and presented in accordance with Statement of Financial Accounting Standards No. 5.
When investment gains and losses are recognized using the equity method, if the financial statements of an investee company have not been prepared in accordance with generally accepted accounting principles in the ROC, such financial statements shall be adjusted to conform to those principles before they may be used to recognize any investment gains and losses. When an investee company has a material effect on the fair presentation of the financial statements of the audited entity, as judged by a certified public accountant pursuant to the Statements of Auditing Standards No. 24, its financial statements shall be audited by the certified public accountant in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and generally accepted auditing standards.
If a long-term investment is pledged as collateral or otherwise subject to any restriction or limitation, such shall be noted.
3. Fixed assets: Tangible assets for use in conduct of business, with a service life of one year or more, and not intended for sale.
Land, depreciable assets, and depletable assets shall be recorded separately within fixed assets. An asset within fixed assets that accounts for 5 percent or greater of the total amount of fixed assets shall be recorded individually on the balance sheet.
Fixed assets shall be recorded at the historical cost of acquisition or construction, provided that interest arising from the purchase of a "presold" building or from the purchase of a fixed asset with money obtained through cash capital increase shall not be capitalized. Idle fixed assets shall be reclassified within the "other assets" section, at the lower of their net fair value or carrying amount. A fixed asset that is still in use after the expiration of its service life shall continue being depreciated based on the residual value.
Leased assets shall be recognized and presented in accordance with Statement of Financial Accounting Standards No. 2.
If an asset lease qualifies as an operating lease, any improvement made to the leased property is called a leasehold improvement and shall be recorded as a fixed asset.
The valuation basis for a fixed asset shall be indicated. If the fixed asset has been revalued, the date of revaluation and the amount of increment or decrement shall be stated, and the acquisition cost and the revaluation increment/decrement shall be recorded separately. The reserve against land value increment tax set aside against land revaluation increment shall be classified as a long-term liability. Where a fixed asset has been revalued, from the day following the date of record of the revaluation, depreciation shall be charged at the revalued amount.
Except for land, fixed assets shall be periodically depreciated in a rational and systematic manner over their estimated useful life, and reclassified as expenses for each period depending on their nature, without interruption or deduction.
The accumulated depreciation, accumulated impairment, or accumulated depletion of a fixed asset shall be recorded as a deduction from fixed assets.
A leasehold improvement shall depreciated in a rational and systematic manner based on the shorter of the estimated useful life or the lease term, and reclassified as an expense for each period according to its nature, without interruption or reduction.
The method for calculating the depreciation of depreciable assets shall be indicated.
If a fixed asset has been given as security, or a mortgage or lien has been created against it, such shall be noted.
Major accounts for fixed assets are as follows:
(1) Land: All company land used or earmarked for the conduct of business.
(2) Buildings: All the buildings of the company used or earmarked for the conduct of business.
(3) Equipment: All the income-generating equipment, information equipment, transportation equipment, and other equipment bought for use in the conduct of business.
(4) Prepayments for buildings and land: Prepayments for purchase of land and buildings.
(5) Prepayments for equipment: Prepayments for purchase of equipment.
(6) Leasehold improvements: Improvements made to property under operating lease.
(7) Other fixed assets.
4. Intangible assets: Non-monetary assets without physical form, that are identifiable, that can be controlled by an entity, and that have future economic benefits.
An asset within intangible assets that accounts for 5 percent or greater of the total amount of intangible assets shall be recorded individually on the balance sheet.
Intangible assets shall be recognized, measured, and disclosed in accordance with Statement of Financial Accounting Standards No. 37.
5. Other assets: All assets not falling within the above categories and with a collection or realization period of one year or more, such as refundable deposits, long-term notes receivable, and other miscellaneous assets.
The fair value of long-term notes receivable and other long-term receivables shall be calculated by using an imputed rate of interest.
Large, overdue accounts receivable shall be recorded individually (with the collection status indicated and an appropriate allowance for bad debts provided) and recorded at their net amount.
When the amount of "other assets" accounts for more than 5 percent of the total amount of assets, the account for each such "other asset" shall be recorded separately.
Major accounts for "other assets" are as follows:
(1) Operating bond: The operation bond deposited in accordance with Article 60 of the Futures Trading Act.
(2) Clearing and settlement fund: This is a clearing and settlement fund deposited in accordance with the Futures Trading Act and other applicable requirements.
(3) Refundable deposits: Other guarantee deposits paid out as refundable deposits.
(4) Deferred debits: Long-term prepaid expenses that have future economic benefits and are required to be amortized over future periods.
(5) Payments to branches: Where an FCM has branches, the "Payments from branches" account is used when the head office has a debit balance on payments between itself and its branches.
(6) Payments from head office: Where an FCM has branches, the "Payments from head office" account is used when the head office has a credit balance on payments between itself and its branches.
(7) Internal payments: To be used by an other-industry enterprise concurrently conducting futures business, when its futures department has a debit balance on payments between itself and other departments.
(8) Other assets: Assets not falling within the above categories.Assets shall be properly classified. Current assets shall be distinguished from non-current assets.
For assets, the total amount expected to be recovered no more than 12 months after the balance sheet date and the total amount expected to be recovered more than 12 months after the balance sheet date shall be separately presented in financial statements or disclosed in the notes.
The classification of asset accounts in the balance sheet, content of account entries, and matters to be noted are as follows:
1. Current assets: Assets resulting from an enterprise's operating activities that are expected to be realized in cash, consumed, or offered for sale in the enterprise's normal operating cycle; assets held primarily for the purpose of being traded; assets expected to be realized in cash within 12 months after the balance sheet date; or cash and cash equivalents. Not included, however, are assets that are earmarked to be exchanged or used to settle a liability more than 12 months after the balance sheet date, or whose use is otherwise restricted.
(1) Cash and cash equivalents: Cash on hand, bank deposits, petty cash revolving fund, and short-term, highly liquid investments that are readily convertible into known amounts of cash and are so near maturity that they represent only an insignificant risk of any change in value attributable to changes in interest rates.
Non-current bank deposits shall be separately presented. If the maturity date is longer than one year, such shall be noted. An asset earmarked for a specific purpose or subject to restrictions on its use, and customer margin account deposits that are required not to be used for purposes other than intended, shall not be classified into this account.
If time deposits (including negotiable certificates of deposit) are pledged as collateral for a debt, and if the secured debt is a long-term liability, such deposits shall be reclassified as "other assets." If the secured debt is a current liability, the deposits shall be reclassified as "other current assets." A footnote shall be provided to indicate the existence of any such security. Where time deposits are lodged as a refundable deposit, they shall be classified as current assets or other assets depending on whether they are short-term or long-term. Any compensating balances, if incurred due to short-term loans, shall be classified as current assets, and shall be explained in footnotes. Any compensating balances incurred due to long-term liability shall be classified as other assets or long-term investments rather than current assets.
(2) Financial assets at fair value through profit or loss–current: Assets that meet either of the following conditions:
(i) Financial assets held for trading.
(ii) Financial assets, except those designated as hedged items under hedge accounting, which upon initial recognition are designated to be measured at fair value, with changes in fair value recognized through profit or loss.
"Financial assets held for trading" means financial assets designated as held for trading by an enterprise upon initial recognition. Financial instruments shall be classified as financial assets held for trading if:
(i) They were acquired principally for the purpose of sale in the near term.
(ii) They are part of a portfolio of identified financial instruments that are jointly administered and for which there is evidence of a recent actual pattern of short-term profit-taking.
(iii) They are derivative financial assets that are not designated and effective hedging instruments.
Financial assets held for trading shall be recorded separately as securities held for trading, open-end funds, money market instruments, option contracts, or futures margins.
"Futures margin – securities" means securities posted as trading margins or premiums by an FCM conducting futures proprietary trading or by a domestic enterprise specializing in futures brokerage business that engages in futures trading with its own funds.
"Futures margin – securities valuation adjustment" means an adjustment to the valuation of |
| Article 14 |
Liabilities shall be properly classified. Current liabilities shall be distinguished from non-current liabilities.
For liabilities, the total amount expected to be settled no more than 12 months after the balance sheet date and the total amount expected to be settled more than 12 months after the balance sheet date shall be separately presented in financial statements or disclosed in the notes.
The classification of liability accounts on the balance sheet, the content of account entries, and matters to be noted are as follows:
1. Current liabilities: Liabilities resulting from an enterprise's operating activities that are expected to be settled in the enterprise's normal operating cycle; liabilities held primarily for the purpose of being traded; liabilities due to be settled within 12 months after the balance sheet date; or liabilities the settlement of which the enterprise does not have an unconditional right to defer for more than 12 months after the balance sheet date.
(1) Short-term borrowings: Includes funds borrowed from the bank on a short-term basis, overdrafts, and other short-term borrowings.
For short-term borrowings, the nature of the borrowing, guarantee status, and interest rate range shall be indicated, and the borrowings grouped by type. If collateral is provided, the name and carrying amount of the collateral shall be indicated.
Funds borrowed from a non-financial institution, as provided in Article 21 of the Regulations Governing Futures Commission Merchants, shall be presented separately.
(2) Commercial paper payable: Commercial paper issued through financial institutions to acquire funds from the money market.
Commercial paper payable shall be valued at present value. Any discount on commercial paper payable shall be recorded as a deduction from commercial paper payable.
For commercial paper payable, the guarantor or accepting institution and interest rate shall be indicated. If collateral is provided, the name and carrying amount of the collateral shall be indicated.
(3) Financial liabilities at fair value through profit or loss – current: Those that meet either of the following conditions:
(i) Financial liabilities held for trading.
(ii) Financial liabilities that, except those designated as hedged items under hedge accounting, upon initial recognition are designated to be measured at fair value, with changes in fair value recognized through profit or loss.
"Financial liabilities held for trading" means financial liabilities designated as held for trading by an enterprise upon initial recognition; a financial instrument shall be classified as a financial liability held for trading if:
(i) It is incurred principally for the purpose of repurchase in the near term.
(ii) It is part of a portfolio of identified financial instruments that are jointly administered and for which there is evidence of a recent actual pattern of short-term profit-taking.
(iii) It is a derivative financial liability that is not a designated or effective hedging instrument.
Financial liabilities at fair value through profit or loss shall be measured at fair value, with valuation gains or losses to be recognized in profit or loss for the period. For exchange- or OTC-listed securities, the term "fair value" means the closing price on the balance sheet date.
Items in this category shall be identified as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "financial liabilities at fair value through profit or loss – non-current" under the long-term liabilities section.
(4) Preferred stock liabilities – current: Preferred stock with characteristics of financial liabilities under Statement of Financial Accounting Standards No. 36.
Preferred stock liabilities shall be identified as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "preferred stock liabilities – non-current.
(5) Futures traders' equity: The difference between margins and premiums deposited by futures traders and the corresponding settlement fair value.
When a debit balance arises on futures traders' equity, it shall be accounted for as futures margins receivable.
Where the balance of futures traders' equity does not reconcile with that in customer margin accounts, the reason for such discrepancy shall be indicated in the notes.
(6) Notes payable: All notes payable.
Notes payable shall be valued at present value, provided that those resulting from operating activities and maturing within one year may be valued at face value.
Notes payable resulting from operating activities shall be recorded separately from notes payable that result from non-operating activities.
Large-amount notes payable to banks and related parties shall be recorded individually.
If collateral has been provided for notes payable, the name and carrying amount of the collateral shall be indicated.
Notes paid out as refundable deposits that can be recovered for cancellation upon termination of the guarantee obligation need not be reported as current liabilities, provided that the nature and amount of the guarantee shall be indicated in the notes.
(7) Accounts payable: Payables resulting from the conduct of business.
Accounts payable shall be valued at present value, provided that those due within one year may be valued at the carrying amount.
Significant accounts payable balances due to related parties shall be recorded individually.
(8) Other payables: Payables other than notes payable and accounts payable, such as tax payable, accrued salaries, dividends payable, and accrued cash dividends collected for others.
For dividends payable passed by resolution of a shareholders meeting, the distribution method and scheduled payment date shall be indicated.
Each period, at the time of closing, the estimated income tax payable calculated based on taxable income shall be classified as a current liability.
Any other type of payable that accounts in aggregate for more than 5 percent of the total amount of current liabilities shall be recorded separately, categorized by counterparty or the nature of the items.
(9) Other financial liabilities – current: Financial liabilities not recorded individually on the balance sheet shall be classified as "other financial liabilities" and shall be identified by as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "other financial liabilities – non-current" under "long-term liabilities".
When financial liabilities account in aggregate for 5 percent or greater of the total amount of current liabilities, they shall be recorded individually on the balance sheet.
Financial liabilities due to be settled within 12 months after the balance sheet date shall still be classified by an enterprise as current liabilities if a long-term refinancing or rescheduling agreement is not completed until after the balance sheet date.
(10) Advance receipts: Amounts received in advance.
Advance receipts shall be presented by main categories, with any relevant stipulations indicated.
(11) Liabilities directly associated with non-current assets held for sale: Any liability included within a disposal group classified as held for sale, that is available for immediate sale in its present condition subject only to terms that are usual and customary for sales of such disposal groups and whose sale is highly probable to be completed within one year.
(12) Collections for others: All the amounts collected for others, such as futures transaction taxes collected for others and payroll taxes collected for others.
(13) Other current liabilities: All current liabilities not falling within the above categories, such as corporate bonds payable and long-term borrowings that come due within one year.
Any of the above categories of current liabilities that accounts for not more than 5 percent of the total amount of current liabilities may be incorporated into "other current liabilities".
2. Long-term liabilities: Liabilities which will mature 12 months or more after the balance sheet date, including corporate bonds payable, long-term borrowings, long-term notes payable, and long-term payables. When financial liabilities account in aggregate for 5 percent or greater of the amount of long-term liabilities, they shall be recorded individually on the balance sheet.
(1) Corporate bonds payable (including overseas corporate bonds): For bonds issued by an FCM, the total approved amount, interest rate, maturity date, name and carrying amount of the collateral, place of issue, and any restrictive covenants shall be indicated in the notes.
For bonds issued as convertible corporate bonds, the method of conversion and amounts already converted shall also be indicated.
Premiums and discounts on corporate bonds payable are valuation accounts of, and shall be classified as additions to or deductions from, corporate bonds payable. They shall be amortized in a rational and systematic manner over the period of bond circulation and reported as an adjustment to interest expenses.
(2) Long-term borrowings: For long-term borrowings, the content, maturity date, interest rate, name of collateral, carrying amount, and any restrictive covenants shall be indicated.
For a long-term borrowing to be repaid in a foreign currency or in an amount translated at a foreign exchange rate, the name and amount of such foreign currency shall be indicated.
Long-term notes payable and other long-term payables shall be valued at present value.
For a financial liability due to be settled within 12 months after the balance sheet date, if the original loan term was for a period longer than 12 months and the FCM intends to refinance on a long-term basis, and if an agreement to refinance, or to reschedule payments, is completed before the balance sheet date, or the FCM has the discretion under the existing loan facility to refinance or roll over the financial liability for longer than 12 months beyond the balance sheet date, the financial liability shall be classified as a non-current liability, with the amount and fact disclosed in the notes to financial statements.
A financial liability shall be recorded as a current liability if, under the loan agreement, immediate repayment is required upon breach of any special provisions in the agreement. Such a liability shall be classified as a non-current liability, however, if the creditor has agreed by the balance sheet date not to press claim and has provided an extension ending more than 12 months beyond the balance sheet date, and if, furthermore, during the extension period the enterprise has the ability to rectify the breach and the creditor is not allowed to demand immediate repayment.
(3) Preferred stock liabilities – non-current: Preferred stock with characteristics of financial liabilities under Statement of Financial Accounting Standards No. 36.
3. Other liabilities: Liabilities not falling within the above categories, such as refundable deposits and other miscellaneous liabilities.
When "other liabilities" account in aggregate for more than 5 percent of total liabilities, each account under "other liabilities" shall be recorded separately.
Major accounts under "other liabilities" are as follows:
(1) Default reserve: The reserve set aside by an FMC engaging in futures brokerage business on a regular basis to cover any loss that may arise from default by customers, funded by applying a percentage of the transaction fee revenues received for executing customers' futures trading orders.
Trading loss reserve: The reserve set aside by an FCM engaging in futures proprietary trading on a regular basis to cover any loss that may arise from trading, funded by applying a percentage of its realized net profit on proprietary trading.
(3) Refundable deposits: All other guarantee deposits received.
(4) Payments from branches: Where an FCM has branch units, the "Payments from branches" account is used when the head office has a credit balance on payments between the head office and its branch units.
(5) Payments from the head office: To be used when there is a credit balance of receipt of funds by an FCM's branches from the head office.
(6) Internal payments: To be used by an other-industry enterprise concurrently conducting futures business, when its futures department has a credit balance on payments between itself and other departments.
(7) Other liabilities: Liabilities not falling within the above categories.Liabilities shall be properly classified. Current liabilities shall be distinguished from non-current liabilities.
For liabilities, the total amount expected to be settled no more than 12 months after the balance sheet date and the total amount expected to be settled more than 12 months after the balance sheet date shall be separately presented in financial statements or disclosed in the notes.
The classification of liability accounts on the balance sheet, the content of account entries, and matters to be noted are as follows:
1. Current liabilities: Liabilities resulting from an enterprise's operating activities that are expected to be settled in the enterprise's normal operating cycle; liabilities held primarily for the purpose of being traded; liabilities due to be settled within 12 months after the balance sheet date; or liabilities the settlement of which the enterprise does not have an unconditional right to defer for more than 12 months after the balance sheet date.
(1) Short-term borrowings: Includes funds borrowed from the bank on a short-term basis, overdrafts, and other short-term borrowings.
For short-term borrowings, the nature of the borrowing, guarantee status, and interest rate range shall be indicated, and the borrowings grouped by type. If collateral is provided, the name and carrying amount of the collateral shall be indicated.
Funds borrowed from a non-financial institution, as provided in Article 21 of the Regulations Governing Futures Commission Merchants, shall be presented separately.
(2) Commercial paper payable: Commercial paper issued through financial institutions to acquire funds from the money market.
Commercial paper payable shall be valued at present value. Any discount on commercial paper payable shall be recorded as a deduction from commercial paper payable.
For commercial paper payable, the guarantor or accepting institution and interest rate shall be indicated. If collateral is provided, the name and carrying amount of the collateral shall be indicated.
(3) Financial liabilities at fair value through profit or loss – current: Those that meet either of the following conditions:
(i) Financial liabilities held for trading.
(ii) Financial liabilities that, except those designated as hedged items under hedge accounting, upon initial recognition are designated to be measured at fair value, with changes in fair value recognized through profit or loss.
"Financial liabilities held for trading" means financial liabilities designated as held for trading by an enterprise upon initial recognition; a financial instrument shall be classified as a financial liability held for trading if:
(i) It is incurred principally for the purpose of repurchase in the near term.
(ii) It is part of a portfolio of identified financial instruments that are jointly administered and for which there is evidence of a recent actual pattern of short-term profit-taking.
(iii) It is a derivative financial liability that is not a designated or effective hedging instrument.
Financial liabilities at fair value through profit or loss shall be measured at fair value, with valuation gains or losses to be recognized in profit or loss for the period. For exchange- or OTC-listed securities, the term "fair value" means the closing price on the balance sheet date.
Items in this category shall be identified as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "financial liabilities at fair value through profit or loss – non-current" under the long-term liabilities section.
(4) Preferred stock liabilities – current: Preferred stock with characteristics of financial liabilities under Statement of Financial Accounting Standards No. 36.
Preferred stock liabilities shall be identified as either current or non-current, depending on their liquidity, and the non-current portion shall be reclassified as "preferred stock liabilities – non-current.
(5) Futures traders' equity: The difference between margins and premiums deposited by futures traders and the corr |