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On the new accounting standards on debt restructuring

Author: WangZuo From: www.yourpaper.net Posted: 2009-06-01 17:16:24 Read:
[Paper Keywords]: the present value of the fair value of the debt restructuring accounting standards
In order to meet the requirements of the international convergence of accounting, economic globalization, the accounting information to more accurately and objectively reflect the variety of complex realities of economic business, in 2006 the Ministry of Finance revised guidelines, the introduction of the "Accounting Standards for Business Enterprises No. 12 debt restructuring. "Enterprise Accounting Standards No. 12, promulgated by the debt restructuring in 2006 and 2001," Enterprise Accounting Standards debt restructuring "is based on a definition of debt restructuring, fair value measurement model, the accounting treatment of the debt restructuring, new standards The problems of the existing problems in the implementation of debt restructuring accounting standards.


Specification debt restructuring accounting and information disclosure, in 1998, the Ministry of Finance released the debt restructuring of Accounting Standards for Business Enterprises "[1]. The criteria are accounted for at fair value as a benchmark, the difference between the debt restructuring through profit or loss. Practical work, however, many companies are making use of such a provision in the guidelines to manage earnings, some operating difficulties listed companies as a security card debt restructuring, Zhaimao a magic weapon. Manipulation for profit, in 2001, the Ministry of Finance issued a revised corporate accounting standards, debt restructuring, "[2]. Valuation basis of non-cash assets repossessed by a fair value to book value, the difference between the debtor due to debt restructuring is no longer recognized as a gain on debt restructuring, but all are included in capital surplus, in order to avoid abuse of the fair value , inhibition of a portion of the profits manipulation. However, such a requirement is contrary to the substance over form principle, difficult to coordinate with the international accounting standards. Based on fully take into account the changes in the economic environment and the revision before the implementation of the guidelines in 2006, the Ministry of Finance guidelines have been revised, and the introduction of the "Enterprise Accounting Standards No. 12 debt restructuring" [3], to redefine the concept of debt restructuring the introduction of a fair value measurement model. Discusses the definition of the debt restructuring, according to the new standards) and the 2001 "Enterprise Accounting Standards debt restructuring" (hereafter "Enterprise Accounting Standards No. 12, promulgated by the debt restructuring in 2006 (hereinafter referred to as the old criteria) are measured at fair value The accounting treatment of the model, debt restructuring, debt restructuring, such as the problems in the implementation of the new standards in accounting standards.

debt restructuring defined

The international community under the definition of debt restructuring reflected from the general two ideas, a generalized debt restructuring, is a narrow debt restructuring. Generalized debt restructuring that all matters should be deemed to modify the terms of a debt to a debt restructuring. The best embodies this idea, the most representative is Australia. Australian Accounting Guide No. 11 defines debt restructuring: "The action taken in order to change or lift the responsibility of the debtor's existing debt, which does not include debt cancellation and convertible bonds into equity. The narrow debt restructuring only of financial difficulties of the debtor and creditors of the debtor to make concessions matters be treated as debt restructuring. The best embodies this idea is the United States. The U.S. Financial Accounting Standards No. 15 Notice: creditor by the debtor in financial difficulties, for economic or legal reasons, usually reluctant to consider the debtor to make concessions matters.
New standards [3] debt restructuring is defined as: "In the case of financial difficulties of the debtor, creditors make concessions in accordance with the agreement reached with the debtor or the Court ruled matters." New standards of financial difficulties of the debtor "as a prerequisite for debt restructuring," concessions "as a necessary condition for debt restructuring. The old criteria [2] defined: "creditor matters agreed to modify the terms of a debt of the debtor in accordance with an agreement reached with the debtor or the court's ruling. Seen the old criteria is defined broadly, and new guidelines for the narrow definition.
I believe that such an amendment is mainly based on the following reasons: debtor has no accounting of the debt restructuring in financial difficulties, and its essence belongs to donate to other applicable guidelines; the bankruptcy liquidation of debt restructuring, belonging to discontinued operations under conditions debt restructuring, debt restructuring under the non-continuous operating conditions do not belong to the scope of debt restructuring guidelines, its accounting treatment prescribed by the accounting norms sub. A corporate restructuring in the enterprise, the situation is more complicated restructuring of its debts, whether belonging to continue as a going concern, the guidelines are also not addressed. of financial difficulties of the debtor's debt restructuring, if the creditor does not make concessions, is not involved in the recognition and disclosure of accounting. Therefore, the definition of the debt restructuring its scientific and reasonable recovery for the definition of the 1998 guidelines.

Although defined in the text of the new guidelines on debt restructuring with the definition of the 1998 guidelines [1], but the scope of application of the new guidelines is the wide scope of application of the 1998 guidelines, which is due to debt restructuring, the criteria of the definition of "concession" different, the 1998 guidelines did not use the calculation of the present value of the new guidelines draw on the announcement of the U.S. Financial Accounting Standards No. 15, using present value calculations to judge whether or not creditors to make "concessions".
The new standard requires to modify the terms of a debt (including the extension of debt repayment, extend the debt repayment period and additional interest, to extend the debt repayment period and reduce the debt principal or interest on the debt, etc.), the present value of the debt restructuring, the debtor amounts payable in the future the difference between the book value of debt restructuring, as the restructuring gains recognized in profit or loss. For creditors, the book balance of the debt to be restructured and the receipt of cash, the transferee fair value of non-cash assets to enjoy the fair value of options, the amount of the present value of the difference between the receivable in the future (have provision for impairment should be offset against the reduction The value ready), as the debt restructuring loss through profit or loss, the transferee of non-cash assets in accordance with the fair value. The present value of more truly reflect the profits and losses of the debtor, creditors in debt restructuring activities, and the introduction of the concept of present value of the debt restructuring specific guidelines further convergence with the International Accounting Standards.

Third, the fair value measurement model

(a) the fair value of the concept.
Fair value, also known as the fair market price, fair price. National accounting standards formulation of the concept of fair value is not the same, but the basic meaning is the same. IAS 32 that the United Kingdom Financial Reporting Standard No. 7: "fair value refers to an arm's length transaction in familiar situations, voluntary exchange between the two sides of an asset or the amount used to settle a debt." the definition is: "fair value, familiar with the situation, willing parties in an arm's length transaction, rather than in a forced or liquidation auction transactions, exchange amount of an asset or a liability." China will define it as: "familiar with the situation in a fair trade both voluntary amount of the asset could be exchanged or a liability settled."

(b) measuring the fair value of non-cash assets to settle the debt
Debt restructuring non-cash assets to pay off debt, the fair value of non-cash assets should be measured in accordance with the following provisions:
(1) non-cash assets are stocks, bonds, funds and other financial assets held by an enterprise should determine its fair value in accordance with the provisions of the "Enterprise Accounting Standards No. 22, Financial Instruments Recognition and Measurement".
(2) non-cash assets belonging to inventory, fixed assets, intangible assets and other assets and there is an active market, its market price shall be determined based on its fair value; there is no active market for similar assets exist an active market, should be determine its fair value based on market prices for similar assets; using the above two methods still can not determine the fair value of non-cash assets, should be a reasonable method to determine the fair value using valuation techniques.

(c) return to fair value as the significance of the recorded value
In theory, the use of fair value measurement can truly reflect the financial position and operating results. fair value to better reflect the actual value of the assets or liabilities of a particular point in time. helps to fully reflect the actual impact of the debt restructuring of enterprises, the correct analysis of the results of operations of the enterprise. Debt such as the settlement of non-cash assets, gains or losses from asset transfer and the nature of the debt restructuring or loss should be accounted for separately, only the use of fair value to clearly distinguish.
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