Research On Revenue Recognition Of Special Entrusted Processing Business

As China’s economic development enters a new stage,the division of labor in the industry continues to improve,the degree of professionalization of production continues to increase,and the form of production organization is adapted to the specialization of division of labor and innovation.As a microcosm of specialized division of labor,entrusted processing is increasingly accepted by modern enterprises and has become the production method adopted by many manufacturing enterprises.Entrusting auxiliary and uneconomic production links to other enterprises can effectively reduce their own costs and indirectly promote To improve the degree of specialization of sub-engineering.High-tech enterprises represented by The STAR Market have gradually become the hot spot in the current capital market.Due to insufficient production capacity and other issues in the process of achieving large-scale mass production,high-tech enterprises often use entrusted processing to increase their production capacity.The form of entrusted processing business has become an “opportunity” for the VC companies to increase their revenues.This article takes the false increase of income that may be involved in the entrusted processing as an entry point and the real case of The STAR Market as the basis to explore the boundary of the entrusted processing business and the purchase and sales business and the related revenue recognition issues,to provide reference for subsequent reporting accountants and issuers.This paper explores the difference between the commissioned processing industry and the purchase and sales business through inductive analysis,case analysis and other methods,and analyzes the fact that the commissioned processing industry in the form of purchase and sales business in practice may lead to falsely high income.Based on the real science and technology board IPO review case,this paper analyzes the nature of such special commissioned processing business and its revenue recognition issues,and proposes practical solutions.This article believes that the “special entrusted processing business” carried out in the form of purchase and sales blurs the boundary between the purchase and sales business and the entrusted processing business.In practice,there is a case of using this method to artificially increase revenue;Difficulties in confirming income,difficulty in selecting income recognition methods,and difficulty in determining the timing of income recognition.The solution of the company H’s special commissioned processing business revenue confirmation judgment is to first determine the nature of the commissioned processing business and whether the commissioned processing centered on the purchase and sales business is established,in order to determine whether the revenue should be confirmed and other related issues.This article proposes a "one basis,two points" approach to identify the nature of the entrusted processing business.It is believed that based on the content of the contract,the focus on the control of the transaction and the production factors of the transaction target is the key to solving the judgment of the entrusted processing industry and the purchase and sales business.Based on the above inquiry,this article believes that to effectively identify the entrusted processing business and the purchase and sales business and to clarify the revenue recognition problems arising from it,we should pay attention to the contract content,pay attention to the continuity of the contract,identify the change in transaction control rights,and pay attention to the changes in control rights The changes in transaction targets should be grasped by paying attention to the three aspects of factor input subjects.