Research On Accounting Treatment Of Performance Commitment Of Listed Companies

In corporate mergers and acquisitions,due to the information asymmetry of the acquirer and the acquired party,the performance commitments in the process of the interests of the two parties have emerged.The signing of performance commitments has shifted from one-way performance compensation commitments to two-way commitments for both performance awards and performance compensation of M&A transactions.In recent years,the number of mergers and acquisitions in various industries has been increasing,the forms of mergers and acquisitions have become more diversified,and the scale of mergers and acquisitions has become larger.Enterprises have more generally designed and signed two-way performance-to-gambling schemes.However,for the accounting treatment of performance awards in corporate mergers and acquisitions,the domestic accounting standards have not yet detailed the regulations,resulting in the accounting confirmation of performance rewards in the actual operation,and the accounting treatment methods are different.The mainstream views of performance reward confirmation can be divided into bonuses and contingent considerations.There are still many problems in the follow-up measurement of performance rewards.Therefore,China's research on accounting treatment of corporate performance rewards is very urgent.Taking W company as an example,this paper analyzes the accounting treatment status of performance reward in the context of performance commitment in the process of domestic M&A and restructuring,and finds that the choice of accounting confirmation for performance reward in actual operation will be caused by the uncertainty of the standard.Different companies have handled this inconsistency.Some enterprises have their fair value defaulted to 0 when they confirm or have performance awards in the form of consideration.This will directly lead to large deviations in the valuation of goodwill and subsequent retrospective adjustment difficulties.Some companies' performance awards in the form of bonuses are subject to the subsequent measurement method of the current profit and loss when the performance commitment expires.This may violate the basic accounting principle of accrual accounting,and there may also be taxation of income tax.In addition,many companies in the process of accounting practice did not separately disclose the specific accounting treatment of corporate performance rewards.Based on the relevant laws and regulations at home and abroad,the company can be based on the senior management status,the special arrangements of the original shareholders who hold the company,the profit sharing plan rules,the reward level,the reward amount and the valuation of the acquired company.If the factors are judged as “or contingent consideration” or “bonus”,the listed company should consider whether the rewarded party is required to remain or not,the level of performance reward,the degree of correlation of the valuation of the merger,and so on.Performance awards A reasonable valuation is used to confirm the merger consideration.The acquirer shall make the performance award amount in installments.All in all,corporate mergers and acquisitions are a game of all stakeholders.The choice of each accounting treatment method under the performance commitment is generated in the balance of interests of all parties.The choice of the final accounting treatment and tax planning depends on the enterprise.The degree of game between the interests of both parties.This paper focuses on the accounting treatment of the performance awards of listed companies in mergers and acquisitions,and puts forward relevant accounting treatment suggestions.For example,enterprises should use the valuation model that considers multiple factors to properly evaluate the performance awards at the initial stage of performance commitment.Responsible system to make reasonable accruals of performance awards during the performance commitment period,in order to help China's M&A market to flourish.