How to confirm the income of inter-annual property management fees?

Q: At the end of the year, the property management company received the property management fee of 202 1 from the owner in advance. How should the company confirm the income of this property management fee in advance?

A: According to Article 9 of the Regulations on the Implementation of the Enterprise Income Tax Law of People's Republic of China (PRC) (Order No.512 of the State Council of the People's Republic of China), the taxable income of enterprises is calculated on the accrual basis, which belongs to the income and expenses of the current period, regardless of whether the money is received or paid. The income and expenses that do not belong to this period, even if the money has been received and paid in this period, are not regarded as the income and expenses of this period.

In addition, according to Article 2 of the Notice of State Taxation Administration of The People's Republic of China on Several Issues Concerning the Recognition of Enterprise Income Tax (Guo [2008] No.875), (4) If the following services meet the conditions for income recognition, the income shall be recognized as required:

8. Service fee refers to the service fee charged for providing repeated services to customers for a long time, and income is recognized when relevant service activities occur.

To sum up, the inter-annual property fees received by the property management company from the owners in advance shall be recognized as the current income when the property management services are actually provided.

How to settle property fees in advance?

The property fees received in advance by the company for the next year can be included in the "accounts received in advance" subject first, and then the main business income can be confirmed. Specific accounting treatment is as follows:

1. Time-consuming property management in advance:

Debit: bank deposit

Credit: accounts received in advance

2. When the property management company confirms the income:

Debit: accounts received in advance

Loan: income from main business

Taxes payable-VAT payable (output tax)