Accounting Standards for Enterprises No. 4 – Fixed Assets
Cai Kuai [2006]
February 15, 2006
Chapter I General Provisions
Article 1 In order to regulate the recognition and measurement of the fixed assets, and disclosure of the relevant information, these Standards are formulated in the light of the Accounting Standards for Enterprises – Basic Standards.
Article 2 Other relevant accounting standards shall apply to the items as follows:
(1) The Accounting Standards No. 3 – Investment Real Estates, shall apply to the buildings as investment real estates; and
(2) The Accounting Standards No. 5 – Biological Assets, shall apply to the productive biological assets.
Chapter II Recognition
Article 3 The term "fixed assets" refers to the tangible assets that simultaneously possess the features as follows:
(1) They are held for the sake of modities, rendering labor service, renting or business management; and
(2) Their useful life is in excess of one fiscal year.
The term "useful life" refers to the period of time over which a fixed asset is expected to use, or the quantity of products expected to produce or services expected to render through the fixed asset.
Article 4 No fixed asset may be recognized unless it simultaneously meets the conditions as follows:
(1) The economic benefits pertinent to the fixed asset are likely to flow into the enterprise; and
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