Circular on Issuing the Accounting System for Non-governmental Nonprofit Organizations
Circular on Issuing the Accounting System for Non-governmental Nonprofit Organizations
Circular on Issuing the Accounting System for Non-governmental Nonprofit Organizations
Cai Kuai [2024] No.25
December 20, 2024
Concerned ministers and commissions of and departments directly under the State Council, the General Office of the Standing Committee of the National People's Congress (NPC), departments (bureaus) of finance of all provinces, autonomous regions, municipalities directly under the Central Government and cities separately listed in the State plan, the Bureau of Finance of Xinjiang Production and Construction Corps, and the entities concerned,
In order to regulate the accounting of non-governmental nonprofit organizations and improve the quality of accounting information, in accordance with the Accounting Law of the People's Republic of China and other relevant regulations, we have revised the Accounting System for Non-governmental Nonprofit Organizations (Cai Kuai [2004] No. 7), which are hereby issued and will take effect as of January 1, 2026.
Accounting System for Non-governmental Nonprofit Organizations
Table of Contents
Chapter I General Provisions
Chapter II Assets
Chapter III Liabilities
Chapter IV Net Assets
Chapter V Income
Chapter VI Expenses
Chapter VII Financial Accounting Reports
Chapter VIII Supplementary Provisions
Appendix: Accounting Subjects and Accounting Statements
Chapter I General Provisions
Article 1 This System is formulated in accordance with the Accounting Law of the People's Republic of China and other national laws and administrative regulations in order to regulate the accounting of non-governmental nonprofit organizations and ensure the quality of accounting information.
Article 2 This System applies to the non-governmental nonprofit organizations established in accordance with the law within the territory of the People's Republic of China that meet the characteristics specified herein. If the financial authority under the State Council has formulated other provisions, such provisions shall prevail.
The term "non-governmental nonprofit organizations" referred to in the preceding paragraph includes social organizations, foundations, social service institutions, religious activity venues, international social organizations, international chambers of commerce, and representative offices of overseas non-governmental organizations legally registered and established within the territory of China.
A non-governmental nonprofit organization applicable to this System shall simultaneously possess the following characteristics:
(1) The said organization has been established for public welfare or any other non-profit purpose;
(2) No economic return is received by any resource provider for any resources provided to the said organization; and
(3) No resource provider retains or enjoys any property right over any asset of the said organization.
Article 3 Transactions or events of non-governmental nonprofit organizations shall be taken as the object for accounting, for which purpose all economic and business events of the organization shall be recorded and reflected.
Article 4 Accounting shall be based on the continued activities of non-governmental nonprofit organizations.
Article 5 Accounting shall be divided into accounting period, account settlement, and the preparation of financial accounting reports. The accounting period shall be divided into at least annual and monthly periods. The start and end dates of an accounting year, month, or any other accounting period shall be based on the Gregorian calendar.
Article 6 Renminbi shall be used as the base currency for bookkeeping in the process of accounting. Any non-governmental nonprofit organization whose business income and expenditure are mainly denominated in currencies other than the Renminbi may select one of such currencies as the base currency for bookkeeping, provided that the currency in the prepared financial accounting reports shall be converted into Renminbi.
A non-governmental nonprofit organization shall set up foreign currency accounts in the accounting for businesses in foreign currency. Foreign currency accounts include foreign currency cash accounts, foreign currency bank deposit accounts, and accounts for receivables and payables settled in foreign currencies, all of which shall be established separately from non-foreign currency accounts and accounted for independently.
Where a non-governmental nonprofit organization engages in foreign currency transactions, the amount of foreign currency involved shall be converted into the amount of base currency for bookkeeping. Unless otherwise specified, all accounts related to foreign currency transactions shall use the spot exchange rate on the date of the transaction.
The foreign currency balances of all foreign currency accounts shall be converted into the base currency at the spot exchange rate at the end of the corresponding period. The difference between the amount of base currency converted at the spot exchange rate at the end of the period and the carrying amount of base currency shall be stated as exchange gains or losses in the current expenses. However, the exchange differences arising from the principal and interest of special borrowings in foreign currencies related to the acquisition and construction of fixed assets, intangible assets, and other non-current assets during the period of borrowing costs to be capitalized shall be hence capitalized and stated as the costs of fixed assets, intangible assets, and other non-current assets. The period of borrowing costs to be capitalized shall be determined in accordance with Article 38 of this system.
The term "foreign currency transactions" in this System refers to transactions involving the receipt and payment of funds and settlement of accounts in currencies other than the base currency for bookkeeping.
The term "special borrowings" in this System refers to funds borrowed specifically for the acquisition and construction of fixed assets, intangible assets, and other non-current assets.
Article 7 Accounting shall be based on the accrual basis.
Article 8 In accounting, a non-governmental nonprofit organization shall adhere to the following basic principles:
(1) Accounting shall be based on actual transactions or events, truthfully reflecting the financial position, business activities, and cash flow of the organization.
(2) The information provided for accounting shall be sufficient to meet the needs of accounting information users (e.g., investors, founders, donors, members, supervisors, etc.).
(3) Accounting shall be conducted based on the substance of transactions or events, rather than merely based on their legal form.
(4) Accounting policies shall be consistent across periods without any arbitrary change. If any change is necessary, the content, reasons, and cumulative impact of such change shall be disclosed in the notes to the financial statements. If the cumulative impact cannot be reasonably determined, the reasons therefor shall be disclosed.
(5) Accounting shall be conducted as per the prescribed accounting methods with consistent and comparable accounting information.
(6) Accounting shall be carried out in a timely manner must not be conducted prematurely or postponed.
(7) Accounting and prepared financial accounting reports shall be clear and easy to understand and use.
(8) Expenses incurred in and from accounting shall be consistent with the related income, and all income and related expenses within the same accounting period shall be recognized within such period.
(9) Accounting shall be subject to the principle of prudence.
(10) In accounting, it is required to reasonably distinguish between expenditures to be included in current expenses and expenditures to be capitalized.
(11) Accounting shall be subject to the principle of materiality: Any material accounting matter with a significant impact on assets, liabilities, net assets, income, or expenses, thus affecting the reasonable judgment of financial accounting report users shall be processed in accordance with prescribed accounting methods and procedures and shall be fully disclosed in the financial accounting reports, while any non-material accounting matter may be appropriately simplified provided that it does not affect the authenticity of accounting information or misleads accounting information users into making accurate judgments.
Article 9 The double-entry bookkeeping method shall be used for accounting records.
Article 10 The Chinese language shall be used in accounting records. In ethnic autonomous areas, a commonly used ethnic language may also be used for accounting records. Any international social organization, foreign chamber of commerce, or representative office of any overseas non-governmental organization legally registered and established within the territory of China may also use a foreign language for its bookkeeping.
Article 11 A non-governmental nonprofit organization may formulate detailed accounting rules in accordance with the relevant accounting laws, administrative regulations, and this System, provided that such rules are compliant with this System and tailored to specific circumstances.
Article 12 Non-governmental nonprofit organizations shall fill in accounting vouchers, register accounting books, prepare financial accounting reports, and manage accounting archives in accordance with the Accounting Law of the People's Republic of China, the Rules for the Basic Accounting Work, the Measures for the Administration of Accounting Archives, and other regulations.
Article 13 A non-governmental nonprofit organization shall establish and improve its internal accounting supervision rules in accordance with the relevant national laws and administrative regulations and based on the characteristics of its business activities, and incorporate such rules into its internal control system to improve the quality of accounting information and management competence.
Chapter II Assets
Article 14 Assets are resources formed from past transactions or events and owned or controlled by a non-governmental nonprofit organization, and are expected to bring economic benefits or service potential to the organization. Assets are divided into current assets, non-current assets, and agency assets under entrustment, the non-current assets of which include long-term investments, fixed assets, and intangible assets.
Article 15 Any resource that falls under the definition of assets specified in Article 14 of this System shall be recognized as assets while all the following conditions are met:
(1) The service potential related to the resource is likely to be realized, or economic benefits are likely to flow into the non-governmental nonprofit organization concerned; and
(2) The cost or value of the resource may be reliably measured.
Assets that meet the definition and are recognized shall be included in the balance sheets.
Article 16 Assets shall be measured at their actual cost upon acquisition, unless otherwise specified by this System, in which case they shall be measured based on the specified measurement basis. Subsequent adjustments to the book value of assets shall be subject to this System. Unless otherwise specified by laws, administrative regulations, and the national unified accounting rules, no non-governmental nonprofit organization is allowed to independently adjust the book value of any asset.
Article 17 Non-governmental nonprofit organizations shall regularly, or at least at the end of each fiscal year, check whether such assets as short-term investments, receivables, inventories, and long-term investments have been impaired. In the case of any impairment, an impairment provision shall be withdrawn, and the losses from impairment shall be recognized and included in the current expenses. For other assets such as fixed assets and intangible assets, in the case of any significant impairment, an impairment provision shall also be withdrawn, and the losses from impairment shall be recognized and included in the current expenses. If the value of any asset for which an impairment provision has been withdrawn is restored in subsequent accounting periods, the previously recognized losses from impairment shall be partially or fully reversed within the range of the impairment provision withdrawn for the asset, offsetting the current expenses.
Article 18 Any cash asset received as a donation by any non-governmental nonprofit organization shall be entered at the actual amount received. Any equity received as a donation by any non-governmental nonprofit organization shall be entered at the amount on the donation receipt or any other evidence issued by the said organization by relevant regulations. For any other non-cash asset received as a donation, its entry value shall be determined as follows:
(1) If the donor provides relevant evidence (e.g., invoices, customs declarations, and agreements), the amount indicated on such evidence shall be used as the entry value.
(2) If the donor fails to provide relevant evidence, or if the amount indicated on the evidence significantly differs from the fair value of the donated asset, such fair value shall be used as the entry value.
(3) For any fixed asset or intangible asset received as a donation by any non-governmental nonprofit organization, if the donor fails to provide the relevant evidence, and conclusive evidence proves that the fair value of the asset cannot be reliably measured, it shall be entered at the nominal amount (i.e., RMB 1). For any cultural relic donated to any non-governmental nonprofit organization, if the donor fails to provide the relevant evidence, such cultural relic shall be entered at a nominal amount.
(4) For any service donation received by any non-governmental nonprofit organization, if the donor provides invoices or other relevant evidence and the amount indicated on the evidence reflects the fair value of the donated service, the said organization shall enter it at the amount on the evidence; otherwise, it shall not be recognized.
(5) Relevant taxes, transportation fees, and other costs incurred by any non-governmental nonprofit organization when accepting non-cash asset donations shall be stated as fundraising expenses.
Article 19 The term "fair value" in this System refers to the price that a market participant would receive from selling an asset or pay to transfer a liability in an orderly transaction at the measurement date. The fair value shall be determined in the following order:
(1) If there is an active market for similar or identical assets, the market price of similar or identical assets shall be used to determine the fair value.
The market price generally refers to the ex-factory price of self-produced goods by the donor, the sales price of goods sold by the donor, government-guided prices, or prices of similar or identical goods on well-known large e-commerce platforms.
(2) If there is no active market for similar or identical assets, or if no similar or identical asset can be found, a reasonable valuation method shall be used to determine the fair value of the asset.
Article 20 If a non-governmental nonprofit organization engages in any non-monetary transactions, the following principles shall apply:
(1) The fair value of the surrendered asset, plus any related taxes to be paid, shall be used as the entry value of the received asset.
(2) In the case of any boot in a non-monetary transaction, the boot shall be accounted for according to the following circumstances, respectively: (i) If the boot is paid, the fair value of the surrendered asset plus the premium paid and any related taxes to be paid shall be used as the entry value of the received asset. The difference between the fair value of the surrendered asset and its book value shall be included in the current gains or losses.
If there is conclusive evidence that the fair value of the received asset is more reliable, the fair value of the received asset and any related taxes to be paid shall be used as the initial amount of measurement for the received asset, and the difference between the fair value of the received asset minus the fair value of the boot paid and the book value of the surrendered asset shall be included in the current gains or losses.
(ii) If a boot is received, the fair value of the surrendered asset minus the boot received plus any related taxes to be paid shall be used as the entry value of the received asset. The difference between the fair value of the surrendered asset and its book value shall be included in the current gains or losses.
If there is conclusive evidence that the fair value of the received asset is more reliable, the fair value of the received asset and any related taxes to be paid shall be used as the initial amount of measurement for the received asset, and the difference between the fair value of the received asset plus the fair value of the boot received and the book value of the surrendered asset shall be included in the current gains or losses.
(3) If an exchange of non-monetary assets simultaneously involves several assets, the total fair value of the surrendered assets and relevant taxes to be paid shall be distributed as per the proportion of the fair value of each received asset to the total fair value of the received assets, thus determining the entry value of each received asset.
The term "non-monetary transactions" in this system refers to exchanges conducted by both parties concerned using non-monetary assets, which do not involve or only involve a small amount of monetary assets (i.e., boot).
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Cai Kuai [2024] No.25
December 20, 2024
Concerned ministers and commissions of and departments directly under the State Council, the General Office of the Standing Committee of the National People's Congress (NPC), departments (bureaus) of finance of all provinces, autonomous regions, municipalities directly under the Central Government and cities separately listed in the State plan, the Bureau of Finance of Xinjiang Production and Construction Corps, and the entities concerned,
In order to regulate the accounting of non-governmental nonprofit organizations and improve the quality of accounting information, in accordance with the Accounting Law of the People's Republic of China and other relevant regulations, we have revised the Accounting System for Non-governmental Nonprofit Organizations (Cai Kuai [2004] No. 7), which are hereby issued and will take effect as of January 1, 2026.
Accounting System for Non-governmental Nonprofit Organizations
Table of Contents
Chapter I General Provisions
Chapter II Assets
Chapter III Liabilities
Chapter IV Net Assets
Chapter V Income
Chapter VI Expenses
Chapter VII Financial Accounting Reports
Chapter VIII Supplementary Provisions
Appendix: Accounting Subjects and Accounting Statements
Chapter I General Provisions
Article 1 This System is formulated in accordance with the Accounting Law of the People's Republic of China and other national laws and administrative regulations in order to regulate the accounting of non-governmental nonprofit organizations and ensure the quality of accounting information.
Article 2 This System applies to the non-governmental nonprofit organizations established in accordance with the law within the territory of the People's Republic of China that meet the characteristics specified herein. If the financial authority under the State Council has formulated other provisions, such provisions shall prevail.
The term "non-governmental nonprofit organizations" referred to in the preceding paragraph includes social organizations, foundations, social service institutions, religious activity venues, international social organizations, international chambers of commerce, and representative offices of overseas non-governmental organizations legally registered and established within the territory of China.
A non-governmental nonprofit organization applicable to this System shall simultaneously possess the following characteristics:
(1) The said organization has been established for public welfare or any other non-profit purpose;
(2) No economic return is received by any resource provider for any resources provided to the said organization; and
(3) No resource provider retains or enjoys any property right over any asset of the said organization.
Article 3 Transactions or events of non-governmental nonprofit organizations shall be taken as the object for accounting, for which purpose all economic and business events of the organization shall be recorded and reflected.
Article 4 Accounting shall be based on the continued activities of non-governmental nonprofit organizations.
Article 5 Accounting shall be divided into accounting period, account settlement, and the preparation of financial accounting reports. The accounting period shall be divided into at least annual and monthly periods. The start and end dates of an accounting year, month, or any other accounting period shall be based on the Gregorian calendar.
Article 6 Renminbi shall be used as the base currency for bookkeeping in the process of accounting. Any non-governmental nonprofit organization whose business income and expenditure are mainly denominated in currencies other than the Renminbi may select one of such currencies as the base currency for bookkeeping, provided that the currency in the prepared financial accounting reports shall be converted into Renminbi.
A non-governmental nonprofit organization shall set up foreign currency accounts in the accounting for businesses in foreign currency. Foreign currency accounts include foreign currency cash accounts, foreign currency bank deposit accounts, and accounts for receivables and payables settled in foreign currencies, all of which shall be established separately from non-foreign currency accounts and accounted for independently.
Where a non-governmental nonprofit organization engages in foreign currency transactions, the amount of foreign currency involved shall be converted into the amount of base currency for bookkeeping. Unless otherwise specified, all accounts related to foreign currency transactions shall use the spot exchange rate on the date of the transaction.
The foreign currency balances of all foreign currency accounts shall be converted into the base currency at the spot exchange rate at the end of the corresponding period. The difference between the amount of base currency converted at the spot exchange rate at the end of the period and the carrying amount of base currency shall be stated as exchange gains or losses in the current expenses. However, the exchange differences arising from the principal and interest of special borrowings in foreign currencies related to the acquisition and construction of fixed assets, intangible assets, and other non-current assets during the period of borrowing costs to be capitalized shall be hence capitalized and stated as the costs of fixed assets, intangible assets, and other non-current assets. The period of borrowing costs to be capitalized shall be determined in accordance with Article 38 of this system.
The term "foreign currency transactions" in this System refers to transactions involving the receipt and payment of funds and settlement of accounts in currencies other than the base currency for bookkeeping.
The term "special borrowings" in this System refers to funds borrowed specifically for the acquisition and construction of fixed assets, intangible assets, and other non-current assets.
Article 7 Accounting shall be based on the accrual basis.
Article 8 In accounting, a non-governmental nonprofit organization shall adhere to the following basic principles:
(1) Accounting shall be based on actual transactions or events, truthfully reflecting the financial position, business activities, and cash flow of the organization.
(2) The information provided for accounting shall be sufficient to meet the needs of accounting information users (e.g., investors, founders, donors, members, supervisors, etc.).
(3) Accounting shall be conducted based on the substance of transactions or events, rather than merely based on their legal form.
(4) Accounting policies shall be consistent across periods without any arbitrary change. If any change is necessary, the content, reasons, and cumulative impact of such change shall be disclosed in the notes to the financial statements. If the cumulative impact cannot be reasonably determined, the reasons therefor shall be disclosed.
(5) Accounting shall be conducted as per the prescribed accounting methods with consistent and comparable accounting information.
(6) Accounting shall be carried out in a timely manner must not be conducted prematurely or postponed.
(7) Accounting and prepared financial accounting reports shall be clear and easy to understand and use.
(8) Expenses incurred in and from accounting shall be consistent with the related income, and all income and related expenses within the same accounting period shall be recognized within such period.
(9) Accounting shall be subject to the principle of prudence.
(10) In accounting, it is required to reasonably distinguish between expenditures to be included in current expenses and expenditures to be capitalized.
(11) Accounting shall be subject to the principle of materiality: Any material accounting matter with a significant impact on assets, liabilities, net assets, income, or expenses, thus affecting the reasonable judgment of financial accounting report users shall be processed in accordance with prescribed accounting methods and procedures and shall be fully disclosed in the financial accounting reports, while any non-material accounting matter may be appropriately simplified provided that it does not affect the authenticity of accounting information or misleads accounting information users into making accurate judgments.
Article 9 The double-entry bookkeeping method shall be used for accounting records.
Article 10 The Chinese language shall be used in accounting records. In ethnic autonomous areas, a commonly used ethnic language may also be used for accounting records. Any international social organization, foreign chamber of commerce, or representative office of any overseas non-governmental organization legally registered and established within the territory of China may also use a foreign language for its bookkeeping.
Article 11 A non-governmental nonprofit organization may formulate detailed accounting rules in accordance with the relevant accounting laws, administrative regulations, and this System, provided that such rules are compliant with this System and tailored to specific circumstances.
Article 12 Non-governmental nonprofit organizations shall fill in accounting vouchers, register accounting books, prepare financial accounting reports, and manage accounting archives in accordance with the Accounting Law of the People's Republic of China, the Rules for the Basic Accounting Work, the Measures for the Administration of Accounting Archives, and other regulations.
Article 13 A non-governmental nonprofit organization shall establish and improve its internal accounting supervision rules in accordance with the relevant national laws and administrative regulations and based on the characteristics of its business activities, and incorporate such rules into its internal control system to improve the quality of accounting information and management competence.
Chapter II Assets
Article 14 Assets are resources formed from past transactions or events and owned or controlled by a non-governmental nonprofit organization, and are expected to bring economic benefits or service potential to the organization. Assets are divided into current assets, non-current assets, and agency assets under entrustment, the non-current assets of which include long-term investments, fixed assets, and intangible assets.
Article 15 Any resource that falls under the definition of assets specified in Article 14 of this System shall be recognized as assets while all the following conditions are met:
(1) The service potential related to the resource is likely to be realized, or economic benefits are likely to flow into the non-governmental nonprofit organization concerned; and
(2) The cost or value of the resource may be reliably measured.
Assets that meet the definition and are recognized shall be included in the balance sheets.
Article 16 Assets shall be measured at their actual cost upon acquisition, unless otherwise specified by this System, in which case they shall be measured based on the specified measurement basis. Subsequent adjustments to the book value of assets shall be subject to this System. Unless otherwise specified by laws, administrative regulations, and the national unified accounting rules, no non-governmental nonprofit organization is allowed to independently adjust the book value of any asset.
Article 17 Non-governmental nonprofit organizations shall regularly, or at least at the end of each fiscal year, check whether such assets as short-term investments, receivables, inventories, and long-term investments have been impaired. In the case of any impairment, an impairment provision shall be withdrawn, and the losses from impairment shall be recognized and included in the current expenses. For other assets such as fixed assets and intangible assets, in the case of any significant impairment, an impairment provision shall also be withdrawn, and the losses from impairment shall be recognized and included in the current expenses. If the value of any asset for which an impairment provision has been withdrawn is restored in subsequent accounting periods, the previously recognized losses from impairment shall be partially or fully reversed within the range of the impairment provision withdrawn for the asset, offsetting the current expenses.
Article 18 Any cash asset received as a donation by any non-governmental nonprofit organization shall be entered at the actual amount received. Any equity received as a donation by any non-governmental nonprofit organization shall be entered at the amount on the donation receipt or any other evidence issued by the said organization by relevant regulations. For any other non-cash asset received as a donation, its entry value shall be determined as follows:
(1) If the donor provides relevant evidence (e.g., invoices, customs declarations, and agreements), the amount indicated on such evidence shall be used as the entry value.
(2) If the donor fails to provide relevant evidence, or if the amount indicated on the evidence significantly differs from the fair value of the donated asset, such fair value shall be used as the entry value.
(3) For any fixed asset or intangible asset received as a donation by any non-governmental nonprofit organization, if the donor fails to provide the relevant evidence, and conclusive evidence proves that the fair value of the asset cannot be reliably measured, it shall be entered at the nominal amount (i.e., RMB 1). For any cultural relic donated to any non-governmental nonprofit organization, if the donor fails to provide the relevant evidence, such cultural relic shall be entered at a nominal amount.
(4) For any service donation received by any non-governmental nonprofit organization, if the donor provides invoices or other relevant evidence and the amount indicated on the evidence reflects the fair value of the donated service, the said organization shall enter it at the amount on the evidence; otherwise, it shall not be recognized.
(5) Relevant taxes, transportation fees, and other costs incurred by any non-governmental nonprofit organization when accepting non-cash asset donations shall be stated as fundraising expenses.
Article 19 The term "fair value" in this System refers to the price that a market participant would receive from selling an asset or pay to transfer a liability in an orderly transaction at the measurement date. The fair value shall be determined in the following order:
(1) If there is an active market for similar or identical assets, the market price of similar or identical assets shall be used to determine the fair value.
The market price generally refers to the ex-factory price of self-produced goods by the donor, the sales price of goods sold by the donor, government-guided prices, or prices of similar or identical goods on well-known large e-commerce platforms.
(2) If there is no active market for similar or identical assets, or if no similar or identical asset can be found, a reasonable valuation method shall be used to determine the fair value of the asset.
Article 20 If a non-governmental nonprofit organization engages in any non-monetary transactions, the following principles shall apply:
(1) The fair value of the surrendered asset, plus any related taxes to be paid, shall be used as the entry value of the received asset.
(2) In the case of any boot in a non-monetary transaction, the boot shall be accounted for according to the following circumstances, respectively: (i) If the boot is paid, the fair value of the surrendered asset plus the premium paid and any related taxes to be paid shall be used as the entry value of the received asset. The difference between the fair value of the surrendered asset and its book value shall be included in the current gains or losses.
If there is conclusive evidence that the fair value of the received asset is more reliable, the fair value of the received asset and any related taxes to be paid shall be used as the initial amount of measurement for the received asset, and the difference between the fair value of the received asset minus the fair value of the boot paid and the book value of the surrendered asset shall be included in the current gains or losses.
(ii) If a boot is received, the fair value of the surrendered asset minus the boot received plus any related taxes to be paid shall be used as the entry value of the received asset. The difference between the fair value of the surrendered asset and its book value shall be included in the current gains or losses.
If there is conclusive evidence that the fair value of the received asset is more reliable, the fair value of the received asset and any related taxes to be paid shall be used as the initial amount of measurement for the received asset, and the difference between the fair value of the received asset plus the fair value of the boot received and the book value of the surrendered asset shall be included in the current gains or losses.
(3) If an exchange of non-monetary assets simultaneously involves several assets, the total fair value of the surrendered assets and relevant taxes to be paid shall be distributed as per the proportion of the fair value of each received asset to the total fair value of the received assets, thus determining the entry value of each received asset.
The term "non-monetary transactions" in this system refers to exchanges conducted by both parties concerned using non-monetary assets, which do not involve or only involve a small amount of monetary assets (i.e., boot).
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