The real estate industry is an important industry of the national economy, playing a dominant role, and the national accumulative investment has closed to 10 trillion by 2014 in China. Although China’s real estate industry has developed rapidly, it also has caused some problems, and the income accounting problems are more common. Especially after the implementation of new accounting standards, accounting requirements for real estate enterprises have a new standard. Income accounting problem of real estate enterprise is paramount: it not only relates to the normal operation and management of the company, but also relates to the investors’ trust and social moral problems, even to social stability and healthy development of market economy.
2. Accounting Standard for Business Enterprises―The Income Accounting Rules of Real Estate Enterprise
China’s “Accounting standards for enterprises-basic standards”, through the finance ministry no. 33 publishing on February 15, 2006, takes effect from January 1, 2007. On July 23, 2014, according to “the decision on modifying the ‘accounting standards for enterprises-basic standards’ of the ministry of finance”, for income accounting regulation is as follows: 1) Income is defined as: refers to the total inflow of economic benefits formed in daily activities, will lead to increases in owners’ equity, and has nothing to do with the owner invested capital. 2) For the recognition criteria of income: income can be confirmed only by the economic benefits that are likely to flow into enterprise assets or debt reduction, and the inflow of economic benefit can be measured reliably. 3) To comply with the definition and recognition criteria of revenue projects, the requirements shall be included in the income statement (The Ministry of Finance, 2006) .
For the real estate development enterprise accounting, easy to carry out the “accounting standards for enterprises”, the ministry of finance formulated the “real estate development enterprise accounting system”. Among them, the caption of account “business income” in no. 501 is used for accounting operating income earned by business through external transfer, sales, settlement and lease development products, as follows: 1) transfer, land sales and commercial housing, all of them should be seen as a sales. When land and commercial housing have been transferred, and have submitted the invoice to settle the bill to the buyer, 2) the agent-construction of housing and project, should be seen as sales when the houses and project completion acceptance, completed the property transfer procedures, and has submitted the settlement bills of project price and construction of housing to entrust unit. 3) For land and commercial housing adopts instalment payment sales approach, can split into account in terms of payment time as stipulated in the contract. 4) Rental product development, shall be as income, after collection of rent on specified date stipulated by the provisions of the lease contract (or agreement); having arrived the receiving date stipulated in the contract and rent party fails to pay the rent, shall be deemed to be business income (Finance, 2010) .
On the specific application, first, the operating revenue of the enterprise, should according to the actual cost accounting. Implementation in current business income, debit “receivables”, “bank deposits” and other subjects, credited subject. Second, this should set up the subsidiary ledger according to the categories of business income, such as “land transfer income”, “commercial housing sales”, “facilities sales revenue”, “income from settlement of construction engineering”, “lease rental income products”, etc. Third, in the final, transferring the balance all to “profits this year” course, after carried forward, caption of account should has no balance.
3. Source of Income for Real Estate Enterprises
Source of income for real estate enterprises, mainly includes the following four aspects:
First, merchandise sales: This enterprise has transferred the main risks and rewards of the goods property to the buyer, the company no longer carries out continuous management right and real control authority concerned to proprietorship the goods, Related revenues can be measured reliably, the sales have received or obtained payment evidence, the related economic interests are likely to flow into the enterprise, and the cost related to the goods can be measured in a reliable way, to confirm the revenue realization.
Second, to provide labor services: The result of service transaction provided on the balance sheet date can be reliably estimate, reliable estimate refers to the amount of revenues can be measured reliably, the related economic interests are likely to flow into the enterprise, the progress of transaction completion can be reliably determined, the cost of trading has occurred and will take place can be measured reliably. In the final, according to the percentage of completion method, service revenue is confirmed.
Third, land development: Commercial land developed by real estate enterprise, we can transfer the land use right. Land development, according to Percentage of Completion Method, confirms the contract revenues and expenses on the balance sheet date.
Fourth, assigning the right to use assets: The economic interests related to trade are likely to flow into the enterprise, and the amount of revenues can be measured reliably. Amount of interest income, according to the time and real interest rates of enterprise monetary funds used by others to calculate and determine. Amount of royalty revenue, in accordance with charging time and methods stipulated by the relevant contract or agreement to calculative determination.
4. The Revenue Recognition and Comparative Analysis of the Listed Real Estate Companies in China
By 2014, china has a total of 144 listed real estate companies. Different listed companies use basically the same way for labor income, land development, the patterns of affirmation of the income through assigning the right to use assets, the following are the main types of commodity sales revenue:
First, proceeding revenue recognition after project completion approval (commodity house has been completed, been qualified and has the housing conditions), such as the Financial Street Holding Co. LTD., Shenzhen Special Economic Zone Real Estate (Group) Co. LTD. (Chen & Chen, 2013) .
Second, in the housing delivery time for revenue recognition (real estate developers will consign commercial housing with housing conditions to the buyer, and then to revenue recognition if owner without justifiable reason to refuse to receive, then to written notice that after the determined delivery date for revenue recognition), such as Cofco Property (Group) Co., LTD., Hainan Expressway Co., LTD. (Chen & Chen, 2013) .
Third, revenue recognition by installments according to the contract, in terms of the fair value of the receivable contract price to confirm by stages, such as Tianjin Real Estate Development (Group) Co., LTD., Jia KaiCheng Group Co., LTD. (Chen & Chen, 2013) .
The above three kinds of revenue recognition ways, each has advantages and disadvantages.
First of all, after the project completion acceptance to proceed revenue recognition, and often the Annual financial just reflects investment costs, making statements fail to reflect actual situation. When all projects of the enterprise under construction are completed, the product conforms to confirm standard and after completion of the acceptance, the previous deposit received will be identified as income. So, this year’s revenue will suddenly increase a lot.
Secondly, at the time of delivery for revenue recognition, this kind of patterns of affirmation is similar to one situation. But, by contrast, revenue recognition span is longer, the uncertainty is more obvious (Huang, 2013) .
Finally, according to the contract in installment to confirm the revenue, the situation is more common to be seen, essentially embodying the financing nature, or to say to adopt the deferred way. In this kind of revenue recognition mode, there will not emerge large conditions like the first two patterns of volatile situation.
Taken together, the third is called Installment affirm income model that according to contract, revenue recognition is smooth, profits less volatile, this can better reflect the operating performance of the enterprise for investors, creditors and relevant government departments, so as to measure the current financial situation, forecasts the development trend of the future, and then to formulate better development strategy, making the enterprise development to strive for further improvement (Zhang, 2011) . It has very important practical significance for the stability of the market economic order and smooth of state macro-control (Ye & Bo, 2012) .
The former two modes, revenue recognition is volatile, profit volatility, the revenues and expenses not matching, income and cash flow is not matching, which causes asymmetric information, the accounting information quality to drop, easy to misleading investors, creditors and relevant government departments, making them difficult to grasp the enterprise’s operating ability and financial status, then making the wrong decision, which will affect the normal operation, and even affect the market economic order.
5. The Suggestion of Income Accounts in Listed Companies
5.1. Pointedly Improving and Refining the Laws and Regulations System of Real Estate Enterprises
Accounting Standards for Business Enterprises does not especially mention the revenue recognition of real estate industry, and in “the Real estate development enterprise accounting system” specially formulated by the ministry of finance, the establishment of Income confirmation principle was fuzzy, therefore in the real estate enterprise accounting system remains to be advanced and refined.
5.2. Enterprises Should Have Multi-Angle Comprehensive Considerations
The selection of real estate enterprise revenue recognition methods in addition to consider the accounting principle, we also should consider the practice environment, from the current state of the real estate industry and the trend of the real estate market (Chen, 2012) . Soaring property prices at present, most of the time the owner can choose payment by installment, in this case to affirm income by installment is more suitable for current situation, and more advantageous to the enterprise development (Qian, 2010) .
Real estate accounting is internal guarantee for the healthy development of real estate. Yet the current form is still not optimistic, the question remains, and the real estate enterprise accounting sales revenue recognition is an important performance. To solve the main problems, affirming income by installment is a good choice. But I believe that the real estate enterprise’s development momentum cannot be prevented, and as a new generation of accounting, workers will further improve the real estate enterprise accounting.
144 listed real estate companies:
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