A Case Study On The Division Of Perpetual Bond Accounting Attributes

Since reform and opening up,with the high speed growth of China's real economy,capital markets has become increasingly energetic,a variety of innovative capital instruments launched,the types of financial instruments has become more and more complex and diverse,and the distinction between accounting attributes and accounting treatment of new financial instruments is becoming more and more important.Financial products following the preferred shares,the permanent bonds also immediately boarded the financial history of the market stage.It emerged as a financial crisis in the various enterprises to bring new gospel.The perpetual bonds has a long duration,stable source of funds,cost control,flexible use,can reduce the rate of assets and liabilities and other characteristics,in line with large-scale projects such as public utilities,construction and transportation and other major project construction financing needs.The persistent bonds hybrid capital securities attributes are highly attractive for companies with high liabilities and high asset operations.Therefore,the successful launch of the perpetual bonds for the urgent need to broaden the financing channels of large and medium-sized enterprises of great significance,the practice of its related accounting policy and the subsequent use of the issue of concern is also of concern.This paper uses the research methods of literature research and case analysis.After introducing the concept of financial liability and equity instrument,its research significance,historical evolution and distinguishing principle,this paper introduces the concept of permanent bonds and characteristics.After that,the author takes the basic concepts and criteria of financial liabilities and equity instruments as the theoretical basis,and makes a comprehensive description of the issuance process and current situation of the perpetual bond issuance with the case of Wuhan Metro Group Co.,Ltd and China Railway Construction Group Co.,Ltd.And then on the permanent bond accounting attributes and the distinction between the issues reflected in-depth study.In the case analysis gradually in-depth,the author also compared the perpetual bonds issued by Wuhan Metro Group Co.,Ltd and China Railway Construction Group Co.,Ltd in order to obtain useful experience,explore the urgent problems in China that have been existing in the practical use of financial liabilities and equity instruments,and put forward the corresponding recommendations.At the same time,through the discussion concluded: in the distinction between the debt and equity characteristics of the permanent debt of the property,we should pay more attention to its terms of delivery reflects the economic essence;Punitive clauses are not recognized as presumption in the present circumstances,but financial instruments containing this provision may be classified as financial liabilities in the future.The limitation of this paper lies in thelack of understanding of the rules and regulations of the accounting instruments of financial instruments.The author can only obtain relevant data from the public information of Wuhan Metro Group Co.,Ltd and China Railway Construction Group Co.,Ltd.Therefore,it may not be comprehensive enough and specific.It is hoped that this paper will provide reference and reference for the follow-up and accounting treatment of innovative financial instruments of permanent bonds,and promote the improvement of relevant accounting and taxation laws and regulations related to financial instruments in China,and make innovative financial instruments such as permanent bonds in the capital market reform tide more vibrant.