Preliminary Thoughts on Formulating the Road and Bridge Toll Right Standard

< p> Preliminary Thoughts on Formulating the Road and Bridge Toll Right Standard

1. The problem

In 1989, Guangdong Fokai Expressway Co., Ltd. was established, which opened the prelude for China to raise funds for highway construction through franchising. By the end of 2005, hundreds of highway operating companies (including more than 20 highway listed companies) in China had used the securities market to raise funds to manage operating fees for a total of more than 30,000 kilometers and a total value of more than 1 trillion yuan. Highways play an active role in the rapid development of China's highway construction, especially highway construction.

The rapid development of operating I toll highways has raised new issues and requirements for the accounting of highway operating enterprises: First, how should a scientifically defined property attribute of road operating enterprises own road and bridge infrastructure? Second, someone advocates the ownership of road operating enterprises Road and bridge toll collection rights are intangible assets, so how should the road and bridge toll collection rights be accounted for? Third, if the current system norms cannot meet the needs of road and bridge toll collection rights calculation, what is the basic idea to solve the problem?

2. Discussion on the attributes of road and bridge infrastructure assets

This issue should be explored in the context of current laws and regulations. Article 65 of the Highway Law of the People ’s Republic of China (hereinafter referred to as the “Highway Law”) stipulates: “Toll roads invested and built by domestic and foreign economic organizations in accordance with this Law shall expire after the agreed operating period and the road shall be recovered by the State free of charge. , Managed by the relevant transportation authority. "Article 20 of the" Toll Road Management Regulations "also stipulates:" The rights and interests of toll roads include toll rights, advertising management rights, and service facility management rights. "This means that the ownership of highways belongs to the state; Highway management enterprises only have the right to charge roads and bridges for a limited period of time relying on the road and bridge infrastructure, but not their ownership or "property rights of legal persons". At the expiry of the stipulated operating period, the highway operating enterprise needs to cancel the right to charge and hand over the road and bridge infrastructure to the government department for free. Therefore, the main issue to be discussed is not the asset attributes of the road and bridge infrastructure, but the asset attributes of the road and bridge toll collection rights that rely on the road and bridge infrastructure. The survey results show that the road and bridge toll collection rights owned by road operation companies are generally obtained in three ways: road operation companies obtain their limited toll management rights by investing in road and bridge infrastructure; the transportation authority will have established a government Loan repayment of highway toll rights will be invested into highway operating enterprises at a price, or the highway operating enterprises will invest their own highway toll rights into the newly formed highway operating enterprises at a price; highway operating enterprises will obtain paid government toll repayment of highway tolls after paid acquisition.

Further analysis, whether the right to charge roads and bridges should be fixed assets or intangible assets? Article 5 of the "Measures for the Compensated Transfer of Highway Operating Rights" of the Ministry of Communications in 1996 stipulates: "Road operating rights are intangible assets that rely on physical assets of highways and refer to With the approval of the people's government at or above the provincial level, the right to charge vehicles tolls that have already been opened to traffic facilities and the right to operate service facilities within the prescribed areas along the highways invested by the transportation department are allowed. "

In this regard, highway operating enterprises that have received the government's right to repay the highway toll should use the toll rights they have acquired as management and accounting of intangible assets. However, in practice, listed companies such as Nanjing-Shanghai Expressway, Shandong Infrastructure, and Zhongyuan Expressway still account for the toll collection rights paid for as fixed assets.

Liu Wencheng published a paper titled "On Highway Toll Rights as Intangible Assets of Highway Operating Enterprises" in the 5th issue of "Transportation Accounting" in 2003, and also put forward the argument that highway toll rights are intangible assets. The reason is: 'The interdependence of the land and the fact that it cannot be stripped is the basic characteristic of the final formation of highway assets "; highway operating companies operating highway tolls are franchise operations, and the ultimate ownership of highways is the state rather than the enterprise."

The author believes that, within the framework of highway concessions, since the highway operating enterprises obtain only the right to charge for a limited period of time with the special administrative permission of the government, whether it is the right of toll management obtained through self-investment in the construction of road and bridge infrastructure, or transportation The competent authority shall invest the share price into the road operation enterprise and the government has completed the right to repay the highway toll, and the road operation enterprise shall have the share price and the share price into the road and bridge toll collection right of the newly formed road operation enterprise, which shall be regarded as the intangible assets of the road operation enterprise. .

The main problem with the above understanding is that: highway franchising is only a conceptual framework formed on the basis of theoretical research, and it still lacks the support of necessary laws and regulations; in addition to listed companies, the toll rights invested in highway operating enterprises are basically Failing to pass the value assessment, highway operating companies basically use the cost of road and bridge construction rather than the value of their toll right as the basis for asset accounting; whether the road operating company can become the subject of the transfer of road and bridge toll rights, there is still no legal and institutional basis .

In practice, whether it is a listed highway company or other highway operation enterprises, they are basically toll management rights obtained through self-investment in the construction of road and bridge infrastructure, or the transportation authority will invest the shares into the highway operation enterprise at a price. Toll collection rights, as well as road operation companies' right to charge roads and bridges owned by newly-owned road operation companies at the price of shares, are used as fixed asset management and accounting.

Because assets of the same nature have different choices when they are booked, which leads to the incomparability of cost items. And for practitioners, they also have different views on the definition of the nature of highway assets, which will inevitably result in a certain preference for prescribed choices.

3. The obstacles encountered in the accounting of road and bridge tolls as intangible assets

If the road and bridge toll right acquired by an enterprise is defined as an intangible asset, according to the relevant provisions of "Accounting Standards for Business Enterprises No. 6-Intangible Assets" x hereinafter referred to as the "New Standard"), the accounting of road and bridge toll right will face the following obstacles.

1. Initial measurement

As far as the purchase is concerned, there is no problem with the initial measurement of road and bridge toll rights. For the initial measurement of highway toll rights invested by investors, Article 8 of the "Financial Management Measures of Expressway Companies" x hereinafter referred to as "Financial Measures") stipulates: "For investment with highway management rights, first apply to the state-owned asset management department The appraisal project was approved by a qualified state-owned asset appraisal agency and reported to the state-owned asset management agency for confirmation. "However, it is understood that in actual work, the majority of investors have invested in the road toll collection right of the road operation enterprise that has not passed the state-owned The asset appraisal agency conducts the appraisal. The construction cost of highways is usually taken directly as the asset's book value and managed as fixed assets.

Regarding the highway toll right acquired through investment and construction, the Highway Law and the Financial Measures do not specify how to measure the initial cost. If in accordance with the relevant provisions of the "Accounting Standards for Business Enterprises-Intangible Assets" hereinafter referred to as the "Old Standards", intangible assets that are self-developed and legally applied for, the book value shall be in accordance with the registration fees, legal fees and other expenses incurred at the time of legal acquisition Confirm; the research and development expenses incurred before obtaining the application according to law shall be recognized as the current expenses when incurred. Then the construction cost of the highway cannot be reflected, and if it is treated as current expense, it will also distort accounting information.

Even according to the definition of Article 8 and Article 9 of the New Guidelines regarding the expenditure of the internal research and development project of the enterprise during the development phase: the expenditure of the research phase of the internal research and development project of the enterprise shall be recorded in the current profit and loss of the person when it occurs; the development of the internal research and development project of the enterprise The expenditures at this stage can be recognized as intangible assets after meeting the relevant 5 conditions. Judging from these two regulations, it seems that it is also difficult to adapt to the requirements of highway operating enterprises in accounting for expenditures incurred in investing in highway construction. Moreover, it remains to be discussed whether the toll right obtained by investment and construction belongs to the intangible assets formed by internal research and development projects.

The realistic approach is that the road toll right obtained by investment and construction is based on the actual construction cost as the fixed asset (highway structure) human account value, which makes the accounting from the construction to the asset value of the human account continuation and unification. It should be noted that the value of the highway toll right obtained by investment and construction is not directly related to the construction cost. The construction cost only reflects the historical cost of highway construction, and the value of the highway toll right should reflect the future cash flow of this highway. The present value of.

2. Depreciation and amortization

Article 15 of the "Old Standard" stipulates: "The cost of intangible assets shall be averagely amortized in installments within the expected service life from the month of acquisition." This means that if the road and bridge toll right is used as an intangible asset, it can only be amortized using the average life method. If the average age method is adopted for the rigid requirements of road and bridge infrastructure, the recognition of the current maintenance expenditure cannot be matched with the current income due to the neglect of the change in the use intensity of road and bridge assets and the corresponding relationship between toll revenue and maintenance expenditure.

This is because the traffic capacity of the expressway is generally designed to meet the needs of the next 20 years, which means that in the early stage of the franchise, the investment income is not obvious, and in the middle and late stages of the operation, due to the increase in traffic, the vehicle Toll income is also increasing until it reaches saturation. If the amortization of the road toll right is carried out according to the straight-line method, this means that the value of the amortized person is large when the income in the early stage is low and the road wear is low, and the value of the amortized person is small in the later stage, which may affect the degree to a certain extent. The correct judgment of shareholders or potential investors on corporate performance. This is the second biggest obstacle to the accounting of road and bridge tolls as intangible assets.

Article 17 of the New Standard stipulates: "The method of amortization of intangible assets chosen by an enterprise shall reflect the expected realization of the economic benefits related to the intangible asset." In light of the green light in practice, at the end of 2003, l4 out of the 19 listed highway companies in China chose to use the traffic flow method (or debt service fund method) to amortize the investment cost of roads and bridges.

The New Standard stipulates that the amortization of intangible assets generally accounts for the current profit and loss of the person. "Enterprise Accounting System" and "Financial Measures)) Bei 0 stipulates that the management expenses of amortized intangible assets for road and bridge tolling rights, the result of such treatment will lead to the strange phenomenon that the management expenses of highway operating enterprises are higher than the main business costs. . For example, the operating assets of Hyundai Investment Co., Ltd. mainly represent road and bridge toll collection rights. Due to the amortization of road and bridge toll collection rights, the company ’s main business cost was 218,340,953.82 yuan in 2005; 032 253.08 yuan The amortization of road and bridge toll right is included in the management fee, which leads to the management cost exceeding the main business cost, reaching 262 883 652.04 yuan. Such disclosure of accounting information will inevitably cause external investors, creditors and other related parties to make wrong judgments on the business status and results of the company.

3. Follow-up expenditure

Article 14 of the "Old Standard" stipulates: "Expenditure incurred after the recognition of intangible assets shall be recognized as current expense when incurred". For the road and bridge tolling business, the follow-up expenditure includes various maintenance costs such as the daily maintenance of the highway, major and medium repairs, and subsequent expansion and technical renovation expenses. If these costs are in accordance with the provisions of the "Old Standard" It is obviously unreasonable to record people's current gains and losses. Generally speaking, the overhaul cost of a four-lane expressway in the plains is about 5 million yuan per kilometer, and the cost of expansion and technical transformation is higher. Since the overhaul of road and bridge infrastructure is partly updated in nature, and is usually combined with technical renovation, its expenditure benefits will play a role in the next few years, that is to say, these subsequent expenditures of road and bridge toll projects are mainly capital expenditures, so , These follow-up expenses should be amortized within the benefit period. Taking Shanghai-Hangzhou-Ningbo Expressway Co., Ltd. as an example, according to the company ’s 2004 annual report, the Shanghai-Hangzhou-Ningbo Expressway mid-surfacing overhaul project completed in 2004 began construction in 2002 and took 3 years. A total of 411.1 million yuan was shared, of which 95.4 million yuan was incurred in 2004. We can assume that, except for the expenses incurred in 2004, the remaining mid-range repair costs were evenly shared between 2002 and 2003, the annual mid-range repair costs reached 157.85 million yuan, which is beyond the reach of ordinary assets for major and mid-range repairs. Expenses and expenses, if in accordance with the requirements of the intangible assets standard, all the expenditures of this project are recorded in the profit and loss of the year, will greatly affect the performance and image of Shanghai-Hangzhou-Ningbo Expressway Co., Ltd., and it is also easy for investors or potential investment The wrong judgment. Since the "New Standard" does not specifically regulate the subsequent expenditure of intangible assets, we cannot regulate the subsequent expenditure of road and bridge toll collection rights based on the "New Standard".

Fourth, the solution to the problem

1. Amend the "New Guidelines"

If it has been agreed that the right to charge roads and bridges should be regarded as intangible assets and there are no more objections, then it is imperative to revise the "new standard", but the "new standard" was just released on February 15 this year, and the main standard is the enterprise intangible assets Common issues in accounting and management. It is unrealistic to require an all-encompassing standard to solve not only common problems but also specific problems of the franchise industry and special businesses.

2. Formulate new accounting standards: "Enterprise Accounting Standards-Road and Bridge Toll Right"

The best way to solve the problem is to formulate a standard specifically for the accounting of road and bridge toll rights. There are three specific reasons.

First of all, the implementation of the franchise system is a product of China's deepening of the reform of the investment and financing system. While greatly promoting the development of China's highway network, it also puts forward new requirements for China's accounting. It should be noted that the road and bridge toll collection business is a special business, and the assets it manages are completely different from the assets operated by the general industry and commerce industry, and it is not a general intangible asset. Special accounting must be conducted for this special asset .

Secondly, the scope of use of intangible assets in "International Accounting Standards No. 38-Intangible Assets" is defined as follows: "1. This standard should be applicable to the accounting of intangible assets of all enterprises except the following: 1) Intangible assets regulated by other international accounting standards; (2 Financial assets defined in IAS 32 Financial Instruments: Disclosure and Presentation; (3) Mineral property rights, and minerals, oil, natural gas and similar non-renewable assets Expenditure on exploration or development and extraction of sexual resources; (4) Intangible assets arising from contracts signed between insurance companies and policyholders. 2. If other international accounting standards involve specific types of intangible assets, the enterprise should Use this standard instead of this standard. "From these provisions, it can be determined that even the intangible asset standards of international accounting standards are not all-encompassing, and there are still many special intangible assets that need to be regulated by the development of special accounting standards.

Third, Article 2 of China ’s newly-issued “Intangible Assets” states: “The following items apply to other relevant accounting standards: (1) As a land use right for investment real estate, the Accounting Standards for Enterprises No. 3-Investment Real Estate. (2) The goodwill formed in a business combination shall be governed by Accounting Standards for Business Enterprises No. 8-Impairment of Assets and Accounting Standards for Business Enterprises No. 20-Business Combination. (C) The equity of oil and gas mining areas, The "Accounting Standards for Business Enterprises No. 27-Oil and Gas Exploitation" applies. "This provision states that China's" Intangible Assets "standard regulates only general intangible assets. For special intangible assets, a separate accounting standard is adopted. Conduct specifications. If the right to charge for roads and bridges is one of the usufructuary rights, since the accounting standards for oil and gas exploitation can be issued, then the introduction of the "Accounting Standards for Enterprises-Right to Charge for Roads and Bridges" is a good way to solve the above problems. Although the implementation of a franchise system for road and bridge infrastructure is not the first in China, the development momentum in China is very rapid, and it also provides a strong financial guarantee for the construction of China's road network, and the subsequent accounting has become New problems restricting road operating companies from faithfully reflecting their financial status, therefore, China should study the guidelines as soon as possible and strive to promulgate them as soon as possible to ensure that the accounting of road and bridge tolling rights is more in line with the basic principles of accounting and that the accounting information of road operating companies Really comparable.

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