Willfar Information Technology Co.Ltd(688100)
Notes to financial statements
Year 2021
Monetary unit: RMB 1. Basic information of the company
Willfar Information Technology Co.Ltd(688100) (hereinafter referred to as the company or the company) was formerly Changsha Willfar Information Technology Co.Ltd(688100) Technology Co., Ltd. (hereinafter referred to as Changsha Weisheng). Changsha Weisheng was jointly invested and established by Changsha Weisheng Electronics Co., Ltd. and Haiji Group Co., Ltd. and registered with Changsha Administration for Industry and Commerce on May 8, 2004. It obtained the business license of enterprise legal person with the registration number of 4301044001280, with a registered capital of 20 million yuan at the time of establishment. In September 2016, Changsha Weisheng was renamed Hunan Willfar Information Technology Co.Ltd(688100) Technology Co., Ltd. (hereinafter referred to as Hunan Weisheng). Taking January 31, 2017 as the base date, Hunan Weisheng was changed into a joint stock limited company. It was registered with Changsha Administration for Industry and Commerce on December 12, 2017, and its headquarters is located in Changsha, Hunan Province. The company now holds a business license with a unified social credit code of 914 Sino-High (China) Co.Ltd(301076) 0727392g. As of December 31, 2021, the registered capital of the company is 500 million yuan, with a total of 500 million shares (par value of 1 yuan per share). Among them, the tradable shares with limited sales conditions: 335547100 A shares; There are 1644529 million A-Shares of tradable shares without restrictions.
The company belongs to C39 computer, communication and other electronic equipment manufacturing industry. The main business activities are R & D, production and sales of all-round products around smart city and Internet of things. The products mainly include: electric monitoring terminal, water, gas and heat sensing terminal, communication module, communication gateway, intelligent public utility management system, etc.
The financial statements have been approved by the 12th meeting of the second board of directors of the company on February 25, 2022.
The company will Hunan Weiming Energy Technology Co., Ltd. (hereinafter referred to as Weiming energy company), Zhuhai Zhonghui Microelectronics Co., Ltd. (hereinafter referred to as Zhuhai Zhonghui company), Zhuhai Huixin Microelectronics Co., Ltd. (hereinafter referred to as Zhuhai Huixin company) Five subsidiaries of Hunan Yichuang Technology Co., Ltd. (hereinafter referred to as Hunan Yichuang company) and Hainan Chenghang Technology Co., Ltd. (hereinafter referred to as Hainan Chenghang company) are included in the scope of consolidated financial statements of the current period. For details, please refer to note VI to the financial statements.
2、 Preparation basis of financial statements
（1） Preparation basis
The preparation of financial statements is based on the company’s going concern.
（2） Evaluation of going concern ability
The company has no events or circumstances that cause major doubts about its ability to continue as a going concern within 12 months from the end of the reporting period. 3、 Important accounting policies and accounting estimates
Important note: according to the actual production and operation characteristics, the company has formulated specific accounting policies and accounting estimates for transactions or events such as impairment of financial instruments, depreciation of fixed assets, depreciation of right of use assets, amortization of intangible assets and revenue recognition.
（1） Statement of compliance with accounting standards for business enterprises
The financial statements prepared by the company comply with the requirements of the accounting standards for business enterprises and truly and completely reflect the company’s financial position, operating results, cash flow and other relevant information.
（2） Accounting period
The fiscal year starts on January 1 and ends on December 31 of the Gregorian calendar.
（3） Business cycle
The business cycle of the company’s business is relatively short, and 12 months is taken as the liquidity classification standard of assets and liabilities.
（4） Recording currency
RMB is adopted as the bookkeeping base currency.
（5） Accounting treatment methods for business combinations under the same control and not under the same control
1. Accounting treatment method of business combination under the same control
The assets and liabilities obtained by the company in business combination shall be measured according to the book value of the combined party in the consolidated financial statements of the final controller on the combination date. The company adjusts the capital reserve according to the difference between the book value share of the owner’s equity of the merged party in the consolidated financial statements of the final controller and the book value of the merger consideration paid or the total face value of the issued shares; If the capital reserve is insufficient to offset, the retained earnings shall be adjusted.
2. Accounting treatment methods for business combinations not under the same control
On the acquisition date, the company recognizes the difference between the combination cost and the fair value of the identifiable net assets of the acquiree obtained in the combination as goodwill; If the combination cost is less than the fair value of the identifiable net assets of the acquiree obtained in the combination, first review the measurement of the fair value of the identifiable assets, liabilities and contingent liabilities of the acquiree and the combination cost. After review, if the combination cost is still less than the fair value of the identifiable net assets of the acquiree obtained in the combination, The difference is included in the current profit and loss.
（6） Preparation method of consolidated financial statements
The parent company brings all subsidiaries under its control into the consolidation scope of the consolidated financial statements. The consolidated financial statements are prepared by the parent company in accordance with the accounting standards for Business Enterprises No. 33 – consolidated financial statements based on the financial statements of the parent company and its subsidiaries and other relevant materials.
（7） Classification of joint venture arrangement and accounting treatment method of joint operation
1. Joint venture arrangements are divided into joint operation and joint venture.
2. When the company is a joint venture, the following items related to the interest share in the joint operation shall be recognized:
(1) Confirm the assets held separately and jointly held assets according to the holding share;
(2) Recognize the liabilities undertaken individually and jointly according to the holding share;
(3) Recognize the income generated from the sale of the company’s share of joint operation output;
(4) Recognize the income generated from the sale of assets in the joint operation according to the share held by the company;
(5) Confirm the expenses incurred separately and the expenses incurred in joint operation according to the share held by the company.
（8） Criteria for determining cash and cash equivalents
Cash listed in the cash flow statement refers to cash on hand and deposits that can be used for payment at any time. Cash equivalents refer to the short-term, highly liquid investments held by enterprises, which are easy to be converted into known amounts of cash and have little risk of value change.
（9） Foreign currency transactions and translation of foreign currency statements
1. Translation of foreign currency business
When foreign currency transactions are initially recognized, they are translated into RMB at the approximate exchange rate of the spot exchange rate on the transaction date. On the balance sheet date, foreign currency monetary items are translated at the spot exchange rate on the balance sheet date. The exchange difference arising from different exchange rates, in addition to the exchange difference between the principal and interest of foreign currency special borrowings related to the acquisition and construction of assets eligible for capitalization, is included in the current profit and loss; Foreign currency non monetary items measured at historical cost shall still be translated at the approximate exchange rate of the spot exchange rate on the transaction date without changing its RMB amount; Foreign currency non monetary items measured at fair value are translated at the spot exchange rate on the date when the fair value is determined, and the difference is included in the current profit and loss or other comprehensive income.
2. Translation of foreign currency financial statements
The assets and liability items in the balance sheet shall be translated at the spot exchange rate on the balance sheet date; Except for the “undistributed profit” item, other items of owner’s equity are translated at the spot exchange rate on the transaction date; The income and expense items in the income statement are translated at the approximate exchange rate of the spot exchange rate on the transaction date. The translation difference of foreign currency financial statements generated according to the above translation shall be included in other comprehensive income.
（10） Financial instruments
1. Classification of financial assets and financial liabilities
Financial assets are divided into the following three categories at initial recognition: (1) financial assets measured at amortized cost; (2) Financial assets measured at fair value and whose changes are included in other comprehensive income; (3) Financial assets measured at fair value through profit or loss.
Financial liabilities are divided into the following four categories at initial recognition: (1) financial liabilities measured at fair value and whose changes are included in current profits and losses; (2) The transfer of financial assets does not meet the conditions for derecognition or continues to be involved in the financial liabilities formed by the transferred financial assets; (3) Financial guarantee contracts that do not belong to (1) or (2) above, and loan commitments that do not belong to (1) above and lend at a lower market interest rate; (4) Financial liabilities measured at amortized cost.
2. Recognition basis, measurement method and derecognition conditions of financial assets and financial liabilities
(1) Recognition basis and initial measurement method of financial assets and financial liabilities
A financial asset or financial liability is recognized when the company becomes a party to the financial instrument contract. When financial assets or financial liabilities are initially recognized, they are measured at fair value; For the financial assets and financial liabilities measured at fair value and whose changes are included in the current profit and loss, the relevant transaction costs are directly included in the current profit and loss; For other types of financial assets or financial liabilities, relevant transaction costs are included in the initially recognized amount. However, if the accounts receivable initially recognized by the company does not contain significant financing components or the company does not consider the financing components in the contract less than one year, the initial measurement shall be carried out according to the transaction price defined in the accounting standards for Business Enterprises No. 14 – income.
(2) Subsequent measurement methods of financial assets
1) Financial assets measured at amortized cost
The effective interest rate method is adopted for subsequent measurement according to the amortized cost. The gains or losses arising from financial assets measured at amortized cost and not part of any hedging relationship shall be included in the current profit and loss when they are derecognized, reclassified, amortized according to the effective interest rate method or recognized as impaired.
2) Changes in other investment instruments measured at fair value are included in comprehensive income
Fair value is adopted for subsequent measurement. The interest, impairment loss or gain and exchange gain and loss calculated by the effective interest rate method are included in the current profit and loss, and other gains or losses are included in other comprehensive income. At the time of derecognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in the current profit and loss.
3) Equity instrument investment measured at fair value with changes included in other comprehensive income
Fair value is adopted for subsequent measurement. The dividends obtained (except those belonging to the recovery part of investment costs) are included in the current profits and losses, and other gains or losses are included in other comprehensive income. Upon derecognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in retained earnings.
4) Financial assets measured at fair value through profit or loss
The fair value is adopted for subsequent measurement, and the resulting gains or losses (including interest and dividend income) are included in the current profit and loss, unless the financial asset is part of the hedging relationship.
(3) Subsequent measurement method of financial liabilities
1) Financial liabilities measured at fair value through profit or loss
Such financial liabilities include trading financial liabilities (including derivatives belonging to financial liabilities) and financial liabilities designated to be measured at fair value and whose changes are included in the current profit and loss. Such financial liabilities are subsequently measured at fair value. The amount of changes in the fair value of financial liabilities designated to be measured at fair value through profit or loss due to changes in the company’s own credit risk shall be included in other comprehensive income, unless the treatment will cause or expand the accounting mismatch in profit or loss. Other gains or losses arising from such financial liabilities (including interest expenses, except for changes in fair value caused by changes in the company’s own credit risk) are included in the current profits and losses, unless the financial liabilities are part of the hedging relationship. Upon derecognition, the accumulated gains or losses previously included in other comprehensive income shall be transferred out of other comprehensive income and included in retained earnings.
2) The financial liabilities formed by the transfer of financial assets that do not meet the conditions for derecognition or continue to be involved in the transferred financial assets shall be measured in accordance with the relevant provisions of the accounting standards for Business Enterprises No. 23 – transfer of financial assets.
3) Financial guarantee contracts that do not belong to 1) or 2) above, and loan commitments that do not belong to 1) above and lend at a lower market interest rate
After initial recognition, subsequent measurement shall be made according to the higher of the following two amounts: ① the amount of loss reserves determined according to the impairment provisions of financial instruments; ② The balance of the initially recognized amount after deducting the accumulated amortization determined in accordance with the relevant provisions of the accounting standards for Business Enterprises No. 14 – income.
4) Financial liabilities measured at amortized cost
It is measured at amortized cost using the effective interest method. The gains or losses arising from financial liabilities measured at amortized cost and not part of any hedging relationship shall be included in the current profit and loss when they are derecognized and amortized according to the effective interest rate method.
(4) Derecognition of financial assets and financial liabilities
1) Financial assets are derecognized when one of the following conditions is met:
① The contractual right to receive cash flows from financial assets has been terminated;
② Financial assets have been transferred, and the transfer meets the provisions on derecognition of financial assets in accounting standards for Business Enterprises No. 23 – transfer of financial assets.
2) When the current obligations of financial liabilities (or part thereof) have been relieved, the recognition of such financial liabilities (or part thereof) shall be terminated accordingly.
3. Recognition basis and measurement method of financial asset transfer
If the company transfers almost all the risks and rewards in the ownership of financial assets, the financial assets shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities; If almost all the risks and rewards of the ownership of financial assets are retained, the transferred financial assets shall continue to be recognized. If the company neither transfers nor retains almost all the risks and rewards of the ownership of financial assets, it shall be treated as follows: (1) if it does not retain control over the financial assets, the financial assets shall be derecognized, and the rights and obligations generated or retained in the transfer shall be separately recognized as assets or liabilities; (2) If the control over the financial assets is retained, the relevant financial assets shall be recognized according to the degree of continued involvement in the transferred financial assets, and the relevant liabilities shall be recognized accordingly.
If the overall transfer of financial assets meets the conditions for derecognition, the difference between the following two amounts shall be included in the current profits and losses: (1) the book value of the transferred financial assets on the date of derecognition; (2) The sum of the consideration received from the transfer of financial assets and the amount of the corresponding derecognized part of the cumulative amount of changes in fair value originally directly included in other comprehensive income (the financial assets involved in the transfer are debt instrument investments measured at fair value and whose changes are included in other comprehensive income). If a part of a financial asset is transferred and the whole of the transferred part meets the conditions for derecognition, the book value of the whole financial asset before transfer shall be recorded in
