FSC allows firms to book real-estate gains by value

By Kevin Chen  /  Staff reporter

Wed, Dec 04, 2013 - Page 13

The Financial Supervisory Commission (FSC) yesterday announced that listed companies will be allowed to book their gains in real-estate investments based on market value next year.

The commission said in a statement that it would allow listed companies to use the so-called “market value method” to calculate their investment gains from the new fiscal year next year.

The commission said listed firms will be also allowed to use the income approach to evaluate their property assets owned for investment purposes, rather than the “cost method.”

Following the implementation of the international financial reporting standards (IFRS) accounting rule this year, listed companies are required by the commission to registered their real-estate investment gains by using “cost method” or comparing with their purchase prices.

The commission said sizable real-estate investments — with each project accounting for 20 percent of a listed firm’s paid-in capital or priced at more than NT$300 million (US$10.14 million) — would need professional appraisals by a third party, the statement said.

The latest relaxation is likely to boost net value of listed firms and helps enhance financial institutions' and life insurers’ capital adequacy ratio in particular, analysts said.

Separately, domestic securities brokers are expected to see extra earnings contribution from foreign currency exchange transactions, especially those associated with foreign deposits and assets, following the latest deregulation announced by the central bank.

Under current regulations, if consumers want to buy foreign currency-denominated securities through brokerages, they have to exchange currencies through banks first.

However, the monetary authority on Monday said it would allow Taiwanese brokerages to perform forex services for their clients without the need to go through banks, according to the central bank’s statement on its Web site.