Chapter 9 Long-term Liabilities

Section 1 Overview of Long-term Liabilities

Long-term liabilities refer to repayment periods of one year or more than one operating cycle of debt. The long-term funds needed for enterprise production and operation mainly come from two sources: one is the capital invested by investors; the other is borrowing long-term debt. For a joint-stock company, borrowing long-term debt has the following advantages compared with issuing additional shares to raise funds: (1) borrowing will not affect the company's equity structure and can avoid equity dispersion; (2) the cost of borrowing is usually low, and Debt interest can also be paid out before tax, which can act as a "tax shield"; (3) If the company's operating performance is good, borrowing can also enable the company's shareholders to obtain financial leverage benefits.

However, there are also some disadvantages to borrowing: (1) The interest expense on long-term debt is a fixed expense of the company, which will increase the company's burden, especially when the company's operating performance is poor, it becomes more prominent. ; (2) Long-term debt contracts generally have many protective clauses that restrict enterprises, such as major operating decisions and changes in financial matters must be approved by creditors, etc. These protective clauses will affect the flexibility of corporate financial operations.

Section 2 Accounting for Corporate Bonds Payable

Bonds are securities issued by a company in accordance with legal procedures and agree to repay principal and interest within a certain period of time. It is a written certificate issued by a company to raise long-term funds. Its essence is a long-term note payable.

1. The issuance price of a bond

The issuance price of a bond is the price used when the bond is issued, that is, the price paid by investors when purchasing the bond. There are usually three prices at which corporate bonds are issued: parity, premium, and discount. When the coupon rate is higher than the market interest rate, bonds are issued at a premium; when the coupon rate is lower than the market interest rate, bonds are issued at a discount; when the coupon rate is consistent with the market interest rate, bonds are issued at par.

Bond issuance price = face amount ÷ (1 + market interest rate) n

+Σ[(face amount × coupon rate) ÷ (1 + market interest rate) t]

In the formula: n——bond term;

t——number of interest payment periods.

For example, a company plans to issue a 10-year bond with a face value of 1,000 yuan, a coupon rate of 10%, and interest payments once a year. If the current market interest rate is 8%, what should its issuance price be? ?

Since the coupon rate of the bond is higher than the market interest rate, it can be judged that its issuance price should be higher than the face value of the bond. The issuance price is calculated as follows:

Bond issuance price = 100×(P/A, 8%, 10) + 1000×(P/S, 8%, 10)

=100×6.7101+1000×0.4632

=1134.21 yuan

2. Main accounts used in accounting for bonds payable

For long-term bonds issued by enterprises, " "Bonds Payable" account, this account accounts for the bonds actually issued by the company to raise long-term funds and the interest payable. The credit of this account registers the principal and interest of the bonds payable, and the debit registers the principal and interest of the bonds to be returned. The credit balance at the end of the period represents the principal and interest of the bonds that have not yet been repaid. This account is set up with four detailed accounts: "bond face value", "bond premium", "bond discount" and "accrued interest". On this basis, detailed classification accounting is carried out according to bond types. In addition, the enterprise must also set up a reference book to record the par amount, coupon rate, total issuance amount, issuance date, repayment period and method, serial number and other items of the bond.

3. Main accounting processing of bonds payable

When the company issues bonds, it debits "bank deposits", "cash" and other accounts according to the actual amount received, and debits "bank deposits", "cash" and other accounts according to the actual amount received. The par value of the bond should be credited to the account "Bonds Payable - Bond Par Value"; for bonds issued at a premium or discount, the difference between the issue price and the par value should also be credited or debited to "Bonds Payable - Bond Premium" or "Bonds Payable - Bond Discount" account.

The bond issuance agency fees and printing fees and other issuance fees paid are debited to the "Projects in Progress" and "Financial Expenses" accounts, and credited to the "Bank Deposits" and other accounts.

Corporate bonds should accrue interest on a regular basis. If a bond is issued at a premium or discount, the difference between the actual amount received and the par value of the bond shall be amortized in installments during the duration of the bond. The amortization method can be the actual interest rate method or the straight-line method. When accruing interest and amortizing premiums and discounts in installments, they should be handled according to the circumstances: ① The interest accrued on bonds issued with face value shall be debited to the "Construction in Progress" and "Financial Expenses" accounts and credited to "Bonds Payable - Accrued Interest" account. ② When bonds are issued at a premium, the "Bonds Payable - Bond Premium" account will be debited based on the amount of premium that should be amortized, and the "Construction in Progress", "Financial Expenses" and other accounts will be debited based on the difference between accrued interest and premium amortization. , according to the accrued interest, credit the "Bonds Payable - Accrued Interest" account. ③ When bonds are issued at a discount, the sum of the discount amount that should be amortized and the accrued interest will be debited to "Construction in Progress", "Financial Expenses" and other accounts, and the "Bonds Payable - Bonds" will be credited based on the discount amount that should be amortized "Discount" account, based on accrued interest, is credited to the "Bonds Payable - Accrued Interest" account.

When the bond matures and the principal and interest of the bond are paid, the "Bonds Payable - Bond Face Value" and "Bonds Payable - Accrued Interest" accounts are debited, and "Bank Deposits" and other accounts are credited.

[Example 1] On January 1, 1991, a company issued a batch of 5-year bonds at a premium (with one-time repayment of principal and interest upon maturity), with a face value of 5 million yuan and an annual coupon rate of 10%. The business was sold for RMB 5.1 million (excluding debt issuance expenses). Based on the above economic business, the enterprise should make the following accounting entries:

Issuing at a premium, when receiving the price, prepare the following accounting entries:

Debit: bank deposit 5,100,000

Credit: Bonds payable—bond face value 5,000,000

Bonds payable—bond premium 100,000

When accruing bond interest and amortizing the premium each year, prepare the following accounting entries:

Annual accrued bond interest = 5 million yuan × 10% = 500,000 yuan

Annual amortized premium amount = 100,000 yuan ÷ 5 = 20,000 yuan

The annual interest expense is 500,000 yuan - 20,000 yuan = 480,000 yuan

Borrow: financial expenses 480,000

Bonds payable - bond premium 20,000

< p> Credit: Bonds payable - accrued interest 500,000

When repaying principal and interest, prepare the following accounting entries:

Debit: Bonds payable - face value of the bond 5,000,000

< p> Bonds payable - accrued interest 2,500,000 (500,000×5)

Loan: bank deposit 7,500,000

From this example question, it can be seen that although the company's coupon rate is 10%, the accrued interest is less than 500,000 yuan, but in fact, the company's actual interest expense is not 2.5 million yuan, but 2.4 million yuan (48 × 5). The 100,000 yuan obtained by the company from premium issuance is actually Compensation paid in advance by an enterprise for overpaying interest in the future. In the same way, the bond discount is the company's precompensation to investors for paying less interest in the future.

Section 3 Accounting for Other Long-term Liabilities

1. Accounting for Long-term Borrowing

Long-term borrowing refers to the amount that an enterprise borrows from a bank or other company for production and operation needs. Various loans borrowed by financial institutions with a term of more than one year or one operating cycle. The long-term borrowings of enterprises are mainly used for large-scale long-term investments such as the purchase and construction of fixed assets and technological transformation.

1. Main accounts used in long-term loan accounting

In order to comprehensively reflect and supervise the borrowing, accrued interest and repayment of principal and interest of long-term loans, enterprises should set up "long-term loans" suject.

The credit of this account registers the increase in the principal and interest of the loan, and the debit registers the decrease in the principal and interest of the loan. The credit balance represents the outstanding long-term loan principal and interest. This account should set up detailed accounts according to loan units, and perform detailed accounting according to loan types.

The principal, interest and foreign currency translation difference of long-term borrowings should be accounted for through the "long-term borrowings" account. This is different from the "short-term borrowing" account that only accounts for the principal and not the interest.

2. Main accounting treatments for long-term loan accounting

When borrowing long-term loans, debit "bank deposits", "projects in progress", "fixed assets" and other accounts, and credit Record the "long-term loan" account; when repaying, the "long-term loan" account will be debited and the "bank deposit" account will be credited.

Interest expenses, exchange losses and other borrowing costs incurred on long-term borrowings, if they fall within the preparation period, are included in the start-up expenses, and the "deferred assets - start-up expenses" or "start-up expenses" account is debited and credited "Long-term borrowing" account; if it belongs to the production and operation period, it will be included in the financial expenses, the "financial expenses" account will be debited, and the "long-term borrowing" account will be credited; if it is related to the purchase and construction of fixed assets, it will occur before the fixed assets are delivered for use. , included in the acquisition and construction costs of relevant fixed assets, debiting the "construction in progress" account and crediting the "long-term borrowing" account. If exchange gains occur, opposite accounting entries are made.

[Example 3] In March 1997, a company borrowed 3 million yuan from the bank to build a factory, with a term of 3 years and an interest rate of 10%. The construction period of the project was 2 years. When the loan matures, the enterprise repays the principal and interest in one lump sum with bank deposits. The accounting treatment is as follows:

When the loan was obtained in March 1997, the following accounting entries were prepared:

Debit: bank deposit 3,000,000

Loan: long-term loan 3,000,000

At the end of 1997, calculate the interest payable and prepare the following accounting entries;

Borrow: 250,000 for construction in progress

Loan: 250,000 long-term borrowings

< p> (Interest = 3000000×10%×10/12=250000)

At the end of 1998, calculate the interest payable and prepare the following accounting entries;

Borrow: 300000 for construction in progress< /p>

Loan: Long-term borrowing 300,000

(Interest=3000000×10%×=300000)

In 1999, calculate the interest payable and prepare the following accounting entries:< /p>

Borrow: Construction in progress 50,000

Financial expenses 250,000

Loan: Long-term borrowing 300,000

March 1, 2000, long-term repayment When borrowing principal and interest, prepare the following accounting entries;

Borrow: long-term borrowing 3,850,000

Financial expenses 50,000

Loan: bank deposit 3,900,000

2. Accounting for long-term payables

Long-term liabilities incurred by an enterprise other than long-term loans and bonds payable should be accounted for through long-term payables. The content of long-term payables accounting includes the price of imported foreign equipment through compensation trade, the leasing fees payable for financing leased fixed assets, etc.

1. Main accounts used in the accounting of long-term payables

In order to comprehensively reflect and supervise the occurrence and return of long-term payables, enterprises should set up the "long-term payables" account. The credit side of this account registers long-term payables incurred, the debit side registers long-term payables returned, and the credit balance represents various long-term payables that have not yet been paid by the enterprise. According to the types of long-term payables, this account sets up detailed accounts such as "payables for imported equipment under compensation trade" and "payables for fixed assets under financing lease" for detailed classification accounting.

2. Main accounting processing of long-term accounts payable

When the company introduces equipment according to the compensation trade method, the foreign currency amount and prescribed conversion rate of the price of equipment, tools, spare parts, etc. Converted into RMB for accounting, debit the "construction in progress", "raw materials" and other accounts, and credit the "long-term payables - compensation trade payables for imported equipment" account. When introducing equipment, the foreign freight and insurance premiums paid by the enterprise shall be converted into RMB according to the prescribed conversion rate, debited to "construction in progress", "raw materials" and other accounts, and credited to "long-term payables - compensation trade payables for imported equipment" "And other subjects. Import duties, domestic transportation fees and installation fees paid by enterprises with RMB borrowings or deposits are also part of the equipment price. Accounts such as "projects under construction" and "raw materials" are debited, and "long-term borrowings", "bank deposits", etc. are credited. suject. When the imported equipment is installed, accepted, and put into production, the "Fixed Assets" account should be debited and credited according to its full value (including equipment price, overseas transportation premiums, import duties, domestic transportation fees, installation fees, etc.). "Construction in progress" subject. When returning the money for imported equipment, the account "Long-term payables - Compensation trade payables for imported equipment" will be debited, and "bank deposits", "accounts receivable" and other accounts will be credited.

For fixed assets leased under financing, the "Construction in Progress" account will be debited according to the financial lease fee payable, and the "Long-term Accounts Payable - Accounts Payable for Fixed Assets Under Financing Lease" will be credited; For installation and commissioning and other expenses, the "Projects under Construction" account will be debited and "Bank Deposits" and other accounts will be credited; when the project is completed and delivered for use, the "Fixed Assets" account will be debited and "Projects under Construction" will be credited according to the actual expenditures incurred. "Account; when paying finance lease fees, debit the account "Long-term Payables - Accounts Payable for Fixed Assets under Financing Lease" and credit the account "Bank Deposits".

Introduced equipment and fixed assets leased by financing, which can be delivered for use without installation, do not need to be accounted for through the "construction in progress" account. The expenses incurred are treated as the original price of the fixed assets and debited to "Fixed Assets" "Account, credit the "Long-term payables - accounts payable for fixed assets under financing lease" account and other related accounts.

Interest expenses, exchange losses and other expenses on long-term payables belong to the preparation period and are included in the start-up expenses. The "start-up expenses" account is debited and "long-term payables - fixed assets payable by financing lease" are credited. "Payment" account; if it is during the production and operation period, it will be included in the current profit and loss, the "Financial Expenses" account will be debited, and the "Long-term payables - accounts payable for financing leased fixed assets" account will be credited; if it is related to the purchase and construction of fixed assets, If the fixed assets are incurred before they are delivered for use, they will be included in the acquisition and construction costs of the relevant fixed assets, the "Construction in Progress" account will be debited, and the "Long-term Accounts Payable - Financing Lease Fixed Assets Payable" account will be credited. If exchange gains occur, make the opposite accounting entry.

[Example 1] The price of equipment imported by a company from abroad is converted into RMB 5 million. The company will repay the equipment price for the products produced using the equipment. The first batch of products will be sold for 400,000 yuan, with a sales cost of 300,000 yuan. The accounting process is as follows:

When introducing equipment, prepare the following accounting entries:

Debit: fixed assets 5,000,000

Credit: long-term payables - compensation trade Accounts payable for imported equipment 5,000,000

For product sales and carry-over costs (excluding exchange transfer taxes), prepare the following accounting entries:

Debit: Accounts receivable 400,000

Loan: Main business income 400,000

Debit: Product sales cost 300,000

Loan: Finished products 300,000

The price of the first batch of products is used When repaying the equipment price, prepare the following accounting entries:

Debit: long-term payables - 400,000 payables for imported equipment under compensation trade

Credit: accounts receivable 400,000

Section 4 Debt Restructuring

1. The Concept of Debt Restructuring

Debt restructuring means that when the debtor encounters financial difficulties, the creditor shall, in accordance with the agreement reached with the debtor or matters subject to court rulings.

Debt restructuring involves creditors and debtors. For creditors, it is called "debt restructuring". However, for ease of expression, "debt restructuring" and "debt restructuring" are generally referred to as "debt restructuring". When understanding the concept of debt restructuring, you need to pay attention to the following two points:

1. The debtor's financial difficulty refers to the debtor's capital turnover difficulties or operating difficulties and its inability to repay the debt according to the original conditions. The debtor's financial difficulties are a prerequisite for debt restructuring.

2. Concession means that the creditor agrees that the debtor experiencing financial difficulties will repay the debt now or in the future at an amount lower than the book value of the reorganized debt. The main reasons why creditors make concessions are: first, to recover their creditor's rights to the maximum extent; second, to alleviate the debtor's temporary financial difficulties and avoid greater losses on creditor's rights due to immediate measures to demand repayment. Such concessions are made based on a voluntary agreement between the parties or a court ruling. The result of the concession is: the creditor incurs debt restructuring losses and the debtor obtains debt restructuring gains. Concessions are an important feature of debt restructuring.

2. Methods of debt restructuring

There are mainly the following methods of debt restructuring: (1) Using assets to pay off debts, that is, the debtor transfers its assets to the creditor to pay off debts. (2) Debt is converted into capital. The conversion of debt into capital is viewed from the perspective of the debtor, while from the perspective of the creditor, it is the conversion of debt into equity. It should be noted that the debtor converts the convertible corporate bonds payable into capital according to the conversion agreement, which is a conversion under normal circumstances and cannot be treated as a debt restructuring. (3) Modify other debt conditions, that is, modify debt conditions that do not include the two methods (1) and (2) above, such as reducing debt principal, reducing debt interest, etc. (4) A combination of the above three methods. For example, a debt may be paid off by a combination of transferring assets and converting debt into capital.

3. Accounting treatment of debt restructuring

Debt restructuring is an incidental economic business of the enterprise. The income generated by the debtor is income that is not directly related to its daily activities and should be included in the " A separate detailed account of "Debt Restructuring Gains" should be set up under the account "Non-operating Income" for accounting; the losses incurred by creditors are losses that are not directly related to their daily activities, and "Loss from Debt Restructuring" should be set up separately under the account "Non-operating Expenses" Detailed accounts are calculated.

The accounting treatment of debt restructuring is different between debtors and creditors, and different restructuring methods also have different accounting treatments.

What needs to be noted here is: for the debtor, the book balance of the restructured debt is generally equal to its book balance, while for the creditor, due to the impact of provision provisions, the book balance of the restructured debt is equal to the book balance of the restructured debt. Book values ??are not equal in most cases.

Under different debt restructuring methods, the accounting treatment of debtors and creditors is different.

[Example 5] On December 31, 1995, Company A held an interest-bearing note issued by Company B on December 31, 1994, with a face value of 1 million yuan and an annual interest rate of 10%. , with a term of one year. Because Company B has suffered losses for many years and has difficulty in capital turnover, it is unable to pay the bill. After negotiation between the two parties, debt restructuring was carried out on December 31, 1995. Company A agreed to reduce the debt principal to 800,000 yuan, the interest rate from 10% to 5%, and the debt maturity date was extended to December 31, 1997. And the accumulated interest of RMB 100,000 will be waived. At the same time, it is stipulated that if Company B makes a profit in the first year after debt restructuring, the interest rate will return to 10%. If there is no profit, it will remain at 5%.

Company B’s accounting treatment is as follows:

1. Calculate the difference between the book value of the restructured debt and the amount payable in the future:

The book value of the note payable is 1,100,000 yuan

Among them: face value 1,000,000 yuan

Accrued interest (1,000,000×10%) 100,000 yuan

Less: future amount payable 960,000 yuan

Among them: Face value 800,000 yuan

Accrued interest (800,000×5%×2) 80,000 yuan

Contingent expenses [800,000×(10%-5%)×2] 80,000 yuan

The difference of 140,000 yuan

The difference of 140,000 yuan is used as debt restructuring income, and the book value after debt restructuring is 960,000 yuan. Since the book value after debt restructuring includes the face value payable in the future of RMB 800,000, the future normal interest payable of RMB 80,000 and the contingent expenses of RMB 80,000, the normal interest expenses and contingent expenses incurred in subsequent periods should be used to offset the restructured debt. Book value treatment.

2. The accounting entries are:

(1) When debt restructuring was carried out on December 31, 1995

Debit: Notes payable 1,100,000

Credit: Accounts payable - Company A (debt restructuring) 960,000

Non-operating income - debt restructuring income 140,000

(2) Assume that Company B has If the company makes a profit from the first year, the company should pay interest at an interest rate of 10%, and it needs to pay an interest of 800,000 × 10% = 80,000 yuan every year, including a contingent expenditure of 40,000 yuan. When paying interest from December 31, 1995 to December 31, 1997

Debit: Accounts payable - Company A (debt restructuring) 80,000

Credit: Bank deposit 80,000

Since Company B has been profitable since the first year after debt restructuring, in the next two years,

when the principal and interest are paid on December 31, 1997

< p>Debit: Accounts payable - Company A (debt restructuring) 880,000

Credit: Bank deposit 880,000

Among them, 880,000 yuan includes principal of 800,000 yuan and interest of 80,000 yuan.

(3) Assuming that Company B still has no profit from the first year after debt restructuring, when interest is paid from December 31, 1995 to December 31, 1997

Debit: Accounts payable - Company A (debt restructuring) 40,000

Loan: Bank deposit 40,000

When paying principal and interest on December 31, 1997

Debit : Accounts payable - Company A (debt restructuring) 920,000

Loan: Bank deposits 840,000

Non-operating income - debt restructuring income 80,000

(including , 840000=80000800000×5%; 80000=800000×(10%-5%)×2)

Since Company B has no contingent expenditures, therefore, the amount included in the book value of the debt after restructuring The contingent expenditure of RMB 80,000 should be treated as debt restructuring proceeds. In this case, Company B’s debt restructuring proceeds are 220,000 yuan.

Company A’s accounting treatment is as follows:

1. Calculate the difference between the book balance of the restructured claims and the future receivable amount excluding contingent earnings, and the calculation is as follows:

The book balance of notes receivable is 1,100,000 yuan

Among them: face value 1,000,000 yuan

Accrued interest (1,000,000×10%) 100,000 yuan

Less: The future amount receivable is 880,000 yuan

Among them: face value 800,000 yuan

Interest (800,000×5%×2) 80,000 yuan

The difference is 220,000 yuan

Since Company A did not make any provision for this claim, the difference of RMB 220,000 was treated as a debt restructuring loss.

2. The accounting entries are:

(1) December 31, 1995

Debit: Accounts receivable - Company B (debt restructuring ) 880000

Non-operating expenses - debt restructuring loss 220000

Credit: notes receivable 1100000

(2) Assume that Company A has the first loss since debt restructuring If there is a profit starting from the year, interest should be charged at an interest rate of 10%. In this way, in the next two years, Company A will collect interest of 800,000 × 10% = 80,000 yuan each year, including contingent income of 800,000 × (10% - 5%) = 40,000 yuan, and normal interest income of 800,000 × 5% = 40,000 Yuan. When collecting interest from December 31, 1995 to December 31, 1997

Debit: bank deposit 80,000

Credit: accounts receivable - Company B (debt restructuring) 40,000

Financial expenses 40,000

When collecting principal and interest on December 31, 1997:

Debit: bank deposit 880,000

Credit: receivable Account - Company B (debt restructuring) 840,000

Financial expenses 40,000

(3) Assuming that Company A has no profit since the first year after debt restructuring, it should be charged 5% The interest rate is calculated and charged from December 31, 1995 to December 31, 1997. When interest is charged:

Debit: bank deposit 40,000

Credit: Accounts receivable - B Company (debt restructuring) 40,000

When collecting principal and interest on December 31, 1997

Debit: bank deposit 840,000

Credit: Accounts receivable - B Company (Debt Restructuring) 840000

From this example, we can see that the creditor's debt restructuring losses are not necessarily equal to the debtor's debt restructuring gains. When Company B suffered losses in 1996, Company B's debt restructuring gains were equal to Company A's debt restructuring losses, both of 220,000 yuan. But when Company B made a profit in 1996, Company B's debt restructuring gain was 140,000 yuan, while Company A's debt restructuring loss was 220,000 yuan. In addition, when creditors make provisions for restructured claims, the creditor's debt restructuring losses will differ from the debtor's debt restructuring gains.