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On the comparison of the old and new debt restructuring guidelines analyze its impact

Author: Guo””Zuo From: www.yourpaper.net Posted: 2009-06-02 01:38:24 Read:
[Paper Keywords]: analysis of debt restructuring affects
[Abstract]:
In 1998, the Ministry of Finance to develop the "Accounting Standards for Business Enterprises - debt restructuring, and was revised in 2001; February 2006, the Ministry of Finance issued" Accounting Standards for Business Enterprises No. 12 - The debt restructuring "(hereinafter referred to as the new guidelines). Study changes in the old and new debt restructuring guidelines as well as the implementation of the new standard on the financial situation of enterprises has important practical significance.


old accounting standards differences and compare

(a) debt restructuring changes in the definition of
The original debt restructuring guidelines defined for the creditors in accordance with the agreement reached with the debtor or court ruling agreed to modify the terms of a debt of the debtor matters ", it shows that regardless of what kind of form of debt restructuring, modify the original terms of a debt matters including modifying the debt amount and repayment time, as the debt restructuring. Debt restructuring in the old criteria, both in debt restructuring under the conditions of the financial difficulties of the debtor, including the debtor is not in financial difficulties under the conditions of debt restructuring.
The new guidelines stress that the debtor is in financial difficulties prerequisite, and highlights the creditors to make a substantive conditions of the concession. Excluded under the conditions of the financial difficulties of the debtor is not in, the debt restructuring in a liquidation or reorganization, and to modify the terms of a debt, but in essence, the creditors did not make concessions on debt restructuring matters. If the difficulties on the part of the debtor, the creditors agreed to the debtor to cover maturing debt stock merchandise, no adjustments are made to repay the amount and timing of, in essence, the creditor does not make concessions, is not part of the debt restructuring.
(b) debt restructuring, changes in the way
The original criteria for debt restructuring debts to less than the debt carrying value of cash and non-cash assets to pay off the debt, the debt is converted into capital, to modify the terms of a debt and debts five ways in combination. New standards in the debt restructuring assets to settle the debt, the debt is converted into capital, to modify the terms of a debt and debts are four ways in combination. The old criteria "below the book value of debt in cash to settle the debt" and "non-cash assets to pay off debt" way collectively as "assets to settle the debt," the way, though not a substantial change, but the formulation of new guidelines is simple and easy to understand.
(c) debt restructuring measurement attributes change
recorded at carrying value of the original guidelines, the introduction of new standards of fair value. In the original debt restructuring guidelines for accounting treatment are accounted for at carrying value on the measurement attributes main content: "transfer of non-cash assets / debt capital to settle a debt, the creditor shall be the book value of the debt to be restructured as a transferee of the non-cash assets / the recorded value of the equity. The new guidelines for the introduction of a fair value measurement attribute a fair value measurement basis has many advantages, it can reasonably reflect the financial condition of the enterprise to more effectively reflect the income and expenses of the ratio is conducive to business physical capital, especially in the case of inflation preservation.
(d) debt restructuring through profit or loss changes
original guidelines require that the debtor should restructure the debt of the difference between the book value and the transfer of non-cash assets or equity book value is recognized as capital reserve, and the the creditor party also can not confirm the reorganization gains. The new standard requires that the debtor shall be the difference between the book value and the actual payment of the debt restructuring cash / transfer of non-cash assets at fair value / shares Total fair value, through profit or loss. Modify other terms of a debt, the debtor shall modify the fair value of the debt in other debt conditions as the recorded value of the restructured debt, the difference between the book value of debt restructuring and reorganization of the recorded value of the debt through profit or loss. " This clearly affirmed the debt restructuring profits through profit or loss (generally operating income for the debtor), the enterprise or company can be eligible for huge profits, may greatly enhance the level of earnings per share of listed companies.

Second, the implementation of the new standard on the financial situation of enterprises impact

The original guidelines for the accounting treatment of the debt restructuring, creditor or debtor, are rarely involved in fair value not recognized gain on debt restructuring. The new guidelines will lead to the original creditor concessions debtor to modify the terms of a debt repayment of all liabilities gains included in capital reserve practices changed through profit or loss; kind repossessed business, the introduction of fair value as a measurement attribute. The new standards with the old criteria, the biggest difference is measured at fair value through profit or loss and the resulting gain on debt restructuring.
(a) the debtor's financial
1. The debtor's liabilities can be reduced, thereby reducing the debtor's assets-liability ratio. However, the reduction of the asset-liability ratio, does not mean that the enhancement of corporate solvency, debt restructuring does not increase the total amount of the debtor's assets, also did not increase the asset's net realizable capacity.
The debtor to the increase in revenue, but it does not mean that the enhancement of profitability. Debtor in the debt restructuring process will be two income: Gain on debt restructuring; asset disposal income. Because these gains are due to the creditors of certain concessions, only the current period. The debt restructuring does not improve the product quality, sales channels, and business management of the debtor of the fundamental factors that affect corporate profitability.
3 can reduce the financial burden of the debtor's future. Reduce debt through debt restructuring, such as the principal, to reduce the interest on the debt, reducing the company's future financial costs, thereby reducing the cost of the use of assets.
4 lead to structural changes in owners' equity, influence the future distribution of benefits relationship, will result in a certain sense, the paid-up capital or capital surplus inflated. Since the debt restructuring can take the debt conversion property, liabilities, owner's equity, resulting the enterprises paid-in capital or capital surplus increased, so that the original owner's equity structure of the debtor change will affect the future distribution of benefits relationship.
5 can make an inventory of some of the idle assets. Due to debt restructuring, non-cash assets to cover the debt, the debtor can use the idle assets exactly the creditor needs of non-cash assets to debt, asset restructuring, which make an inventory of some of the idle assets, improve asset utilization.
(b) the creditor financial
1 cause the creditors assets decreased, resulting in the loss of debt restructuring. Longer part of the new standard requires: (1) in cash to settle a debt, the creditor should be restructured book balance to offset the bad debt loss reserves and the difference between the cash received first, the loss reserve shortfall as debt restructuring loss in profit or loss. (2) non-cash assets to settle a debt, the difference between the book balance of the debt to be restructured and the fair value of the transferee's non-cash assets as debt restructuring loss in profit or loss. The difference between the book balance (3) Conversion of debt into capital, the creditors should be restructured and the fair value of the options as debt restructuring loss of profit or loss. (4) to modify the terms of a debt for debt restructuring, the book balance of the creditors' claims should be written down to future receivable balance, the reduced amount as debt restructuring loss in profit or loss.
Can reduce creditors part of the economic burden, reduce the amount of funds used to reduce the cost of the use of funds. Through debt restructuring, creditors can recover a certain amount of monetary funds or non-monetary assets to reduce the burden of financial expenses, you can also recover part of recognized income and debt, while the funds advanced by the increase, such as advance tax.
3. Activation sluggish capital, accelerate cash flow, improve the authenticity of the assets, to ensure the quality of liquid assets, enhance the fund's ability to add value and enhance the solvency beneficial to relieve debt default. So long and sluggish capital through debt restructuring to be activated to restore the liquid receivables, certain positive significance to improve the quality of the circulation of funds.
Avoid some bad debt losses, to eliminate part of the hidden losses factors to improve the authenticity of corporate profit and loss. Through debt restructuring, relieve some of the burden of the debtor, the opportunity to be left out of the woods, the creditors can also avoid greater losses. In addition, if the creditor's receivables owed too much, too long, they form factors of hidden losses of the creditors, the part of the debt through debt restructuring to be implemented to enhance the authenticity of corporate profit and loss.
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