Hello, Mr. Xiaohai from the Accounting School will give you the explanation of Enterprise Accounting Standards 2010》Chapter 13 Debt Restructuring Section 1 Debt Restructuring Overview Debt restructuring refers to the situation where the debtor encounters financial difficulties and the creditor agrees with the debtor in accordance with the agreement reached between the debtor and the debtor.

Matters subject to concession by agreement or court ruling.

Debt restructuring involves creditors and debtors. For creditors, it is "creditor's rights restructuring" and for debtors, it is "debt restructuring".

For ease of expression, they are collectively referred to as "debt restructuring".

"Accounting Standards for Business Enterprises No. 12 - Debt Restructuring" (hereinafter referred to as "Debt Restructuring Standards") regulates the recognition, measurement and disclosure of relevant information for debt restructuring.

Debt restructuring emphasizes the prerequisite that the debtor is in financial difficulty and highlights the essence of the concession made by the creditor, thereby excluding debt restructuring in which the debtor is not in financial difficulty, debt restructuring during liquidation or reorganization, and debt restructuring despite modification of the debt.

Conditions, but the creditor has not actually made a concession. For example, when the debtor encounters financial difficulties, the creditor agrees to the debtor to use inventory goods of equivalent value to pay off the due debt, but does not adjust the repayment amount. In fact, the creditor has not made a concession.

Content that does not fall within the debt restructuring standards.

The debtor's financial difficulties and the creditor's making concessions are the basic characteristics of debt restructuring as defined by the debt restructuring standards.

"The debtor encounters financial difficulties" means that the debtor is unable or unable to repay the debt according to the original conditions due to difficulties in capital turnover, operating difficulties or other reasons.

"Concession by creditors" means that the creditors agree that the debtor experiencing financial difficulties will repay debts now or in the future at an amount or value lower than the book value of the reorganized debts.

The circumstances in which the creditor makes concessions include the creditor reducing or exempting part of the debt principal or interest of the debtor, reducing the interest rate on the debt payable by the debtor, etc.

Debt restructuring methods mainly include: paying off debts with assets, converting debts into capital, modifying other debt conditions, and combinations of the above three methods.

Among them: paying off debts with assets refers to a debt restructuring method in which the debtor transfers its assets to the creditor to pay off debts.

The assets used by the debtor to pay off debts include cash assets and non-cash assets, mainly including: cash, inventory, financial assets, fixed assets, intangible assets, etc.

Converting debt into capital refers to a debt restructuring method in which the debtor converts the debt into capital and the creditor converts the creditor's rights into equity.

When debt is converted into capital, for a joint-stock company, it is a conversion of debt into equity, and for other enterprises, it is a conversion of debt into paid-in capital.

As a result, the debtor increases its equity (or paid-in capital), and the creditor increases its long-term equity investment, etc.

Modifying other debt conditions refers to debt restructuring methods that modify other debt conditions, excluding the above two methods, such as reducing debt principal, reducing or eliminating debt interest, etc.

The combination of the above three methods refers to the debt restructuring method that uses the above three methods to simultaneously pay off debts.

The combined debt repayment method may be: part of the debt is paid off with assets, part is converted into capital, and the other part is modified with other debt conditions, etc.

Financial liabilities and financial assets involved in debt restructuring can only be derecognized when they meet the derecognition conditions for financial liabilities and financial assets stipulated in the "Accounting Standards for Business Enterprises No. 22 - Recognition and Measurement of Financial Instruments".

This chapter focuses on the recognition, measurement and accounting treatment of debt restructuring in which creditors make concessions under the condition of going concern.

Section 2 Accounting Treatment of Debt Restructuring 1. Settlement of Debts with Assets (1) Settlement of Debts with Cash Sweet Accounting Treatment If debts are settled with cash, the debtor shall recognize the difference between the book value of the restructured debt and the actual cash paid as debt.

Gains from restructuring are included in non-operating income.

The book value of restructured debt is generally the face value or principal and original value of the debt, such as accounts payable; if there is interest, accrued unpaid interest should also be added, such as long-term loans, etc.

Creditors shall recognize the difference between the book balance of the restructured claims and the cash received as debt restructuring losses and include it in non-operating expenses.

If a creditor has made impairment provisions for its claims, it shall first offset the impairment reserves. If there is still a balance after the offset, it shall be included in non-operating expenses. If there is still a balance after the offset, the impairment reserves shall be reversed and offset.

Less current asset impairment losses.

If no impairment provision is made for the creditor's rights, the difference should be directly recognized as a debt restructuring loss.

(2) Accounting treatment for repaying debts with non-cash assets. If an enterprise uses non-cash assets to repay debts, the accounting treatment will be slightly different depending on the category of non-cash assets.

1. If the debtor uses non-cash assets to pay off debts, the debtor should distinguish between debt restructuring gains and asset transfer gains and losses, and recognize them in the current period of debt restructuring.

Gains from debt restructuring refer to the difference between the book value of restructured debt and the fair value of non-cash assets (i.e. repossessed assets), which should be included in non-operating income.

The fair value of non-cash assets shall be measured in accordance with the following provisions: (1) If the non-cash assets are stocks, bonds, funds and other financial assets held by the enterprise, and there is an active market for the financial assets, the market price of the financial assets shall be used as the non-cash asset.

Fair value of cash assets.