Chapter V Owners' Equity



Article 38. Owners' equity refers to the interest of the investors remaining in the net assets of an enterprise, including capital of the enterprise invested in by investors, capital reserve, surplus reserve, and undistributed profit retained in the enterprise etc..



Article 39. Invested Capital is the capital fund actually invested in the enterprise by its investors, whether it be in form of cash, physical goods or other assets for the operation of the enterprise.



Invested Capital shall be accounted for at the amount actually invested.



Amount of shares issued by a corporation shall be accounted for as capital stock at the face value of the shares issued.



Specia1 appropriation allocated by the government to an enterprise sha1l be accounted for as government investment unless otherwise provided.

Article 40. Capital reserve includes premium on capital stock, legal increment of property value through revaluation and value of donated assets accepted, etc..

Article 41. Surplus reserve refers to the reserve fund set up from profit according to relevant government regulations.



Surplus reserve shall be accounted for at the amount actually set up.



Article 42. Undistributed profit refers to the profit reserved for future distribution or not distributed yet.



Article 43. Invested capital, capital reserve, surplus reserve and undistributed profit shall be shown by items in accounting statement. Deficit not yet made up, if any, shal1 be shown as a deduction item of owners' equity.
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