Analysis of Accounting Treatment for Dadi Oriental (600327)'s RMB 1 Hospital Equity Disposal

Based on collected information, this report provides a systematic analysis of the accounting treatment for Dadi Oriental’s RMB 1 hospital equity disposal.

According to publicly disclosed information, Wuxi Commercial Building Dadi Oriental Co., Ltd. (Stock Code: 600327) issued an announcement on November 25, 2025, stating that its holding subsidiary, Shanghai Junyao Medical Health Technology Co., Ltd., intends to transfer its 80% equity interest in Jinhua Lianji Hospital Co., Ltd. to Jinhua Lantian Biotechnology Co., Ltd. for

, while transferring approximately against Jinhua Lianji Hospital for [1][2].

• Valuation benchmark date for Jinhua Lianji Hospital: September 30, 2025
• Valuation value: -RMB 52.2275 million (negative net assets)
• Jinhua Lianji Hospital has accumulated approximately RMB 79.15 million in losses since 2022[1][2]

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Pursuant to Accounting Standard for Business Enterprises No. 2 — Long-term Equity Investments and Accounting Standard for Business Enterprises No. 33 — Consolidated Financial Statements, the accounting treatment for this transaction must distinguish between the following scenarios:

Accounting Method	Applicable Scenario	Accounting Treatment upon Disposal
Cost Method	Subsidiary (control)	The difference between disposal consideration and carrying value is recognized in investment income
Equity Method	Associate/Joint Venture (significant influence/joint control)	The difference between disposal consideration and carrying value is recognized in investment income; amounts originally recognized in other comprehensive income need to be transferred

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Assuming the carrying value of Dadi Oriental’s long-term equity investment in Jinhua Lianji Hospital is

million yuan (cost + profit and loss adjustments + other equity changes):

Debit: Cash in Bank                      RMB 1
    Investment Income (Loss)              W - 1
  Credit: Long-term Equity Investment - Jinhua Lianji Hospital      W

Pursuant to Article 17 of Accounting Standard for Business Enterprises No. 2 — Long-term Equity Investments:

“When disposing of a long-term equity investment, the difference between its carrying value and the actual consideration received shall be recognized in current period profit or loss. For long-term equity investments accounted for using the equity method, when disposing of such investment, the portion originally recognized in other comprehensive income shall be accounted for in the same manner as if the investee directly disposed of the relevant assets or liabilities, in proportion to the corresponding share.”[3]

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For the transfer of RMB 89.991 million in claims (transacted for RMB 5.8 million):

Item	Amount (RMB 10,000)
Carrying value of claims	8,999.10
Transfer price	580.00
Transfer loss	8,419.10

Debit: Cash in Bank                      580
    Investment Income (Transfer Loss)          8,419.10
  Credit: Other Receivables/Debt Investments           8,999.10

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If Jinhua Lianji Hospital was previously included in Dadi Oriental’s consolidated financial statements:

1. Processing upon Loss of Control:
   • The difference between disposal consideration and carrying value on the disposal date is recognized in investment income
   • The remaining equity interest is remeasured at fair value
   • Investment income recognized at the consolidated level = Disposal consideration + Fair value of remaining equity interest - Carrying value of disposed subsidiary × disposal ratio - Minority Interest

2. Profit and Loss Classification Adjustment:
   • Investment income recognized in prior periods under the equity method must be transferred out of “Investment Income”
   • Other comprehensive income recognized in prior periods must be transferred out on the same basis

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Item	Amount (RMB 10,000)	Account to Be Recorded In
Equity disposal loss	W - 0.0001	Investment Income
Debt transfer loss	8,419.10	Investment Income
Total Impact	Approximately (W + 8,419)	Reduction in Total Profit

Financial Statement Item	Impact Direction
Total Assets	Decrease (due to transfer out of net assets)
Total Liabilities	Decrease (e.g., due to assumption of debts)
Owner’s Equity	Decrease (due to loss recognition)
Investment Income	Negative Impact
Net Profit	Negative Impact

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Pursuant to Accounting Standard for Business Enterprises No. 39 — Fair Value Measurement, the RMB 1 pricing should be based on sufficient due diligence and valuation to ensure the fairness of the pricing.

The announcement for this transaction clearly states that “this transaction does not constitute a related party transaction”[1], but attention should still be paid to:

• Whether the transaction pricing is reasonable
• Whether there is any interest transfer

Pursuant to the Measures for the Administration of Information Disclosure of Listed Companies, the following should be disclosed:

• Basis for transaction pricing
• Core content of the valuation report
• Accounting treatment methods
• Impact on the financial condition of the listed company

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Key Points of Accounting Treatment for Dadi Oriental’s RMB 1 Disposal of Jinhua Lianji Hospital Equity:

1. Accounting Recognition
   : Disposal of long-term equity investment, with the difference recognized in investment income
2. Accounting Measurement
   : Profit and loss are recognized based on the difference between carrying value and actual consideration received
3. Consolidated Processing
   : When control is lost, the remaining equity interest must be remeasured at the consolidated level
4. Financial Impact
   : This transaction will generate a large amount of investment loss, which will have a negative impact on current period profits

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[1] Sina Finance - Dadi Oriental: Announcement on Transfer of Equity Interest and Claims of Holding Grandson Company (http://money.finance.sina.com.cn/corp/view/vCB_AllBulletinDetail.php?stockid=600327&id=11630069)

[2] MedTrend - Xinhua Medical Hastens Sale of 11 Hospitals: RMB 1 Distress Sales, 10% Discounts Find No Buyers (https://m.sohu.com/a/977949723_617205)

[3] Ministry of Finance - Accounting Standard for Business Enterprises No. 2 — Long-term Equity Investments (https://cwfwpt.ggj.gov.cn/zcfg/qykjzd/202306/P020230620628629211983.pdf)