1. Characteristics of owner's equity
Owner's equity is the owner's right to Ownership of a business's net assets. Compared with liabilities, it has the following characteristics:
(1) Owners’ equity can be used by the company for long-term and continuous use during the company’s operating period, and the company does not have to pay Investors return their principal. Liabilities must be returned to creditors on time and become a burden on the company.
(2) Enterprise owners enjoy the right to distribute after-tax profits based on the Capital they invest in the enterprise. Owners' equity is the main basis for a company to distribute its net profit after tax, and creditors have no right to distribute the company's profits except for dividends as required.
(3) The owner of the enterprise has the right to exercise the operation and management rights of the enterprise, or authorize managers to exercise the operation and management rights. But creditors do not have management rights.
(4) The owners of the enterprise have unlimited or limited liability for the debts and losses of the enterprise, while the creditors have no relationship with other debts of the enterprise. Generally, they are not responsible for corporate losses.
(5) Owners’ equity lags behind creditors’ equity. From a legal perspective, liabilities have priority over owners' equity in their claims to corporate assets, because owners' equity can only have the remaining equity of total assets minus total liabilities. Therefore, when a company is liquidated, the assets after realization are first used to repay liabilities, and the remaining assets are distributed among investors in proportion to their capital contributions.
2. Different classifications of owners’ rights and interests
Owner’s rights and interests According to different standards, it can be divided into different categories.
(1) Classification by composition
Owner’s equity is divided into invested capital, Capital reserves and retained earnings.
1. Input capital
Input capital refers to the capital actually invested by the owner within the scope of the registered capital of the enterprise. The so-called registered capital is It refers to the total capital registered with the industrial and commercial administration department when the enterprise is established, which is the sum of the capital contributions set by all investors. The enterprise's capital raising should be carried out in a timely manner in accordance with the provisions of laws, regulations, contracts and articles of association. If it is If it is raised in one go, the invested capital should be equal to the registered capital; if it is raised in installments, after the owner pays the last capital, the invested capital should be equal to the registered capital. Registered capital is the legal capital of the enterprise and is the financial guarantee for the enterprise to bear civil liability. .
In different types of enterprises, the expression of invested capital is different. In a joint stock company, the invested capital is expressed as the face value of the actual issued shares, also known as It is equity capital; in other enterprises, invested capital is expressed as the actual amount of capital contributed by the owner within the scope of registered capital, also called paid-in capital.
The invested capital is calculated according to all The nature of the investors is different and can be divided into state-invested capital, legal person-invested capital, individual-invested capital and foreign-invested capital. State-invested capital refers to the capital formed by the investment of state-owned assets into enterprises by government departments or institutions with the power to invest on behalf of the country; Capital invested by legal persons refers to the capital formed by entities with legal person status in my country investing in enterprises with the assets they can control according to law; capital invested by individuals refers to the capital formed by Chinese citizens investing their legal property in enterprises; capital invested by foreign parties refers to foreign investment The capital formed by investors and investors from Hong Kong, Macau and Taiwan in China investing assets into enterprises.
The invested capital can be divided into currencies according to the form of the invested assets. Investment, physical investment and intangible asset investment.
2 Capital Reserve
Capital reserve refers to Capital that is jointly owned by owners and formed by non-income conversion mainly includes capital premium (equity premium) and other capital reserves.
3. Retained earnings
Retained earnings refer to the owners’ equity that is shared by the owners and formed by the conversion of earnings, mainly including statutory ** common reserve, arbitrary ** common reserve and Undistributed profits, etc.
(2) Division according to economic content
Owner’s equity according to economic content divided, can be divided into the followingSeveral kinds.
1. Input capital
Input capital is the various properties that investors actually invest in the economic activities of the enterprise Materials, including state investment, legal person investment, personal investment and foreign investment. State investment refers to the capital invested by state-owned assets in enterprises by departments or institutions with the right to invest on behalf of the state; legal person investment refers to the capital invested in enterprises by corporate legal persons or other legal entities with the assets they can control according to law; personal investment refers to the capital invested by individuals in society or within the enterprise. The capital formed by employees investing their legal property into the enterprise; foreign investment is the capital invested by foreign investors and investors from Hong Kong, Macao and Taiwan.
2. Capital reserve
Capital reserve is the net increase in the company’s non-operating profits Assets include various property materials obtained from donations, legal property revaluation and appreciation, capital exchange rate conversion differences and capital premiums. Acceptance of donations refers to the capital reserve increased by the enterprise due to accepting cash or in-kind donations from other departments or individuals; statutory property revaluation and appreciation refers to the assets assessed or stipulated in contracts or agreements due to the division, merger, change and investment of the enterprise. The difference between the value and the original net book value; the capital exchange rate conversion difference refers to the exchange difference that occurs due to exchange rate changes when the enterprise receives foreign currency investment; the capital premium refers to the difference between the capital contribution paid by the investor and its subscribed capital, including The net premium income from the issuance of shares by a joint-stock company and the net premium income from the conversion of convertible bonds into equity, etc.
3.**Process
**Process is the enterprise’s net profit after tax Provident fund withdrawn. **The public reserve can be used to make up for corporate losses according to regulations, or it can be converted into capital according to legal procedures. The statutory provident fund withdrawal rate is 10%.
4. Undistributed profits
Undistributed profits are the net profits realized during the year after profit distribution The remaining profits will be distributed later. If the undistributed profit is negative, it means that the uncompensated losses at the end of the year should be made up by the profits or public reserves of subsequent years.
(3) Divide by formation channels
If the owner’s equity is divided by formation channels, it is divided into The capital originally invested and the capital formed in operations.
The original invested capital includes investmentCapital and capital reserves. The capital formed in operations includes capital reserves and undistributed profits.
3. Accounting for corporate capital reduction
The company suffered serious losses Capital reduction generally adopts the method of writing off capital, which actually means using capital to make up for losses. When a non-stock company cancels capital, the "paid-in capital" account should be debited and the "profit distribution - undistributed profits" account should be credited. When a joint-stock company cancels shares or writes off part of the amount per share, it actually uses equity capital to make up for losses. When canceling the par value of shares or writing off part of the amount per share, the "paid-in capital" account should be debited and the "profit distribution - —Undistributed profits” account.
4. Accounting of treasury stocks
Treasury generally refers to the company Recover the company's shares that are issued but have not been cancelled. The stocks of other companies held by the company, the company's unissued stocks, and the company's stocks recovered and canceled by the company are not treasury shares. Treasury shares are not assets, but a reduction of shareholders' equity. Treasury shares do not have stock rights, preemptive rights, profit distribution rights and property liquidation rights, but may participate in stock subdivisions. In our country, the Company Law strictly prohibits companies from owning treasury shares. However, in foreign countries, treasury stocks are more common, mainly based on the following considerations: to meet the needs of employee compensation contracts; to cope with possible acquisitions and mergers; to reduce the shares in the company to increase earnings per share; to affect the company's stock trading activities and stock price; to meet the needs of possible mergers and acquisitions in the future, etc.
No matter the reason for the company to purchase treasury stock, the accounting treatment is to reduce the company's assets and shareholders' equity. The accounting treatment of treasury shares can be divided into two types: cost method and par value method. Companies can choose one of the methods according to different intentions of acquiring treasury shares.
When canceling treasury shares, the total par value of the shares calculated based on the par value of the stock and the number of canceled shares should be debited to the "paid-in capital" account, and the total par value of the canceled treasury shares should be debited. The book balance is credited to the "treasury stock" account, and the difference is used to offset the premium originally included in the capital reserve when the stock is issued, and the "capital reserve - share premium" account is debited. If the share capital premium is insufficient to offset· The accounts of "** Reserve" and "Profit Distribution - Undistributed Profit" should be debited in sequence; if the price paid to repurchase the stock is lower than the total face value, the "Paid-in Capital" account should be debited based on the total face value of the stock. According to the book balance of the canceled treasury shares, the "Treasury Stock" account will be credited, and according to the difference, the "Capital Reserve - Capital Premium" account will be debited.
The limited liability company is in progressWhen calculating the capital invested by the bank, attention should be paid to the following issues:
(1) When a limited liability company is initially established, each investor invests in the enterprise in accordance with the contract, agreement or company articles of association. All costs should be recorded in the "paid-in capital" account, and the company's paid-in capital should be equal to the company's registered capital. When an enterprise increases capital and shares, if a new investor intervenes, and the amount of investment paid by the newly intervened investment is greater than its share of the registered capital calculated according to the agreed proportion, the "paid-in capital" account will not be recorded. As a capital reserve, it is recorded in the subject of "Capital Reserve - Capital Premium".
(2) According to the provisions of my country's "Company Law", one-person limited liability companies and wholly state-owned companies are both limited liability companies. When forming and adding such companies, When investing, all the capital invested by the owner will be recorded as paid-in capital, and no capital reserve will be generated to maintain a certain investment ratio.
5. The difference between capital reserve, paid-in capital and ** public reserve
Capital reserve is usually the amount of funds invested by investors or others in an enterprise that exceeds the statutory capital. The ownership belongs to the investor, which is very different from the paid-in capital ratio and ** public reserve projects.
(1) The difference between capital reserve and paid-in capital
Paid-in capital clarifies investment The main body is the basis for investors to control enterprises and distribute surplus
The increase or decrease in the total amount and structure of paid-in capital involves the fundamental interests of investors. Changes that affect an enterprise's operating policies and capital markets must be subject to strict legal restrictions on increases or decreases. Capital reserve is the common equity of the owners. Before it is converted into paid-in capital, the specific investment subject cannot participate in the control and surplus distribution of the enterprise. Capital reserves are generated with investment. For listed companies, they are mainly formed by premium income. Since the price of stocks issued by listed companies in my country has generally increased, shareholders have injected a large amount of funds into listed companies. What truly belongs to their own rights and interests is only calculated at face value. A large amount of premium income forms capital reserves. Under the premise of "insider" control, it is equivalent to managers obtaining and using shareholder funds for free. This is contradictory to establishing a corporate governance structure and improving restraint and incentive mechanisms. , which is an infringement on the rights and interests of shareholders.
(2) The difference between capital reserve and ** public reserve
** public reserve It is converted from corporate profits.It is the result of the accumulation of enterprise operating activities. In order to prevent enterprises from over-allocating, the relevant system sets a lower limit for the withdrawal of public reserve. **Profit is usually linked to the profitability of the company and is of great significance to shareholders and the company. It directly reflects the shareholder's ability to invest in capital appreciation, reflects the quality of the company's operating activities, and is the manager's assessment of the company and the company. Shareholder Contributions. Capital reserve mainly accompanies investment, reflects the size of the enterprise, and is the contribution of investors to the enterprise. **The main purpose of public reserves and capital reserves is to increase capital, but they are subject to various restrictions.
6. The role of extracting public reserves
Company system The statutory ** public reserves and arbitrary ** public reserves drawn by the enterprise have three purposes.
1. Make up for losses
The losses incurred by the enterprise should be made up by the enterprise itself. The enterprise can make up for it with the pre-tax profits in the following years (the period is 5 years). For the losses that the enterprise has not made up after 5 years, it must use the after-tax profits in the following years to make up the losses or use the withdrawn public reserve to make up the losses. When an enterprise uses public reserves to make up for losses, it shall be resolved by the company's board of directors and approved by the shareholders' meeting.
2. Convert to capital
When an enterprise converts ** public reserves into capital, it must go through After the resolution of the shareholders' meeting is approved, and then the capital increase procedures are completed in accordance with regulations, the statutory ** reserve and arbitrary ** reserve can be converted into paid-in capital or share capital. When the ** public reserve is actually transferred to capital, it must be carried forward in accordance with the shareholder's original shareholding ratio. However, after the statutory reserve fund is converted into capital, the remaining reserve fund shall not be less than 25% of the company's registered capital before the conversion.
3. Expand enterprise production and operation
The actual performance of the company’s ** public reserve balance It is an integral part of the owner's equity of the enterprise and indicates a source of funds for the enterprise's production and operation. Withdrawing the ** public reserve does not mean that this part of the funds is withdrawn from the company's capital turnover process. It is recycled like the funds formed from other sources of the company and used for the production and operation of the company.