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Chapter I General Provision
Article 1
This Regulation is be prescribed in accordance with Article 13 of Business Entity
Accounting Act (hereinafter referred to as the “Act”).
Article 2
The handling of business accounting affairs shall be in accordance with
the provisions of the “Act”, this Regulation and all applicable legal
directives. Matters not provided herein shall be subject
to Generally Accepted Accounting Principles. However, starting the beginning
of 2018 fiscal year, a company, except when it has control or significant
influence over, or a joint venture interest in, an invested company, in which
case it shall value the long-term equity investment using the equity method,
may prepare financial statements voluntarily pursuant to provisions
in Articles 3, 9 through 14, 16, 18, 24-1 through 26 and 28
of “Regulations Governing the Preparation of Financial Reports
by Securities Issuers” promulgated by Financial Supervisory Commission,
and shall be exempted from restrictions under this Regulation.
Article 3
A business entity may set up, as required, accounting documents,
account items, account books and financial statements in addition to those
listed in this Regulation.
The titles and formats of the bookkeeping voucher, account books
and financial statements shall be announced by the Central Competent Authority.
Article 4
A business entity may set up, as required, subsidiary items for account items,
subsidiary books for account books and supplementary schedules for
financial statements.
Chapter II Accounting Documents
Article 5
The external document and outgoing document shall be signed or sealed by
the issuer and shall include the following items:
1.Name of the document.
2.Date.
3.The name and address or the Tax Identification Number of the transacting parties.
4.Contents and amount of the transaction.
The internal document shall be prepared and kept by the business entity
according to the fact and amount of the transaction.
Article 6
The content of a bookkeeping voucher should include the name of
the business entity, name of the voucher, date, serial number of the voucher,
name of the account items, summary contents and amount. The bookkeeping
voucher should be signed or sealed by a relevant personnel.
Article 7
The preparation of a bookkeeping voucher shall be based on the source
document affixed thereto.
The source document that proves the existence of right and liability which
is required to be preserved permanently or bound separately for convenience
may be compiled and kept separately, categorized and numbered according
to the nature or preservation period, specified for cross reference with the date,
number, person of custody, place of custody, and catalogued with a table
of documents for auditing purposes.
Article 8
The bookkeeping voucher shall be bound by the sequence of date or month
with a cover to specify the number of volumes, starting and ending dates
and the number of pages, and shall be signed or sealed thereon by the manager,
in-charge personnel or handling accountant authorized by the business
entity’s person-in-charge, appropriately stored and catalogued with a table
of vouchers for auditing purposes. After the end of the preservation period,
the bookkeeping voucher may be destroyed with approval of the person-in-charge
of the business entity.
Chapter III Account Books
Article 9
An account book should be used continuously for record keeping within
the same accounting year and, unless completely exhausted, shall not be replaced
by a new book.
Article 10
The first page of every account book should provide record of
the initial use, management, and closing bookend date. The second
page of a ledger book should provide a table of accounts.
Article 11
In replacing an account book, each blank page of the book shall be
stamped "Blank and Invalid" or clipped to render it ineffective, and the
words "All of the following pages are blank and invalid" should be added
on the first blank page.
Article 12
Bookkeeping figures shall use the Yuan as the monetary unit or, as required
by the nature of transaction, may extend to the decimal fraction below the Yuan.
Article 13
Where a correction of a bookkeeping error does not affect the total, the error
shall be indicated with a double strike-through in red ink with the correct figure
or words written and signed or sealed by the individual who made the correction,
or the correction can be done using a new bookkeeping voucher, to prove
identity of responsible party.
Where a correction of a bookkeeping error does not affect the total, the correction
shall be done using a new bookkeeping voucher.
Chapter IX Account Items and Preparation of Financial Statements
Article 14
The statement of financial position shall be presented as follows:
1. Assets.
(1) Current assets.
(2) Non-Current assets.
2. Liabilities.
(1) Current liabilities.
(2) Non-Current liabilities.
3. Equity.
(1) Capital (or share capital).
(2) Capital surplus.
(3) Retained earnings (or accumulated deficit).
(4) Other Equity.
(5) Treasury share.
Article 15
Current assets, a business entity expects to realize, or intends to sell or consume
the asset, in its normal operating cycle; holds the asset primarily for the
purpose of trading; expects to realize the asset within twelve months after the
date of statement of financial position; the asset is cash or
a cash equivalent. Unless the asset is restricted from being exchanged or used
to settle a liability for at least twelve months after the date of statement
of financial position.
Current assets including account items as follows:
1.Cash and Cash equivalent: cash on hand, demand deposits, and short-term,
highly liquid certificate deposits or investments that are readily convertible
to known amounts of cash and which are subject to an insignificant risk of
changes in value.
2.Short-term investment: defined as investment that is short-term, including
account items as follows, provided as a lien, collateral or refundable
deposit, etc. shall be disclosed.
(1)Financial assets at fair value through profit or loss-current: It is classified
as held for trading or upon initial recognition it is designated as at fair value
through profit or loss.
(2)Available-for-sale financial assets-current: Non-derivative financial assets are designated as
available for sale which shall be measured at fair value.
(3)Financial assets measured at cost-current: Investments in equity instruments
that do not listed and whose fair value cannot be reliably measured and
derivatives that are linked to and must be settled by delivery of
such unquoted equity instruments.
(4)Bond investments without active market-current: Bond investments that
do not have a quoted price in an active market and with fixed or
determinable payments shall be measured at amortized cost.
(5)Held-to-maturity financial assets-current: Held-to-maturity financial
assets held until the date of expiry that expires within one year shall
be measured at amortized cost.
(6)Derivative financial assets for hedging-current: Designated by hedge
accounting and be an effective hedging instrument of derivative financial
asset shall be measured by fair value.
3.Notes Receivable: defined as various notes which are collected by the business entity.
(1)Notes receivable shall be measured at amortized cost. However,
short-term notes receivable with no stated interest rate may be measured
at the original invoice amount if the effect of discounting is immaterial.
(2)Notes receivable that were discounted or transferred to others shall be disclosed.
(3)Notes receivable arising from operations shall be presented separately from
those not arising from operations.
(4)Large-sum notes receivable from related persons shall be presented individually.
(5)Notes receivable that are provided as collateral shall be disclosed.
(6)Notes receivable determined to be uncollectible shall be written off.
(7)Notes receivable shall be valued at the date of statement of financial position
for the unrecoverable amount, and any allowance for the uncollectible amount
shall be properly provided and presented as the contra account of the notes receivable.
4.Accounts receivables: defined as the claim of the business entity resulting from
sale of goods or services.
(1)Accounts receivable shall be measured at amortized cost. However,
short-term accounts receivable with no stated interest rate may be measured
at the transaction amount if the effect of discounting is immaterial.
(2)Large-sum accounts receivable from related persons shall be presented individually.
(3)Unrealized interest revenues from installment sales shall be presented
as the contra account of the accounts receivable.
(4)Accounts receivable to be collected over one year, shall be disclosure for
the amount of expected collection of each year.
(5)Accounts Receivable have been collateralized, shall be disclosed.
(6)Accounts receivable determined as uncollectible shall be written off.
(7)Accounts receivable shall be valued at the financial position date for
the unrecoverable amount,and any allowance for the uncollectible amount
shall be properly provided and presented as the contra account of
the trade receivables.
5.Other receivables: defined as the receivables that do not belong to
the notes receivable and accounts receivable.
(1)Other receivables shall be valued at the date of statement of financial
position for the uncollected amount, and any allowance for doubtful accounts
shall be properly provided and presented as the contra account of the other receivables.
(2)Where the receivables are classified greater detail, the allowance for
doubtful accounts shall also be presented accordingly.
6.Current tax assets: defined as the portion of the tax amount already paid
in respect of current and prior periods that exceed the amount due for those periods.
7.Inventories: defined as held for sale in the ordinary course of business; or
in the process of production for sale in the ordinary course of business; or
in the form of materials or supplies to be consumed in the production process
or in the rendering of services.
(1)The cost of inventories shall comprise all costs of purchase, costs of conversion
and other costs incurred in bringing the inventories to their present location
and condition, the cost may be calculated by using a specific identification method,
first-in first-out method, or average method, in accordance with the categories
or characteristics of an inventory.
(2)Inventories shall be measured at the lower of cost and
net realizable value. If the cost of inventories is higher than
net realizable value, inventories shall be written down below cost to
net realizable value, and the amount of the write-down shall be recognized
as cost of sales in the period the write-down occurs.
(3)Inventories that are provided as lien or guarantee, whose usage
is supervised by creditors, etc. shall be disclosed.
8.Prepayments: defined as various costs and expenses prepaid, including
prepaid expenses and prepayments to suppliers.
9.Other current assets: defined as current assets that do not belong to
the previous eight categories of current assets.
Article 16
Long-term investments include the following account items:
1.Financial assets at fair value through profit or loss-non current.
2.Available-for-sale financial assets-non current.
3.Measured at cost financial assets-non current.
4.Bond investments without active market -non current.
5.Held-to-maturity financial assets-non current.
6.Investments accounted for using the equity method: defined as holding
an investment in equity instruments with major influence or power of control.
Long-term investments that are provided as lien or subject to restrictions,
limitations, etc. shall be disclosed.
Article 17
Investment property shall mean property held by the owner or by
the lessee under a finance lease to earn rentals or for capital appreciation or both.
Initial recognition of Investment properties shall be recognized at cost,
and subsequent measurement shall be presented at a carrying amount of
costs subtracted by accumulated depreciation and accumulated impairment losses.
Article 18
Property, plant and equipment shall mean tangible asset items held to
be in the use of production or provision of commodities, agricultural
produce or services, as rental to tenants or for administrative purposes,
and to be with expected useful life longer than one year, and
the accounting items of which shall include land, buildings, machineries,
transportation equipment, office equipment and bearer plants.
Property, plant and equipment shall be recognized at its original and
subsequent costs at the time of acquisition or construction. Original cost
shall include the purchase price, any costs incurred directly attributable to
bringing the asset to the site and working condition for its intended use and
estimated cost of dismantling and removing the asset and restoring
the site in the future. Subsequent costs shall include the cost of enhancements,
partial redevelopment or maintenance.
Property, plant and equipment shall be presented at a carrying amount of
costs subtracted by accumulated depreciation and accumulated impairment losses.
The fact, if any, that property, plant and equipment being provided as security,
pledged, or otherwise subject to any restriction or limitation shall be disclosed
in financial statements together with the amounts involved.
Article 19
Mineral resources are defined as natural resources whose value decreases
after extraction or other means of alteration.
Mineral resources shall be recognized according to the exact cost
of acquisition, exploration and development, and carried at its cost less
accumulated depletion and accumulated impairment losses.
Article 20
Biological assets shall mean living animals or plants related to
agricultural activities. However, bearer plants shall be classified into property,
plant and equipment.
Biological assets shall be divided as current and non-current based
on liquidity and measured by fair value less costs to sell. However,
in the event that fair value is not readily determined without
undue cost or effort,biological assets may be presented at carrying amounts
of costs subtracted by accumulated depreciation and accumulated impairment losses.
Article 21
Intangible assets are identifiable non-monetary assets without physical
substance, as follows:
1.Intangible Assets other than Goodwill: defined as assets have
meet identifiability, controlled by the business entity, and future
economic benefits. Including trademarks, patents, copyrights,
and computer software, etc.
2.Goodwill: defined as the goodwill is unidentifiable and
not separately recognized future economic benefits of intangible assets
that acquired in a business combination.
Intangible assets with economic benefit clearly shall be reasonably
and systemically amortized over the years.
Goodwill and intangible assets without economic benefit clearly
shall be reasonably and systemically amortized or tested for impairment annually.
Research expenditures and development expenditures, with the exception
of commissioned research where the costs can be totally recovered
according to contract, must be recognized incurred profit or loss. However,
development expenditure qualify for recognition as assets, may recognized
as intangible assets.
Intangible assets shall be carried at its cost less accumulated amortization
and accumulated impairment losses. Amortization period and method of
intangible assets shall be disclosed.
Article 22
Deferred tax assets: defined as the amounts of income taxes probable against
in future periods in respect of deductible temporary differences;
the carryforward of unused tax losses; and the carryforward of unused tax credits.
Article 23
Other non-current assets are defined as assets that do not belong to
the Article sixteen through Article twenty two categories of non-current assets.
Article 24
A business entity should be assess at the date of statement of
financial position to available-for-sale financial assets, financial
assets measured at cost, bond investments for which no active
market exists, held-to-maturity financial assets, investments accounted
for using the equity method, property, plant and equipment,
investment property and intangible assets project whether there is
any indication of impairment;
If the carrying amount of the asset is greater than its recoverable amount,
an impairment loss should be recognized.
When there is evidence of goodwill, available-for-sale assets and
equity instruments measured at cost investments other than the
impairment loss recognized in prior periods out, may no longer exist or
decreased when the carrying amount of the asset shall reverse rotation
amount will be recognized to the current profit.
Those have handled the asset revaluation, impairment occurs should
first reduce the unrealized revaluation increment, if insufficient, recognized
to current period loss. Rotation impairment loss when the loss recognized
in the original scope of recognized to the current profit if the balance
is recorded as unrealized revaluation increment.
Article 25
Current liabilities are regarded as liabilities that the business entity are
to be expects to settle the liability in its normal operating cycle; it holds
the liability primarily for the purpose of trading, and are expected to be settled
within twelve months after the maturity of the debt, even if the liability
at the date of statement of financial position to complete the long-term
refinancing prior to the financial statements or reschedule
payment agreement; itdoes not have an unconditional right to defer settlement
of the liability for at least twelve months after the date of statement of
financial position.
Current liabilities include the following account items:
1.Short-term borrowings: defined as the sum of money that is borrowed or
is an overdraft from a financial institution or another party.
(1)Shall be specified by type or nature, guarantee situation and interest rate
range of the borrowings, and, if collateral is disclosed, the name and
carrying amount of the collateral.
(2)Borrowings from financial institutions, owners, employees, related persons,
and other persons or institutions shall be separately disclosed.
2.Short-term bills payable: defined as the short-term notes and bills issued
through a commissioned financial institution for the purpose of obtaining funds
from the money market, including commercial paper payable and
bank acceptances, etc.Short-term bills payable shall be specified
for the guarantee, institution of acceptance, interest rate, and if collateral
is disclosed,the name and carrying amount of the collateral.
3.Financial liabilities at fair value through profit or loss-current: defined
as when held for trading or is specified initial recognition of financial
liabilities measured at fair value through profit or loss.
4.Derivative financial liabilities for hedging-current: defined by hedge
accounting and be an effective hedging instrument of derivative financial
liabilities shall be measured by fair value.
5.Financial liabilities measured at cost-current: defined as with the unlisted
equity tools of the link and delivery settled derivatives such equity tools,
financial liabilities whose fair value cannot be measured reliably.
6.Notes payables: defined as the various notes payable by the business entity.
(1)Notes payables arising from operations shall be separately presented
from those not arising from operations.
(2)Notes payable of a material amount to related parties shall be presented individually.
(3)Notes payable with collateral disclosed shall be specified for the name
and carrying amount of the collateral.
(4)Notes payable that are used as security and can be recovered for cancellation
at the termination of guarantee responsibility may not be presented as
current liabilities, but shall be disclosed specified for the nature and amount
of the guarantee.
7.Accounts payable: defined as the liabilities occurring due to trade
on credit terms purchased of raw materials, goods or services.
(1)Accounts payable arising from operations shall be separately presented
from those not arising from operations.
(2)Accounts payable of a material amount to related parties shall be presented individually.
(3)Accounts payable with collateral disclosed shall be specified for the name
and carrying amount of the collateral.
8.Other payables: defined as any of the payables that do not belong to
the previous categories of payables, such as other salary payables,
taxes payables, dividend and bonus payables etc. Dividend and bonus
payables whose appropriation method and expected payment date
are determined shall be disclosed.
9.Current tax liabilities: defined as the unpaid income tax for the
current and prior periods.
10.Advance Receipts: defined as various sums of money received
in advance. Advance receipts shall be disclosed separately by major category
with special contract items specified.
11.Provisions-current: defined as the uncertain point or amount of
current liabilities. A business entity arising from past events has a present
obligation, and it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation and provisions
liabilities shall be recognized when a reliable estimate can be made of
the amount of the obligation.
12.Other current liabilities: defined as current liabilities that do not belong
to the previous eleven categories.
Short-term borrowings, short-term bills payable, notes payable, accounts
payable and other payables should be measured at amortized cost.But they
may be measured at the transaction amount if the effect of discounting is immaterial.
Article 26
Non-current liabilities: defined as the non-current liabilities do not belong
to the current liabilities, including account items as follows:
1.Financial liabilities at fair value through profit or loss-non current.
2.Derivative financial liabilities for hedging-non current.
3.Financial liabilities measured at cost-non current.
4.Bonds payable: defined as bonds issued by the business entity.
(1)Premiums and discounts on bonds payable are valuation items of bonds
payable. They shall be presented as an addition to or deduction from bonds
payable, and shall also be amortized, as an adjustment to interest expenses,
using the effective interest method during the period of bond circulation.
(2)For issued bonds, the total approved amount, interest rate, maturity date,
name of collateral, carrying amount, issuing area, and other relevant terms
and restrictions shall be disclosed.
5.Long-term borrowings: defined as the loans payable whose repayment deadlines are exceeds one year.
(1)Measured at amortized cost.
(2)The content, maturity date, interest rate, name of the collateral, carrying
amount and other covenants of shall be specified. Where the repayment of
long-term loans payable is denominated at a foreign currency or is based
on a foreign currency exchange rate, the name and amount of the foreign
currency shall be specified.
(3)Long-term borrowings from owners, employees or related persons
shall be separately disclosed.
6.Long-term notes and accounts payable: defined as the notes payables,
accounts payables, etc. whose payment deadline exceeds one year. Long-term
notes payable and other long-term accounts payables shall be measured
at its amortized cost.
7.Provisions-non current: defined as the liabilities of uncertain timing or amount.
8.Deferred tax liabilities: defined as the amounts of income taxes payable
in future periods in respect of taxable temporary differences.
9.Other non-current liabilities: defined as other non-current liabilities that
do not belong to the previous eight categories.
Article 27
Capital (or share capital): defined as the capital brought into the business
entity by the owner and registered with a competent authority; however
it does not include preferred share of liability nature; the items that
shall be disclosed in the notes are as follows:
1.The kinds of capital, face value per share, number of shares authorized,
number of shares issued and special conditions shall be specified.
2.Various class of share capital: the rights, preferences and restrictions.
3.The number of treasury shares held by the entity or by its subsidiaries and associates.
Article 28
Capital surplus: defined as equity arising through company’s trading of equity.
Capital surplus shall be specified according to its nature.
Article 29
Retained earnings (or accumulated deficit): defined as the equity resulting
from business operations, including account items as follows:
1.Legal reserve: defined as the reserve appropriated from earnings according
to Company Law or other related regulations.
2.Special reserve: defined as the reserve appropriated from earnings
according to regulations or the resolution of earnings distribution for
the purpose of restricting the distribution of earnings as dividends or bonus.
3.Undistributed earnings (or deficit to be offset): defined as the earnings
that have not been appropriated (or the deficit has not been offset).
The appropriation of retained earnings (or the offsetting of deficit) shall
only be recorded in the book with the consent of the business owner
or a mutual resolution among the stockholders. Proposals for the appropriation
of earnings (or the offsetting of deficit) shall be specified in the notes to
the current period financial statements.
Article 30
Other equity: defined as the items causing the increase or decrease of
equity, including account items as follows:
1.Unrealized gains or losses from available-for-sale financial assets: the gains
and losses produced by financial assets available for sale measured at fair value.
2.Gains (losses) on effective portion of cash flow hedges: defined as the
effective portion of unrealized gains and losses on hedging instruments
in a cash flow hedge.
3.Gains (losses) on the exchange differences resulting from translating
the financial statements in foreign operations:
defined as the exchange differences resulting from translating the financial
statements of a foreign operation and the monetary items of net investment
in a foreign operation.
4.Unrealized revaluation surplus: defined as the unrealized revaluation
surplus arising under asset revaluation according to law.
Article 31
Treasury shares: defined as the shares once issued, later reacquired and
still not resold or cancelled by the company.Treasury shares shall be accounted
for using the cost method and presented as a deduction from equity. The number
of shares shall be noted.
Article 32
The categories of account items in the statement of comprehensive income
are as follows:
1.Operating revenue.
2.Operating costs.
3.Operating expenses.
4.Non-operating income and expenses.
5.Tax expense (benefit).
6.Profit (loss) of continued operations.
7.Profit (loss) of discontinued operations.
8.Profit (loss) for the period.
9.comprehensive income.
10.Total comprehensive income.
Article 33
Operating revenue: defined as the revenue earned in the normal operation
of selling goods or services provided in the current period.
Article 34
Operating costs: defined as the costs that are borne for selling goods or
providing services in the current period.
Article 35
Operating expenses: defined as the expenses that are borne from selling
goods or providing services in the current period; operating costs and expenses
that cannot be separately presented may be merged into operating expenses.
Article 36
Non-operating income and expenses: defined as the revenues and expenses
which do not arise from usual operating activities in the current period;
include interest income, rental income, royalty income, dividend income,
interest expense, gains (losses) on financial assets (liabilities) at fair value
through profit or loss, gains (losses) from investments for using
equity method, gains (losses) on foreign exchange, gains (losses)
on disposals of investment, gains (losses) on disposal property, plant and
equipment, gains on reversal of impairment loss.
Interest revenues and expenses shall be presented separately. Gains (losses)
on financial assets (liabilities) at fair value through profit or loss, gains (losses)
from investments for using equity method, gains (losses) on foreign exchange,
gains (losses) on disposals of investment may be presented at the respective net amount.
Article 37
Tax expense (tax benefit): defined as the aggregate amount included
in the determination of profit or loss for the period in respect of current tax
and deferred tax.
Article 38
Profit (loss) of discontinued operations : defined as the post-tax profit
or loss of discontinued operations and the post-tax gain or loss recognized
on the measurement to fair value less costs to sell or on the disposal
of the assets or disposal group(s) constituting the discontinued operation.
Article 39
Profit (loss): defined as the current period’s profit (or loss).
Article 40
Other comprehensive income: defined as the changes of the equity
in the current period, including unrealized gains (losses) on available-for-sale
financial assets, gains (losses) on effective portion of cash flow hedges,
gains (losses) on exchange differences on translation of foreign
financial statements, unrealized revaluation surplus.
Article 41
Total comprehensive income: defined as the components of
the profit (or loss) for the period and other comprehensive income.
Article 42
The statement of changes in equity: defined as the changes in the items
of the equity. The item categories and contents are as follows:
1.The beginning balance, the changes of the items and the amount during
the current period, and the ending balance of the share capital must be indicated.
2.The beginning balance, the changes of the items and the amount
during the current period, and the ending balance of the capital surplus
must be indicated.
3.Retained earnings (or accumulated deficit).
(1)The beginning balance.
(2)Effects of retrospective application and retrospective
restatement (net post-tax amount ).
(3)Net profit (or loss) for the period.
(4)The appropriation of legal reserves and special reserves, distribution of dividends, etc.
(5)The ending balance.
4.The beginning balance, the changes of the items and the amount during
the current period, and the ending balance of each item of the other equity
must be indicated.
5.The beginning balance, the changes of the items and the amount during
the current period, and the ending balance of the treasury shares must be indicated.
Article 43
The statement of cash flows: defined as the information about the changes
in cash and cash equivalents of the business entity for a reporting period,
showing separately changes from operating activities, investing activities
and financing activities.
Article 44
The following events after the reporting period that occur between
the date of statement of financial position and the date when
the financial statements are authorized for issue shall be disclosed:
1.Changes in capital structure.
2.Significant long- or short-term borrowings.
3.Additions, expansion, construction, leasing, abandonment,
idleness, sale, collateralization, transfer or long-term renting of major assets.
4.Significant changes in productive capacity.
5.Significant changes in production and sales policies.
6.Major investments in other businesses.
7.Losses on catastrophic disasters.
8.The proceeding or settlement of important lawsuits.
9.The signing, fulfillment, cancellation or voiding of important contracts.
10.Important organizational adjustments and significant reforms in management systems.
11.Significant effects resulting from changes in government regulations.
12.All other important events and measures that will affect the financial position,
results of operations and cash flows in the future.
Chapter X Appendix
Article 45
This regulation shall be enforced from January 1, 2016. However, a business
entity may voluntarily adopt the Regulation starting January 1, 2014.
Except that Article 2 and Article 17 have been enforced starting January 1, 2018, amendments to the Regulation on
December 10, 2018, shall be enforced starting January 1, 2019.
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