Accounting entries of enterprises' acquisition of loss-making companies
1. Where the equity is transferred between shareholders, the equity of the transferor shall be transferred to the transferee's name after the industrial and commercial change registration.
Borrow: paid-in capital-transferor
Loan: paid-in capital-transferee
2. If the company withdraws its shares, it shall go through the formalities of "capital reduction", calculate the net assets of the company through experience and determine the stock price.
Borrow: Shareholders who withdraw their shares from paid-in capital
Loan: Profit Distribution-Undistributed Profit
What is paid-in capital?
Paid-in capital refers to all kinds of property invested by investors as capital, which is the source of all legal capital registered by enterprises, and it embodies the basic property right relationship between owners and enterprises. The proportion of paid-in capital is the main basis for enterprises to distribute profits or dividends to investors. China's "Regulations on the Administration of Enterprise Legal Person Registration" stipulates that unless otherwise stipulated by the state, the paid-in capital of an enterprise shall be consistent with the registered capital. When the paid-in capital of an enterprise increases or decreases by more than 20% compared with the original registered capital, it shall apply to the original registration authority for change registration with the certificate of capital use or capital verification. The credit balance at the end of this course reflects the paid-in capital or total share capital of the enterprise.
What is profit distribution?
Profit distribution refers to the distribution of the total profits realized by an enterprise and the profits obtained from a joint venture between the state and enterprises, and between enterprises in a certain period (usually annual). At the end of the year, the enterprise shall transfer the net profit realized in the whole year from the "current year's profit" account to the "profit distribution-undistributed profit" account, and transfer the balance of other related detailed accounts under the "profit distribution" account to the "undistributed profit" account. After carry-forward, the credit balance of the "Undistributed Profit" detail account is the accumulated undistributed profit amount; If it is a debit balance, it means the accumulated uncompensated loss amount. After the carry-over, except for the "undistributed profit" detailed account, there should be no balance in other detailed accounts.