As a common financial management method, bonds are less risky than stocks and have higher returns than time deposits, so they are very popular financial management methods. Bonds can be issued by banks or qualified enterprises. Do you know how to write the accounting entry of the cost of issuing bonds? The following is the answer to this question. If you want to know more details, please read the following carefully to find the answer! Welcome to read!
How to deal with the cost accounting of issuing bonds?
At present, there are three accounting treatment methods for bond issuance expenses, which are summarized as follows.
Method 1: The issuance expenses are directly included in the current profit and loss.
Debit: financial expenses
Loans: bank deposits
Method 2: firstly, the issuance expenses are included in the subject of "bonds payable-interest adjustment" and amortized in subsequent periods. When issuing: borrowing: bonds payable-interest adjustment.
Loans: bank deposits
Amortization: borrowing: financial expenses.
Loans: bank deposits
Method 3: The issuance expenses are first included in the long-term deferred expenses and amortized in subsequent periods. Borrow long-term deferred expenses at the time of issuance.
Loans: bank deposits
Amortization: borrowing: financial expenses.
Loans: bank deposits
Accounting treatment of issuance expenses
If it is stock issuing expenses, it can be deducted from the premium income of stock issuance, that is, the capital reserve-capital (equity) premium can be reduced;
If it is a bond issuance fee, according to the provisions of the Accounting Standards for Business Enterprises and the Accounting System for Business Enterprises:
1. If the issuance expenses are less than the interest income generated by freezing funds during the issuance period, the difference between the interest income generated by freezing funds during the issuance period and the issuance expenses will be regarded as the premium income of issuing bonds, which will be amortized when the interest accrues during the duration of the bonds.
2. If the issuance expenses are greater than the interest income generated by freezing funds during the issuance period, the difference between the issuance expenses and the interest income generated by freezing funds during the issuance period shall be handled according to the following circumstances:
(1) The funds raised from the issuance of bonds by enterprises are used exclusively for the purchase and construction of fixed assets. If the issuance cost is quite different, they will be directly included in the cost of the purchased fixed assets before they reach the scheduled usable state.
(2) If the funds raised by an enterprise in issuing bonds are exclusively used for the purchase and construction of fixed assets, and the issuance cost is quite different, the purchased fixed assets will be directly included in the current financial expenses after reaching the scheduled usable state.
(three) the funds raised by the issuance of bonds by enterprises are used exclusively for the purchase and construction of fixed assets. However, if there is little difference in the issuance expenses, they will be directly included in the current financial expenses.
(4) The funds raised by the issuance of bonds by enterprises are not used for the purchase and construction of fixed assets, and are directly included in the current financial expenses.
This paper not only answers the question of how to write the accounting entries of issuing bonds, but also shares the accounting treatment of issuing bonds with you. I wonder if it will help you? It would be great if you could learn something from it! If your question is not fully answered after reading the article, you can also consult our online Q&A teacher and answer it for you according to the actual situation!