Study On Accounting Confirmation Of Perpetual Bonds

The demands for financing and investment have led to a series of hybrid financial innovation tools,which also include the perpetual bond.Since it was introduced to China in 2013,it has been mostly applied due to its advantages in improving the asset-liability ratio.By the end of 2018,the issuance scale of China‘s perpetual bonds has exceeded 1.7 trillion yuan,with a trend of continuous growth.However,the accounting treatment of perpetual bond has always been an issue because it seems to be either equity or debt.No matter the perpetual debt is included in liabilities or owners‘ equity,it will both affect the asset structure,as well as the accounting profit.At present,most of the perpetual bonds in China have been recognized as equity,while their rationality is questionable,especially after the new rules generated by the ministry of finance on the accounting treatment of perpetual bonds in early 2019.This article mainly adopts normative research,statistical analysis and case analysis.Firstly,it analyzes the basic definition of debt and owner‘s equity in the latest financial concept framework,and then introduces the relevant theory of debt and owner‘s equity distinction and its impact on accounting standards.Then it combs the latest provisions of the current accounting standards at home and abroad countries and summarizes the judgment chart of the accounting attributes of financial instruments at the theoretical level.After the theoretical introduction,it comes to the statistics on the overall issuance situation of China‘s perpetual bond market,and analysis of the distribution of issuing subjects,credit rating distribution and bond types,following by studying and analyzing the crucial terms of perpetual bonds,such as renewal option terms and interest deferred payment terms,in combination with China‘s market conditions.In the end,?16 Zhejiao Y1?and?19 bank of China‘s perpetual bond 01?are selected to make a comparative case analysis.The former is the first renewable corporate bond in China,which was recognized as owner‘s equity in accounting treatment.The latter is the first bank perpetual bond in China,whose accounting treatment is also recognized as owner's equity,while it fully meets the condition that the perpetual bond can be included in the owner‘s equity.In view of the situation of ?one-sided?accounting treatment of domestic perpetual bond,this paper hopes to analyze the core clauses of perpetual bond through these two typical cases,in order to provide reference for enterprises preparing to adjust their asset structure by using perpetual bond,and also to put forward policy suggestions for improving the accounting confirmation of perpetual bond.