Circular of the Ministry of Finance on Printing and Issuing the Accounting Rules of Trust Business

Circular of the Ministry of Finance on Printing and Issuing the Accounting Rules of Trust Business

Cai Kuai [2005] No. 1

January 5, 2005

To the finance departments (bureaus) of all provinces, autonomous regions, municipalities directly under the Central Government, and cities specifically designated in the state plan and the finance bureau of the Xinjiang Production and Construction Corps, related ministries and commissions under the State Council and related agencies directly under the State Council, related enterprises under the administration of the Central Government:

The Accounting Rules of Trust Business is formulated under the Accounting Law of the People's Republic of China, the Accounting Systems for Financial Enterprises and other laws and regulations of the State with the purpose of regulating and strengthening the accounting audits of trust business, protecting the security of trust properties, and guarantying the legitimate rights and interests of the entrusting parties, trustees and beneficiaries. We hereby provide it for your implementation. All units (including the entrusting parties, trustees and beneficiaries) engaged in the trust business and trust items shall implement the Measures as of the date of promulgation.

Should there be any problem during the implementation, please feed back to the Ministry of Finance in a timely manner.

Appendix: Accounting Rules of Trust Business

Article 1 Accounting treatment of trust items
1. A trust item refers to a basic unit where a trustee, under the agreement of the trust documents, independently or collectively manage, use and dispose the trust properties.
2. A trust item shall independently calculate the management, use and disposition of the trust properties as an independent accounting audits entity under the circumstance of continuous operations. Various trust items shall independently keep the accounts, calculate and compile the financial reports. Different trust items shall be inter-independent on such issues as the account establishment, capital allotment and accounting records.
Trust properties refer to the properties acquired by the trustees after promising to accept the trust. Properties acquired by the trustees due to the management, use and disposition of the trust properties or under other circumstances shall also be subject to the trust properties. The trust properties shall differ from the properties owned by the trustees (hereinafter referred as the fixed asset), and shall not be deemed as the fixed assets of the trustees or involved into part of the fixed assets. The trust properties shall differ from other properties for which the entrusting parties fail to establish a trust.
3. Accounting elements for a trust item include the trust asset, trust liabilities, trust rights and interests, incomes from trust items, expenditures for trust item and benefits from trust items.
4. Trust asset refers to various assets formed from the trustee management, use and disposition of the trust properties according to the requirements of the trust documents. The trust asset includes the bank deposit, short-term investment, accounts receivable, long-term investment on stocks, client loan, fixed assets and intangible assets.
Where a entrusting party fails to terminate the confirmation for the trust properties, the trust items shall establish a memorandum to register such trust properties (including the profiles of the trust properties, the book list price or balance on the date of the trust establishment, the calculated depreciation reserves, value as agreed in the trust documents, the trust terms and etc.), and shall confirm and calculate such properties according to the Measures. Where the trust properties that a entrusting party fails to terminate the confirmation are fixed assets and intangible assets, the entrusting parties shall calculate the properties' depreciation or amortize the properties. Where the trust properties that a entrusting party fails to terminate the confirmation are long-term investment on stocks, the entrusting parties shall calculate the properties under the measure of rights and interests. The trust items shall not calculate such long-term investment on stocks under the measure of rights and interests. Trust items shall not calculate the depreciation reserves on the trust properties for which an entrusting party fails to terminate the confirmation.
5. Trust liabilities refer to the liabilities formed from the trust items' management, use and disposition of trust properties. They shall include the rewards payable for the trustees, benefits payable for the beneficiaries, trust fees payable, the sold and repurchased credit assets and etc.
6. Trust rights and interests refer to the economic interests that the beneficiaries are entitled in the trust properties. The sum of such interests shall be the balance of the trust properties deducting the trust liabilities, including the actual trust, capital reserves and the undistributed profits, etc.
7. Incomes from trust items refer to the incomes generated from the trust items' management, use and disposition of trust properties. Incomes from trust items shall include the interest incomes, incomes from investment and leasing and other incomes. They shall not include the accounts collected on behalf of a third party or a entrusting party.
8. Expenditures for trust items refer to various costs that shall be assumed by the trust items as agreed by the trust documents. Where the trust documents fail to make such agreement, the expenditures for trust items shall be various costs assumed by the trust items as agreed by the contracts in written form after the negotiation between the trustees and entrusting parties.
9. Benefits from trust items refer to the operation benefits generated by the trust items during a certain accounting term.
Benefits from trust items shall be distributed to the trust beneficiaries as agreed by trust documents.
10. Where a trust is terminated, the trustees shall provide the liquidation reports concerning the trust disposition for the trust items. Where the beneficiaries or the right owners of the trust properties fail to raise objections on such liquidation reports within the terms as agreed by the trust documents, the trustees shall remove all liabilities on all issues as listed in the liquidation reports by trust items, and shall inform, in written form and as stipulated by the trust documents, the beneficiaries or the trust asset owners to retrieve the trust properties after the liquidation. Other circumstances where the laws and administrative regulations provide additional stipulations shall be excluded.
Where a trust is terminated, the trust properties shall be subject to the party as stipulated by the trust documents. Where the trust documents fail to make such stipulations, the ownership of the trust properties shall be determined according to the following orders: 1. the beneficiary or his/her inheritors; 2. the entrusting party or his/her inheritors. Where the verified trust assets are retrieved after the trust termination and the liquidation, they shall be returned to the owners of the trust properties as stipulated by the trust documents; where the trust documents fail to stipulate the owners of the verified and retrieved trust properties, the ownership shall also be determined according to the aforementioned orders.
Where the trust properties fail to be retrieved, benefits generated during the trustees' custody shall be subject to the owners of trust properties. The custody fees shall be paid by such owners.
11. Accounting records for trust items shall be major materials and testimonies for recording and presenting the trust business, and shall include the accounting vouchers, accounting records, financial reports and liquidation records for trust items, etc.
Establishment, safekeeping, review, destroying and custody terms shall comply with related stipulations in the Administrative Measures for Accounting Record Management (Cai Kuai Zi [1998] No. 32) jointly released by the Ministry of Finance and the State Archives Administration.
12. The accounting year of a trust item shall begin on January 1 and end on December 31 of Gregorian calendar.
13. Profit and loss which are generated from the transactions between the trust items and their affiliated parties (such affiliated parties shall be the listed companies), shall be disposed under the Tentative Provisions for Related Accounting Treatment Issues as the Sold Assets between Affiliated Parties (Cai Kuai [2001] No. 64).

Article 2 Accounting treatment for trust business of entrusting parties
1. Where a entrusting party establishes a trust, the confirmation for the trust properties' termination shall be determined by the fact whether related risks and rewards with the ownership of trust properties have actually transferred. (i.e. the trust properties are transferred from the accounts and the balance sheets. Hereinafter shall be the same).
(1) Where a trustee is not the beneficiary and the beneficiary obtains the trust benefit rights via paying a consideration, if the entrusting parties have transferred the risks and rewards for the ownership of such trust properties, confirmation for such trust properties shall be terminated.
A.Where confirmation for trust properties is terminated, balance receivable for the entrusting parties between the consideration and the book value of the trust properties shall be cognized as the profit and loss of asset disposition, and shall be involved into the current profit and loss.
B.Where confirmation for trust properties fails to be terminated, the entrusting party shall keep them on the accounts and the balance sheets, and the received consideration shall be respectively confirmed as an item of assets and an item of liabilities.
a.The entrusting parties shall set subsidiary account titles of "Trust Asset" under the corresponding accounting titles, and shall establish a memorandum for registration. The registered contents shall include profiles of the trust properties, the book list price or balance on the date of the trust establishment, the calculated depreciation reserves, value and the trust terms as agreed in the trust documents and the collected consideration, etc.
b.Where the trust properties for which the confirmation fails to be terminated are such assets as the fixed assets and intangible assets, they shall be depreciated or amortized under the accounting policies prior to the trust establishment, and the depreciation reserves shall be reasonably calculated by the end of the trust terms; where the trust properties for which the confirmation fails to be terminated are long-term investment on stocks calculated by equity method, they shall still be calculated by equity method, and the depreciation reserves shall be reasonably calculated by the end of the trust terms.
Where the fixed assets and intangible assets for which the confirmation fails to be terminated are depreciated or amortized, sum of the calculated depreciation or the amortization shall be calculated under such titles as "Other Business Expenditure".
c.A subsidiary account title of "Trust Financing Account" shall be established under the title of "Other Account Payable" for calculating the consideration received by the entrusting parties from the beneficiaries; where the entrusting parties are subject to other units or organizations, rather than the enterprises, a subsidiary account title of "Trust Financing Account" shall be established under similar titles.
The trust financing accounts shall be involved into the title of "Other Account Payable" on the balance sheets; where the terms of trust financing accounts exceed 1 year, they shall be involved into the title of "Other Long-term Liabilities".
Where a trust continues to exist after the termination, the entrusting parties shall calculate the interest expenditures for the confirmed trust financing accounts, and shall calculate them under such titles as "Financial Expenditures".
d.Entrusting parties shall disclose, in the annotations of accounting forms, the profiles of the trust properties for which the confirmation fails to be terminated, the book value or balance on the date of balance sheet, the calculated depreciation reserves by the end of current term and the calculated depreciation and amortization by the end of current term, etc.
e.Entrusting parties shall cognize the balance between the liquidation value of trust properties and the book value of the entrusting parties' accounts as the asset depreciation loss on the date of trust termination.
(2)Where the entrusting parties are not the beneficiaries and the beneficiaries fail to obtain the trust ownership via paying for the consideration, the entrusting parties shall terminate the confirmation of such trust properties, and shall cognize them as the donations as well as the expenditures beyond the current operation.
(3)Where a entrusting party is the beneficiary and the unique one, the entrusting party shall not terminate the confirmation of trust properties, and shall keep them on its accounts and balance sheet.
Calculation and disclosure of trust properties for which the confirmation fails to be terminated and the calculation at the trust termination shall be processed under related stipulations as stated in "(I). 1. (2)".
Where a trust item announces the trust profit distribution, the entrusting party shall confirm the trust incomes according to their entitled proportions, and shall calculate them under the title of "Other Business Income – Trust Income".
(4)Where a entrusting party is the beneficiary but not the unique one, and other beneficiaries obtain the trust ownership via paying for the consideration, the trust properties shall be treated under the following principles:
A.Where a entrusting party has transferred certain related risks and rewards with the ownership of such trust properties to a trust item, the entrusting party shall apportion, according to the corresponding fair value and between the terminated confirmation and the continuous confirmation, the book value of the trust properties in line with related stipulations as stated in "(I) 1".
B. Where a entrusting party fails to transfer related risks and rewards with the ownership of such trust properties to a trust item, the entrusting party shall dispose such trust properties in line with related stipulations as stated in "(I) 1. (2)".
(5) Where a entrusting party is the beneficiary but not the unique one, and other beneficiaries fail to obtain the trust ownership via paying for the consideration, the entrusting party shall apportion, according to the corresponding fair value and between the terminated confirmation and the continuous confirmation, the book value of the trust properties respectively in line with related stipulations as stated in "(I) 1" and "(I) 2".
2. Where a entrusting party is a listed company and the beneficiary, and the entrusting party has affiliated relations with other beneficiaries (the entrusting party fails to be the unique beneficiary) or trustees, the calculation of its trust incomes shall be processed under Tentative Provisions for Related Accounting Treatment Issues as the Sold Assets between Affiliated Parties (Cai Kuai [2001] No. 64).
3. Where a entrusting party is eligible to control a trust item, it shall be involved into the consolidation of accounting statements.

Article 3 Accounting treatment for trust business of trustees
1. A trustee shall calculate and confirm, according to the calculation measures and standards as stipulated by the trust documents, the trustee' rewards which shall be assumed by the trust items.
Where a trustee is a listed company and has affiliated relations with the entrusting parties or beneficiaries, its calculation of trustees' rewards shall be processed under Tentative Provisions for Related Accounting Treatment Issues as the Sold Assets between Affiliated Parties (Cai Kuai [2001] No. 64)
2. Where a trustee pays for the trust business expenses on behalf of a trust item, such expenditures shall be cognized as the trustee's credit to the trust item.
3. Trust compensation reserves calculated in line with stipulations by a trustee shall be calculated under the title of "Trust Compensation Reserves"; where the compensation is paid to the beneficiaries as agreed by the trust documents, it shall be deducted from balance of "Trust Compensation Reserves" according to the actual payment. And the insufficient part shall be directly involved into the expenditures beyond the operation.
4. Where a trust item is terminated but the trust properties fail to be retrieved, the trustees shall manage and calculate such trust properties as a custody business. Where the trust properties are capitals in currency, they shall be deposited in a specific bank deposit.
5. Where such related parties as entrusting parties shall assume the trustees' rewards, they shall be directly involved into the trustees' title of "Service Fee Income" according to related contracts, and shall not be of any relation with the trust items.

Article 4 Accounting treatment for trust business of beneficiaries
1. Where a beneficiary fails to be the entrusting party and fails to obtain the trust beneficial rights via paying for the consideration, the beneficiary shall cognize such rights as the acceptance of donation, and shall confirm the account record value of such trust beneficial rights according to the proportions entitled to the beneficiary as stipulated by the latest announcement of trust items.
A title of "Trust Beneficial Rights" shall be established to calculate the trust beneficial rights obtained by the beneficiaries. Where the trust beneficial rights are obtained, they shall be debited into the title of "Trust Beneficial Rights" and credited into the title of "Capital Reserves - Trust Beneficial Right Transfer"; where the disposition of a trust beneficial right completes, the overall balance in the title of "Capital Reserves - Trust Beneficial Right Transfer" shall be transferred into the title of "Capital Reserves - Other Capital Reserves".
2. Where a beneficiary fails to be the entrusting party and obtains the trust beneficial rights via paying for the consideration, the beneficiary shall confirm the account record value of such trust beneficial rights according to the paid consideration.
Where a beneficiary obtains the trust beneficial rights, they shall be debited into the title of "Trust Beneficial Rights" and credited into such titles as the "Banking Deposit".
3. Where a beneficiary is the entrusting party, the beneficiary shall dispose such trust properties according to related stipulations as stated in "II. Accounting treatment for trust business of entrusting parties" of the Measures.
4. Where a trust item announces to distribute the trust profits, the beneficiary shall confirm the trust incomes according to the entitled proportions, and shall calculate them under such titles as "Other Business Income - Trust Income".
5. A beneficiary shall inquiry, regularly or at least by the end of each year, on the operation of the trust items; where it is proved that the trust beneficial rights has been devaluated, the beneficiary shall calculate a reasonable depreciation reserves for its trust beneficial rights. The calculated depreciation reserves for trust beneficial rights shall be debited into such titles as "Expenditures beyond the Operation" and "Assets Depreciation Loss", and credited into the title of "Depreciation Reserves for Trust Beneficial Rights".
Where it is objectively proved that the value of the trust beneficial rights after being calculated the depreciation reserves has been recovered, the book value of the trust beneficial rights calculated and confirmed without considering the depreciation shall be compared with its retrievable value. And the balance between the lower one and the book value of trust beneficial rights prior to the value retrieving, shall be debited into the title of "Depreciation Reserves for Trust Beneficial Rights" and credited into such titles as "Expenditures beyond the Operation" and "Assets Depreciation Loss".
6. The beneficiaries shall not amortize the value of trust beneficial rights during the continuous terms of the trust.
Where the sum which a beneficiary actually receives equals to that returned from the value of trust beneficial rights, it shall be deducted from the book balance of the trust beneficial rights.
7. Where the term of trust beneficial rights fails to exceed 1 year, a title of "Trust Beneficial Rights" shall be established after the title of "Long-term Investment on Bonds within 1 Year" in the balance sheet by the end of the year and before the title of "Other Flow Assets". And it shall be specified in the annotations of accounting forms.
Where the term of trust beneficial rights exceeds 1 year, a title of "Trust Beneficial Rights" shall be established after the title of "Intangible Assets and Other Assets" in the balance sheet by the end of the year and before the title of "Deferred Tax". And it shall be specified in the annotations of accounting statements.
8. Where a trust is terminated, balance between the value of trust liquidation properties obtained by beneficiaries and the book value of "Trust Beneficial Rights" shall be cognized as the non-operating incomes beyond the current operations or expenditures beyond the operations.
9. Where a beneficiary is a listed company and has affiliated relations with the entrusting parties or trustees, the calculation of its trust incomes shall be processed under the Tentative Provisions for Related Accounting Treatment Issues as the Sold Assets between Affiliated Parties (Cai Kuai [2001] No. 64).
10. Where a beneficiary is eligible to control a trust item, it shall be involved into the consolidation of accounting statements.

Article 5 Accounting titles and financial reports of trust items
1. Accounting titles of trust items

Name and serial number of accounting items
Sequence number Serial Number Name of Accounting Items

Trust Assets
1 1002 Bank Deposit
2 1003 Other Monetary Assets
3 1100 Capital Lent
4 1101 Short-term Investment
5 1111 Voucher Receivable
6 1121 Dividends Receivable
7 1122 Interests Receivable
8 1131 Accounts Receivable
9 1132 Operating Lease Receivable
10 1133 Other Accounts Receivable
11 1141 Bad Debt Reserves
12 1201 Purchase of Resale Securities
13 1211 Purchase of Resale Credit Assets
14 1301 Client Loans
15 1305 Loan Loss Reserves
16 1401 Long-term Investment on Stocks
17 1402 Long-term Investment on Bonds
18 1421 Long-term Investment Depreciation Reserves
19 1431 Financing and Leasing Assets
20 1432 Finance Lease Receivable
21 1433 Un-guaranteed Residual Value
22 1501 Fixed Assets
23 1502 Accumulated Depreciation
24 1505 Fixed Asset Depreciation Reserves
25 1601 Intangible Assets
26 1605 Intangible Assets Depreciation Reserves
27 1701 Long-term Deferred and Prepaid Expenses

Trust Liabilities
28 2102 Interests Payable
29 2111 Trustees' Rewards Payable
30 2121 Beneficiaries' Incomes Payable
31 2131 Custody Fees Payable
32 2141 Taxation Payable
33 2151 Other Accounts Payable
34 2201 Sale of Repurchase Securities
35 2211 Sale of Repurchase Credit Assets
36 2301 Deferred Incomes

Trust Rights and Interests
37 3101 Received Trust
38 3111 Capital Reserves
39 3131 Profits of Current Year
40 3141 Profit Distribution

Trust Profit and Loss
41 4101 Interest Incomes
42 4201 Incomes from Investment
43 4301 Incomes form Leasing
44 4401 Other Incomes
45 4501 Operation Taxation and Others
46 4502 Business Expenses
47 4601 Asset Depreciation Loss

Instructions for the accounting titles

1002 Bank Deposit

Article 1 The title shall calculate the accounts that a trust item deposits in the commercial banks and other financial institutions.

Article 2 Where the accounts are deposited in the banks, they shall be debited into the current title and credited into related titles; where the accounts are paid, they shall be debited into related titles and credited into the current title.

Article 3 "Deposit Journal" shall be respectively established under the title according to the banks opening the accounts and varieties of the deposits. They shall also be recorded according to the business sequence and the receipt and payment vouchers. Balance shall be calculated by the end of each day. The "Deposit Journal" shall be checked with the banking statement in a regular manner, at least once for each month. Where differences exist between the book balance of bank deposits and the balance of the banking statements by the end of the month, the reasons shall be found out via checking all transactions. And a "Bank Deposit Balance Adjustment Form" shall be compiled every month.

Article 4 Debt balance by the end of the term in the current title shall reflect the accounts that the trust items actually deposit in the commercial banks and other financial institutions.

1003 Other Monetary Assets

Article 1 The title shall calculate various other monetary assets of the trust items, including the bank draft deposits, bank promissory note deposits and refundable deposits.

Article 2 Main accounting treatment for other monetary assets
1. The bank draft deposits refer to the accounts that are deposited into the banks in line with provisions for obtaining the bank drafts. Where the bank drafts are obtained, they shall be debited into the current title and credited into the title of "Bank Deposit" according to the returned application forms' counterfoil sealed by banks. Where the bank drafts are used, they shall be debited into related titles and credited into the current title according to related vouchers as the invoices; where additional accounts exist or the accounts are returned because the bank drafts exceed the payment terms, they shall be debited into the title of "Bank Deposit" and credited into the current title according to the payment notice transferred from the banks opening the accounts.
2. Bank promissory note deposits refer to the accounts that are deposited into the banks in line with provisions for obtaining the bank promissory notes. Where the bank promissory notes are obtained, they shall be debited into the current title and credited into the title of "Bank Deposit" according to the returned applications' counterfoil sealed by banks. Where the bank promissory notes are used, they shall be debited into related titles and credited into the current title according to related vouchers as the invoices; where it is required to return the accounts because the bank promissory notes exceed the payment terms, they shall be filled into the credit bill in duplicate and the credit shall be submitted to the banks together with the promissory notes. They shall be debited into the title of "Bank Deposit" and credited into the current title according to the first page of returned credit bill sealed by banks.
3. Refundable deposits refer to the accounts which are deposited into the capital accounts opened in such institutions as the securities companies and are prepared for the short-term investment. Where the capitals are transferred to the capital accounts of such institutions as the securities companies, they shall be debited to the current title and credited to the title of "Bank Deposit" according to the actually transferred sum of money; where the securities or resale securities are purchased, they shall be debited into such titles as "Short-term Investment" and "Purchase of Resale Securities" and credited into the current title; where capitals are returned from the capital accounts of securities companies, they shall be debited into the title of "Bank Deposit" and credited into the current title.

Article 3 Such subsidiary account titles as "Bank Draft", "Bank Promissory Note" and "Refundable Deposit" shall be established under the current title. The "Refundable Deposit" shall be checked, at least once a month, with the credit bill of such institutions as the securities companies. Where differences exist between the book balance of "Refundable Deposit" and the balance of the credit bills of such institutions as the securities companies by the end of the month, the reasons shall be found out via checking all transactions. And a "Bank Deposit Balance Adjustment Form" shall be compiled every month.

Article 4 Bank drafts, bank promissory notes which fail to process the settlement in due shall be returned in a timely manner in line with provisions.

Article 5 Debt balance by the end of the term in the current title shall reflect the other monetary assets actually possessed by the trust items.

1100 Capital Lent

Article 1 The title shall reflect the trust assets lent by the trust items in line with provisions via the inter-bank loan market.

Article 2 Main accounting treatment for Capital Lent
Where the assets are lent, they shall be debited into the current title and credited into the title of "Bank Deposit" according to the actual capitals lent; they shall be debited into the title of "Interests Receivable" and credited into the title of "Interest Incomes" according to the calculated interests of the capitals lent by the end of the terms. Where the principals and interests for the capitals lent are due and shall be retrieved, they shall be debited into the title of "Bank Deposit" according to the sum actually received, be credited into the title of "Interest Receivable" according to the calculated interests, be debited into the current title according to the principals for capitals lent and shall be credited into the title of "Interest Incomes" according to their balance.

Article 3 The trust items shall conduct a comprehensive review on the capitals lent regularly or at least by the end of each year, and shall reasonably calculate the bad debt reserves. Reasons shall be found out and liabilities shall be imposed for the un-retrieved capitals lent. Where the capitals lent can not be retrieved indeed, they shall be cognized as the bad debt loss according related agreements as stated in the trust documents, and shall be deducted from the calculated bad debt reserves.
Where the capitals lent are confirmed as the bad debt with approval, they shall be debited into the title of "Bad Debt Reserves" and credited into the current title according to the confirmed bad debts.
Where the confirmed and resold bad debt loss is retrieved, it shall be debited into the current title and credited into the title of "Bad Debt Reserves" according to the sum of money that shall be actually retrieved; it shall be debited into the title of "Bank Deposit" and credited as the current title.

Article 4 The subsidiary account titles shall be established under the current title according to the lent units for detailed calculation.

Article 5 Debt balance by the end of the term in the current title shall reflect the principals of the trust capital lent which are un-due but the trust items have not retrieved.

1101 Short-term Investment

Article 1 The title shall calculate the investments that the trust items possess for their management, use and disposition of the trust properties for no more than 1 year (inclusive), and that can be cashed in any time, including the stocks, bonds and funds, etc.
Where the purchased investments are unable to be cashed in any time or are not planned to be cashed in any time, they shall be calculated under the titles of "Long-term Investment on Stocks" and "Long-term Investment on Bonds", and shall not be calculated under the current title.

Article 2 Where the short-term investments are obtained, they shall be recorded into the accounts according to the investment costs while obtaining the investments. The investment costs shall refer to the prices which are actually paid for obtaining such assets as stocks, bonds and funds, etc.
The prices actually paid for purchasing various stocks, bonds and funds shall include the cash dividends which have been announced but have not been drawn, or the bond interests which are due but have not been drawn. They shall be calculated independently and shall not be the investment costs.
Where an entrusting party obtains the short-term investments via establishing a trust by securities, they shall be cognized as the short-term investment costs according to the value as agreed by the trust documents.

Article 3 Main accounting treatment for Short-term investment
1. Where a short-term investment is purchased, it shall be debited into the current title and credited into such titles as "Bank Deposit" and "Other Monetary Assets" according to the actually paid prices. Where the actually paid prices include the cash dividends which have been announced but have not been drawn, or the bond interests which are due but have not been drawn, they shall be debited into the current title according to the balance of the actually paid prices deducting the cash dividends which have been announced but have not been drawn or the bond interests which are due but have not been drawn, and shall be debited into such titles as "Dividends Receivable" and "Interests Receivable" according to the cash dividends and interests receivable, and shall be credited into such titles as "Bank Deposit" and "Other Monetary Assets" according to the actually paid prices.
2. Where a entrusting party obtains the short-term investments via establishing a trust by securities, they shall be debited into the current title and be credited into the title of "Received Trust" according to the value as agreed by the trust documents.
3. Where the cash dividends or interests are generated from the obtained short-term investments, they shall be debited into the title of "Bank Deposit" according to the generated cash dividends or interests, be credited into such titles as "Dividends Receivable" and "Interests Receivable" according to the confirmed dividends or interests receivable, and shall be credited into the title of "Investment Incomes" according to their balance.
4. The dividends (i.e. the distributed bonus share) or the conversed shares generated from the obtained stocks shall not be processed with the accounting treatment, and shall be recorded in the column of "Number" in the current account.
5. Where the short-term investments are sold, they shall be debited into the title of "Bank Deposit" according to the actually received sum of money, be credited into the current title according to the book value of the short-term investments, be credited into such titles as "Dividends Receivable" and "Interests Receivable" according to the confirmed dividends or interests receivable and shall be credited or debited into the title of "Investment Incomes" according to their balance.
Where the short-term investments are sold, the short-term investment costs that are carried over by the investments shall be calculated via the Weighted Average Method, First In First Out Method and the Specific Identification Method.

Article 4 The short-term investments shall be calculated under the market price by the end of the terms, and balance between the book value of short-term investments shall be calculated into the current profit and loss.
Where a entrusting party obtains the short-term investments via establishing a trust by securities, if the entrusting party fails to terminate the confirmation, they shall also be calculated according to the costs by the end of the terms.

Article 5 The subsidiary account titles shall be established under the current title according to the varieties of the short-term investments for detailed calculation respectively for stocks, bonds and securities.

Article 6 Debt balance by the end of the term in the current title shall reflect the market prices or costs of such short-term investments as stocks, bonds and funds possessed by trust items.

1111 Voucher Receivable

Article 1 The title shall calculate the commercial drafts which are received by the trust items for their management, use and disposition of trust properties, including the bank acceptance bills and commercial acceptance drafts.

Article 2 Where the opened and accepted commercial drafts are received, they shall be recorded into accounts according to the book value of the vouchers receivable; interest-bearing notes receivable shall be calculated with the interests by the end of the terms. The calculated interests shall increase the book balance of the vouchers receivable.

Article 3 Main accounting treatment for vouchers receivable
1. Where the opened and accepted commercial drafts are received, they shall be debited into the current title and credited into the title of "Interest Incomes" according to the book value of the vouchers receivable.
2. Where the vouchers receivable compensate the accounts receivable, they shall be debited into the current title and credited into the title of "Accounts Receivable" according to the book value of the vouchers receivable. Where they are the interest-bearing vouchers receivable, they shall be calculated with the interests according to the book value of the vouchers receivable and the confirmed interests by the end of the terms. The calculated interests shall increase the book balance of the vouchers receivable, and shall be debited into the current title and be credited into the title of "Interest Incomes".
3. Where the possessed undue vouchers receivable are used to discount to the banks, they shall be processed under the principle of "Substance Over Form" comprehensively considering the economic substance of the transactions. Where it is objectively proved that the risks and rewards related to the discounted vouchers receivable have been transferred to the banks in fact, they shall be sold and disposed as the vouchers receivable. The corresponding profit and loss shall be confirmed; otherwise, the accounting treatment shall be processed as the debts obtained with the pledge of vouchers receivable.
Where the risks and rewards related to the discounted vouchers receivable have been transferred to the banks in fact, they shall be debited into the title of "Bank Deposit" according to the accounts actually received from the banks, be credited into the current title according to the book balance of the discounted vouchers receivable, be debited into the title of "Operation Expenditures" and be credited into the title of "Interest Incomes" according to their balance.
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