Accounts receivable can be transformed into "long-term equity investment" through debt restructuring; Accounts payable can be converted into paid-in capital through debt restructuring. However, accounts receivable cannot be converted into paid-in capital.

Extended reading:

Debt restructuring, also known as debt restructuring, refers to the matter that creditors make concessions according to the agreement reached with the debtor or the court's ruling when the debtor has financial difficulties. In other words, as long as the original debt repayment conditions are modified, that is, the debt repayment conditions determined during debt restructuring are different from the original agreement, it is regarded as debt restructuring.

Debt restructuring model

Pay off debts with assets

Debt restructuring, the debtor transfers its assets to creditors to pay off debts. The assets that debtors usually use to pay debts mainly include: cash, inventory, financial assets, fixed assets and intangible assets. Paying off debts in cash usually means paying off debts in cash below the book value of debts. If the same amount of debt is paid off in cash, it does not belong to debt restructuring.

Convert debt into capital

A debt restructuring method in which debtors convert debts into capital and creditors convert creditor's rights into equity. However, if the debtor converts the convertible corporate bonds payable into capital according to the share conversion agreement, it belongs to the debt capital under normal circumstances and cannot be treated as debt restructuring.

Modify other debt conditions

Reduce the debt principal, lower the interest rate and exempt the unpaid interest.

The combination of the above three ways.

Adopting the above three methods * * * is the same as debt restructuring to pay off debts.

(1) part of the debt is paid off with assets, and the other part is converted into capital;

(2) part of the debt is paid off by assets, and the other part is modified by other debt conditions;

(3) Part of the debt is converted into capital, and the other part is modified into other debt terms;

(4) part of the debt is paid off by assets, part of it is converted into capital, and the other part is modified by other debt terms.

accounting treatment

Pay off debts with assets

(1) Paying off debts in cash

The debtor shall recognize the difference between the book value of the restructured debt and the cash paid as debt restructuring income and include it as non-operating income in the current profit and loss. Among them, the relevant restructuring debts are derecognized when the conditions for derecognizing financial liabilities are met.

The creditor shall recognize the difference between the book balance of the restructured creditor's rights and the cash received as debt restructuring loss, and take it as non-operating expenditure and count it into the current profit and loss. Among them, the related restructured creditor's rights are derecognized when the conditions for derecognizing financial assets are met. If the impairment provision has been made for the restructured creditor's rights, the difference will be written off first, and if there are still losses after the write-off, it will be included in the non-operating expenses (debt restructuring losses); If there is still a balance after the write-off of the impairment reserve, it shall be reversed to offset the current asset impairment loss.

(2) Paying off debts with non-cash assets.

The debtor shall recognize the difference between the book value of the restructured debt and the fair value of the transferred non-cash assets as debt restructuring income and include it as non-operating income in the current profit and loss. Among them, the relevant restructuring debts are derecognized when the conditions for derecognizing financial liabilities are met. The difference between the fair value and the book value of the transferred non-cash assets shall be regarded as the profit and loss of the transferred assets and included in the current profit and loss.

Some taxes and fees incurred by the debtor in the process of transferring non-cash assets, such as asset appraisal fees and transportation and miscellaneous fees, are directly included in the profit and loss of transferred assets. For VAT taxable items, if the creditor fails to pay VAT to the debtor separately, the income from debt restructuring is the fair value of the transferred non-cash assets and the difference between the VAT output tax of the non-cash assets and the book value of the restructured debt; If the creditor pays the value-added tax to the debtor alone, the income from debt restructuring is the difference between the fair value of the transferred non-cash assets and the book value of the restructured debt.

The creditor shall record the transferred non-cash assets at fair value, and the difference between the book balance of the restructured creditor's rights and the fair value of the transferred non-cash assets shall be recognized as the debt restructuring loss and included in the current profit and loss as non-operating expenses. Among them, the related restructured creditor's rights are derecognized when the conditions for derecognizing financial assets are met. If the impairment provision has been made for the restructured creditor's rights, the difference will be written off first, and if there are still losses after the write-off, it will be included in the non-operating expenses (debt restructuring losses); If there is still a balance after the write-off of the impairment reserve, it shall be reversed to offset the current asset impairment loss. For VAT taxable items, if the creditor fails to pay VAT to the debtor separately, the input VAT can be treated as the book balance of the restructured creditor's rights. If the creditor pays the value-added tax to the debtor alone, the input value-added tax cannot be treated as the book balance of the restructured creditor's rights.

The related freight and miscellaneous expenses incurred when the creditor receives the non-cash assets shall be included in the value of the related assets.

1. Pay off debts with inventory materials and commodities.

The debtor should record it as sales. Enterprises can divide this business into two parts. One is to sell inventory materials and commodity products to creditors to obtain payment. The business of selling inventory materials and commodity products is the same as the normal sales business of the enterprise, and its profits and losses are included in the current profits and losses. The second is to repay the debt with the currency obtained. However, in this business, there is actually no corresponding inflow and outflow of funds.

2. Pay off debts with fixed assets.

The debtor shall take the difference between the fair value of fixed assets, the book value of fixed assets and the cleaning expenses as the profit and loss of the transfer of fixed assets. At the same time, the difference between the fair value of fixed assets and the book value of debt payable is regarded as debt restructuring income and included in non-operating income. Fixed assets received by creditors shall be measured at fair value.

3. Pay off debts with financial assets such as stocks and bonds.

The debtor shall regard the difference between the fair value of the relevant financial assets and their book value as the gain or loss of the transfer of financial assets; The difference between the fair value of the relevant financial assets and the book value of the restructured debt shall be regarded as the income from debt restructuring. Relevant financial assets received by creditors shall be measured at fair value.

Convert debt into capital

Debt-to-equity swaps are handled in the following ways:

1, Limited by Share Ltd

If the debtor is a joint stock limited company, the debtor will stop recognizing the restructured debt when the conditions for derecognition of financial liabilities are met, and the total par value of the shares enjoyed by the creditors due to the abandonment of their creditor's rights will be recognized as capital stock; The difference between the total fair value of shares and share capital is regarded as capital reserve. The difference between the book value of the restructured debt and the total fair value of the shares, as debt restructuring income, is included in the current profit and loss (non-operating income).

2. Other enterprises

When the debtor is another enterprise, if the debtor meets the conditions for derecognition of financial liabilities, the recognition of restructured debts will be derecognized, and the share enjoyed by creditors due to abandonment of creditor's rights will be recognized as paid-in capital; The difference between the fair value of equity and paid-in capital is recognized as capital reserve. The difference between the book value of the restructured debt and the fair value of the equity is taken as the debt restructuring income and included in the current profit and loss (non-operating income).

3. Other circumstances

On the date of debt restructuring, the creditor shall confirm the fair value of the equity as an investment in the debtor. The difference between the book balance of the restructured creditor's rights and the fair value of the equity enjoyed by giving up the creditor's rights shall be offset first. If the impairment provision is insufficient to offset, or if the loss provision is not withdrawn, the difference shall be recognized as a debt restructuring loss. Where the debt is converted into capital, the creditor shall measure the rights and interests enjoyed by giving up the creditor's rights at fair value. The relevant taxes and fees incurred shall be handled in accordance with the provisions on the recognition and measurement of long-term equity investment or financial instruments respectively.

Modification condition

Where debt restructuring is carried out by modifying other debt conditions, the debtor and the creditor shall deal with the following situations respectively:

1, unconditional or conditional debt restructuring

For unrelated or conditional debt restructuring, the debtor shall write down the book balance of the restructured debt to the future payable amount, and the write-down amount shall be recognized as debt restructuring income and included in the current profit and loss. The book balance of restructuring debt is the amount payable in the future.

Debt restructuring by modifying other debt terms. If the revised debt terms involve contingent receivables, the creditor shall take the fair value of the creditor's rights after the revision of other debt terms as the book value of the restructured creditor's rights on the reorganization date, and the difference between the book balance of the restructured creditor's rights and the book value of the restructured creditor's rights shall be recognized as the debt restructuring loss and included in the current profit and loss. Where the creditor has made provision for bad debts, it shall first write off the provision for bad debts.

2. Contingent or conditional debt restructuring

Contingent debt restructuring, for the debtor, if the revised debt terms involve contingent payable amount, and the contingent payable amount meets the conditions for recognizing contingent liabilities, the debtor shall recognize the contingent payable amount as estimated liabilities. The difference between the book value of the restructured debt and the sum of the recorded value of the restructured debt and the estimated debt shall be regarded as debt restructuring income and included in non-operating income.

For creditors, if contingent receivables are involved in the revised debt terms, contingent receivables are not recognized and are not included in the book value of the restructured creditor's rights. According to the principle of prudence, contingent receivables belong to contingent assets, or contingent assets are not recognized. Contingent receivables are included in the current profit and loss only when they actually occur. .

Combination of three ways

1. Use a combination of cash and non-cash assets to pay off debts.

1 If the debtor pays off the debt by combining cash and non-cash assets, the difference between the book value of the restructured debt and the fair value of the cash paid and the transferred non-cash assets shall be regarded as the debt restructuring income. The difference between the fair value of non-cash assets and their book value shall be regarded as the profit and loss of the transferred assets.

Creditors shall take the difference between the book value of restructured creditor's rights and the fair value of cash received, non-cash assets transferred and provision for bad debts as debt restructuring losses.

2. Cash and debt are converted into capital portfolio to pay off debts.

If the debtor pays off the debt by combining cash and converting the debt into capital, the difference between the book value of the restructured debt and the fair value of the cash paid for giving up the creditor's rights and the rights enjoyed by the creditor shall be regarded as the income from debt restructuring. The difference between the fair value of equity and share capital (or paid-in capital) is regarded as capital reserve.

Creditors shall take the difference between the book value of the restructured creditor's rights and the fair value of the cash received and the equity enjoyed by abandoning the creditor's rights as the debt restructuring loss.

3. Converting non-cash assets and debts into capital to pay off debts.

If the debtor uses a combination of non-cash assets and converts the debt into capital to pay off the debt, the difference between the book value of the restructured debt and the fair value of the transferred non-cash assets and the fair value of the equity enjoyed by the creditor due to the abandonment of the creditor's rights shall be regarded as the debt restructuring income. The difference between the fair value and book value of non-cash assets shall be regarded as the profit and loss of the transferred assets; The difference between the fair value of equity and equity (paid-in capital) is regarded as capital reserve.

Creditors should take the difference between the book value of creditor's rights, the fair value of transferred non-cash assets and the fair value of equity that they have given up their creditor's rights, and make provision for bad debts as debt restructuring losses.

4. Cash, assets and debts are converted into capital to pay off debts.

If the debtor pays off the debt by combining cash, non-cash assets and converting the debt into capital, the difference between the book value of the restructured debt and the fair value of the cash paid, the transferred non-cash assets and the equity enjoyed by the creditor due to the abandonment of the creditor's rights shall be regarded as the debt restructuring profit; The difference between the fair value of non-cash assets and their book value shall be regarded as the profit and loss of transferred assets; The difference between the fair value of equity and share capital (or paid-in capital) is regarded as capital reserve.

Creditors shall take the difference between the book value of restructured creditor's rights and the fair value of cash received, transferred non-cash assets, fair value of equity enjoyed by giving up creditor's rights and bad debt provision as debt restructuring losses.

5. Converting assets and debts into capital to pay off debts, etc.

Repay part of the debt by means of assets and converting the debt into capital. And restructure another part of the debt by modifying other debt conditions. In this way, the debtor should first offset the book value of the restructured debt with the fair value of the cash paid, the transferred non-cash assets and the fair value of the equity enjoyed by the creditor due to the abandonment of the creditor's rights, and compare the balance with the future payable amount, so as to calculate the debt restructuring profit. The difference between the fair value of equity and the share capital (or paid-in capital) enjoyed by creditors due to giving up their creditor's rights shall be regarded as capital reserve; The difference between the fair value of non-cash assets and their book value shall be regarded as the current profit and loss of the transferred assets.

Creditors should first write off the book value of restructured creditor's rights with the fair value of cash received, transferred non-cash assets and equity enjoyed due to abandonment of creditor's rights, and compare the difference with the future receivable amount to calculate the debt restructuring loss accordingly.

Usually, after the debtor and the creditor restructure their debts by means of non-cash assets, issuing equity securities, modifying debt conditions, etc., the creditor will make some concessions to the debtor and let the debtor rearrange its financial funds or pay off its debts. Therefore, if the fair value of non-cash assets or equity securities issued by the debtor is greater than the debt that the debtor should repay in debt restructuring, the creditor is not in debt restructuring.

Making concessions in the process, in this case, in the case of temporary financial difficulties of the debtor, can not be regarded as a debt restructuring. It should be reflected in the current assets in the balance sheet: "futures member investment" is included in the "long-term equity investment" in the balance sheet; "Futures profit and loss" is reflected as a separate item in the income statement; The investment in membership recovered by the enterprise applying for withdrawal, transfer or cancellation of membership in the current year should be reflected in the "cash flow statement" as an investment activity. In addition, in the notes to the accounting statements, "investment by futures members", "book value of pledged goods" and "floating profit of position contracts" should be disclosed.