(a) "Equity", "Share" and "Stock Exchange"
"Share exchange", that is, equity exchange, refers to the trading behavior of an enterprise exchanging its own shares issued or its shares held in other enterprises for the shares of another enterprise. "Shares" include equity and shares. Equity, as far as investors are concerned, is a kind of property, which is manifested in the form of shares issued by a joint stock limited company, including listed shares and unlisted shares, or the capital contribution certificate issued by a limited liability company, also collectively referred to as equity securities; Shares, as far as the invested entity is concerned, are an obligation, that is, the amount that should be recorded in the "share capital" or "paid-in capital", to issue shares, to issue capital contribution certificates and to record shares, which are also collectively referred to as issuing equity securities.
(2) the specific methods of stock trading
1. Common stock exchange. Refers to the equity exchange that does not constitute a business combination. Generally, stock exchange can be divided into: (1) stock exchange, that is, an enterprise exchanges its own equity securities for the equity of another enterprise, which can be the equity securities issued by the other party itself or the equity of a third-party enterprise held by the other party; (2) Share swap, that is, an enterprise exchanges the equity of a third-party enterprise it holds for the equity of another enterprise, which can be the equity securities issued by the other party itself or the equity of a third-party enterprise held by the other party.
2. Mergers and acquisitions of enterprises and stock exchanges. The so-called enterprise merger and acquisition and stock exchange means that the enterprise obtains the control right of the other party or absorbs the other party through stock exchange, that is, the equity securities issued or the equity of other enterprises held as the consideration. According to the different situations during the stock exchange period, the stock exchange for enterprise merger can be divided into: (1) According to the relationship between the two parties during the stock exchange period, the stock exchange for merger can be divided into the stock exchange for enterprise merger under the same control and the stock exchange for enterprise merger under different controls; (2) According to the new shareholding relationship after the stock exchange merger, the merged shareholding can be divided into normal purchase and reverse purchase; (3) According to whether the stock exchange leads to the existence of one party and the dissolution of the other party, the stock exchange merger can be divided into holding stock exchange merger and absorbing stock exchange merger. Share conversion through merger refers to the shareholders of the dissolved enterprise in the merger converting their shares in the dissolved enterprise into the shares of the surviving enterprise after the merger.
3. The industrial and commercial and tax authorities have different titles and specific requirements for the business of stock exchanges. (1) In terms of industrial and commercial registration, the Measures for the Administration of Registration of Equity Contribution (Order No.39 of the State Administration for Industry and Commerce, hereinafter referred to as the Measures) refers to the stock exchange business as equity contribution, but it is only limited to the act of an enterprise investing its shares of other domestic enterprises in exchange for equity securities issued by the other party. In other cases, the stock exchange does not seem to fall within the scope of this measure; (2) Regarding the tax treatment of income tax, the Ministry of Finance of People's Republic of China (PRC) and State Taxation Administration of The People's Republic of China, in the Notice on Several Issues Concerning the Treatment of Enterprise Income Tax in Enterprise Restructuring Business (Caishui [2009] No.59, hereinafter referred to as Caishui [2009] No.59), respectively included the share swap business into the share purchase and enterprise merger. The share purchase refers to the enterprise holding merger, excluding the above-mentioned general share swap, absorption merger and general share purchase that do not involve control rights; Enterprise merger refers to the absorption and merger of enterprises. The exchange of equity by an enterprise as the consideration of merger is called share-based payment in Caishui [2009] No.59 document, but the equity exchange is limited to the equity securities issued by the enterprise or its holding enterprise, excluding the equity held by the enterprise in its joint venture or joint venture.
(3) Conditions for share exchange and identification of subject qualification
1. Exchange conditions. According to the Administrative Measures, the shares invested by enterprises are the shares held by other domestic enterprises. Therefore, the current system can not be registered and recognized by the administrative department for industry and commerce. However, enterprises cannot invest abroad with their own equity securities. There are neither prohibitive provisions nor insurmountable obstacles. The specific method is to prepare and exchange cash with the same value. For example, Company A first invests in Company B, and Company B then invests in Company A. ..
2. Identification of subject qualification. For the convenience of description, this paper refers to the norms of the Administrative Measures, and defines the parties involved in the stock exchange as follows: (1) Any enterprise that does not involve the trading of its own shares in the stock exchange shall be recognized as an investment enterprise; (2) If an enterprise obtains the equity originally held by the other party at the consideration of issuing equity securities by itself, it shall be recognized as the invested entity; (3) The equity issuer used by the investment enterprise to exchange shares is the equity company; (4) If the consideration paid by both parties does not involve their respective issued shares, it shall be treated as an investment enterprise.
Second, the accounting treatment of general stock exchange
(A) accounting treatment of investment enterprises
The stock exchange is generally handled in accordance with the provisions of Accounting Standards for Enterprises No.2-Long-term Equity Investment: according to the agreed price or fair value of the exchanged equity, the subjects such as "long-term equity investment" (cost method), "long-term equity investment-cost" (equity method) and "available-for-sale financial assets-cost" are debited, and the "long-term equity" is credited according to the book value of the exchanged equity. Credit (or debit) the subjects of "long-term equity investment-cost, profit and loss adjustment and other changes in equity" and "available-for-sale financial assets-changes in cost and fair value", credit the subject of "bank deposit" according to the relevant taxes paid, and credit or debit the subject of "investment income" according to the difference.
(2) the accounting treatment of the invested entity
Debit the subjects of "long-term equity investment" or "long-term equity investment-cost" and "available-for-sale financial assets-cost" according to the price or fair value of the share swap agreement, credit the subjects of "equity" or "paid-in capital" according to the total face value of the shares issued by the share swap or the agreed amount included in the paid-in capital, and credit the "capital reserve (equity premium or capital premium)" according to the difference. If it is the debit difference, the account of "capital reserve (equity premium or capital premium)" and the account of "profit distribution-undistributed profit" will be debited in turn.
In this paper, the meanings of "debit in turn" and "surplus reserve" are limited to their balances. No matter how much the insufficient part is, the account of "profit distribution-undistributed profit" should be debited.
Three, under the same control to form a holding merger accounting treatment.
(A) accounting treatment of investment enterprises (merging parties)
Debit the account of "long-term equity investment" according to the share of the investment enterprise in the book value of the owner's equity of the merged enterprise (referring to the equity company, the same below) on the merger date, and credit the account of "long-term equity investment-cost, profit and loss adjustment and other changes in equity" and the account of "available-for-sale financial assets-changes in cost and fair value" according to the book value of the exchange equity. Or debit "capital reserve (equity premium or capital premium)", "surplus reserve" and "profit distribution-undistributed profit" in turn.
(two) the accounting treatment of the invested entity (the merged party)
1. confirmation of share conversion: debit the subjects such as "long-term equity investment", "long-term equity investment-cost" and "available-for-sale financial assets-cost" according to the original book value of the converted shares in the transferor, and credit the subjects of "equity" or "paid-in capital" according to the total face value of the issued shares or the agreed amount.
2. Cancellation of treasury shares: If the invested enterprise takes treasury shares instead of issuing new shares as equity exchange consideration, the part of the above entry confirming the newly-increased share capital shall be changed to: "Credit the treasury share account according to the book cost of paid treasury shares".
Four, the accounting treatment of stock exchange under different control to form a business combination.
(A) accounting treatment of investment enterprises (buyers)
Debit "long-term equity investment" according to the fair value of the exchanged equity, credit "long-term equity investment" and "available-for-sale financial assets" according to the difference between the fair value of the exchanged equity and its book value.
(two) the accounting treatment of the invested entity (the purchased party)
1. confirmation of stock exchange: according to the fair value of the converted shares, debit the subjects such as "long-term equity investment", "long-term equity investment-cost" and "available-for-sale financial assets-cost", and record them in the paid-in capital according to the total par value or agreed amount of the shares issued by stock exchange, and credit them in the subjects of "equity" or "paid-in capital".
2. Cancellation of treasury shares: If the newly issued shares are replaced by paid treasury shares, the part recorded in the above entry as "share capital" shall be changed to "credit treasury shares according to the book cost of paid treasury shares".
Verb (abbreviation of verb) Accounting treatment of stock exchange in merger and acquisition
The purpose of stock exchange in merger and acquisition is different from other stock exchange methods mentioned above. Generally, stock exchange, holding merger and reverse acquisition are all used for holding, while stock exchange in absorption merger is used for cancellation. Therefore, the accounting treatment does not involve the increase (exchange) of equity, but should be: (1) confirmation of absorption and merger: debit related assets according to the book value (business combination under the same control, the same below) or fair value (business combination under different control, the same below) of the assets of the merged party (or the purchased party), and debit related assets according to the book value or fair value of the liabilities of the merged party. (2) Stock exchange: after receiving the shares or capital contribution certificate of the merged party delivered by the shareholders of the merged party, and the total face value of the company's shares or the amount agreed to be included in the paid-in capital, debit the subjects of "capital reserve (equity premium or capital premium)", "surplus reserve" and "profit distribution-undistributed profit" in turn, and credit the subjects of "equity" or "paid-in capital"; (3) Cancellation of treasury shares: If the merging party pays treasury shares instead of issuing shares, it shall debit the subjects of "capital reserve (equity premium)", "surplus reserve" and "profit distribution-undistributed profit" in turn and credit the subjects of "treasury shares" according to the book cost of paying treasury shares.
Six, the accounting treatment of reverse takeover formed by stock exchange.
When an enterprise, as an investment enterprise, purchases the control right of another enterprise (the investee), because it takes the equity securities issued by itself as the consideration, the result of the purchase is that its control right is purchased by the original parent company of the purchased enterprise. This kind of purchase behavior is called reverse purchase in international accounting standards and China's accounting standards system. Reverse takeover is a special form of stock exchange merger. And special means: (1) After the share exchange, the invested unit must become a subsidiary of the investing enterprise; (2) After the share exchange, the equity company must become a subsidiary of the invested unit; (3) The consolidated financial statements on the purchase date of reverse purchase (hereinafter referred to as consolidated statements) refer to the consolidated financial statements prepared by the invested entity and its subsidiaries (equity companies) as a whole on the purchase date.
According to the "Reply of Accounting Department of Ministry of Finance on Accounting Treatment of Indirect Acquisition of Listed Companies by Non-listed Companies" (Reply of Accounting Department [2009] 17), the reverse acquisition of listed companies without input-output mechanism through stock exchange should be handled by the equity combination method (that is, the merger of enterprises under the same control); Reverse purchase of listed companies with input-output mechanism through "backdoor listing" of the stock exchange, and accounting by purchase method (that is, enterprise merger under different control). The important difference is that after the accounting treatment of reverse purchase, stock exchange and enterprise merger is confirmed by the above method, the invested unit, as the parent company of the equity company, should embody the principle of reverse when compiling the consolidated statements of the parent and subsidiary companies. This reverse principle is realized in a "virtual" (hypothesis) and six "transposition".
A "dummy" means that when preparing the offset entries in the consolidated statement, it is assumed that the statutory subsidiary (the equity company in this paper) will distribute the number of shares and the fair value of shares to the shareholders of the statutory parent company (the invested company in this paper) in order to obtain the shareholding ratio of the reporting entity after the merger, and take this fair value as the "dummy" merger cost of the subsidiary, so as to prepare the adjustment offset entries and record them in the working paper of the consolidated statement.
6 "Transposition" refers to the items that should be offset and retained in the normal consolidated statement and the measurement of assets and liabilities in the consolidated statement when the consolidated statement is prepared on the purchase date. There are six "transpositions" between the parent company and its subsidiaries. These six "exchange positions" mean that (1) the assets and liabilities of the subsidiary shall be confirmed and measured according to the book value before the merger; (2) The retained earnings in the consolidated statement should reflect the retained earnings balance of the subsidiaries before the merger and offset the shareholders' equity items of the parent company; (3) The amount of equity instruments in the consolidated statement should reflect the total face value of shares issued by subsidiaries plus "virtual" issued shares minus the shares of minority shareholders of subsidiaries; (4) The assets and liabilities of the parent company in the consolidated statement shall be measured at the fair value determined on the purchase date, and the difference between the "fictitious" merger cost of the subsidiary and the fair value of the identifiable net assets "virtually" acquired on the purchase date shall be recognized as goodwill or current income; (5) The comparative information of consolidated statements is the amount of previous statements of subsidiaries; (6) The minority shareholders' rights and interests of subsidiaries shall be listed separately in the consolidated statement, while the parent company shall not list the minority shareholders' rights and interests.
It should also be noted that: (1) when reverse purchase is used to offset the equity items of the parent company, the corresponding items are long-term equity investments that should be offset, including all adjusted balances of the parent company and subsidiaries; (2) In reverse purchase, the minority shareholders' rights and interests of subsidiaries shall be listed separately and calculated according to the shareholding ratio and amount before the merger.
Seven. others
In order to avoid repeated narration, some accounting treatments under the above-mentioned stock exchange methods are not described in each part, which means:
(1) Accounting treatment when the equity company confirms the equity transfer.
When the equity company confirms the equity transfer, the shares accepted for transfer shall be debited to the account of "share capital (transferor)" or "paid-in capital (transferor)" and credited to the account of "share capital (transferee)". If the exchanged shares are bearer shares, the equity company does not need to carry out accounting treatment for equity transfer.
(2) Dividends receivable included in the equity price
If the cash dividend (or profit) that has been announced but is still being paid is included in the share exchange price, it shall be listed separately in the same direction as the corresponding amount of long-term equity investment when making the share exchange entry, and shall not be included in the book value, fair value or personal account value of the share exchange.
(III) Provision for impairment
If the impairment reserve has been accrued for the exchanged equity, the impairment reserve should be written off at the same time when the equity is resold, and the "difference" after the entry should be changed accordingly.
(4) Gains and losses from changes in fair value
The net gains and losses from changes in fair value of equity as available-for-sale financial assets originally included in capital reserve shall be transferred out at the time of share exchange and included in investment income or non-operating income and expenditure.
(5) Premium
In the process of stock trading, there may be premium behavior. If there is a premium, it can be handled in accordance with the principles stipulated in Accounting Standards for Enterprises No.7-Exchange of Non-monetary Assets (hereinafter referred to as Accounting Standards No.7).
Article 8 of Accounting Standards No.7 stipulates that if an enterprise takes fair value and relevant taxes and fees payable as the cost of exchanging assets, it shall make the following treatment: if a premium is paid, the difference between the cost of exchanging assets and the sum of the book value of the exchanged assets plus premium and relevant taxes and fees payable shall be included in the current profit and loss. If the premium is received, the difference between the sum of the cost of the transferred assets plus the premium received and the sum of the book value of the transferred assets plus the relevant taxes payable shall be included in the current profits and losses.
Article 9 of Accounting Standards No.7 stipulates that if an enterprise takes the book value of the exchanged assets and the relevant taxes payable as the cost of the exchanged assets, it shall make the following treatment: if a premium is paid, the book value of the exchanged assets will be added with the premium paid and the relevant taxes payable as the cost of the exchanged assets, and no profit or loss will be recognized. If the premium is received, the book value of the exchanged assets minus the premium received and relevant taxes payable shall be regarded as the cost of the exchanged assets, and no profit or loss shall be recognized.
(vi) Stock transaction costs
Accounting Standards for Business Enterprises No.20-Interpretation of Accounting Standards for Business Combination and Business Enterprises No.4 (Caishui [20 10] 15) stipulates that in the process of share exchange, the investing enterprise pays the audit, evaluation, legal consultation and other expenses of share exchange, and the invested company pays the expenses of capital verification, capital increase and change registration.
(seven) the cost of issuing shares
According to Interpretation No.4 of Accounting Standards for Business Enterprises, the transaction cost of equity securities issued by the buyer as the merger consideration shall be included in the initial recognition amount of equity securities. The author believes that this provision should be interpreted as follows: the direct fees and commissions paid for issuing equity securities should be charged from the equity premium or capital premium of issuing equity securities, and the insufficient part should be debited to other subjects in turn: capital reserve (equity premium or capital premium), surplus reserve and profit distribution-undistributed profit.