What are the entries for withdrawing capital reserves? How to withdraw capital reserves

Capital reserves are not withdrawn. It is generally a premium to the share capital. Donations are accepted. or resale without payment and other reasons.

1. Borrow: related assets.

Credit: paid-up capital.

Capital reserve. 2. Borrow: related assets.

Credit: Capital Reserve.

3. Borrow: accounts payable or other payables.

Credit: Capital Reserve.

Since capital reserve is an integral part of owners' equity, and it usually directly leads to an increase in the net assets of enterprises, capital reserve information is very important for the decision-making of investors, creditors and other users of accounting information. In order to avoid inflating net assets and misleading decision-making, it is necessary to clarify the main factors of capital reserve formation.

There are several categories of capital reserves, but the entries are all the same.

1.Donate reserves.

1) The monetary funds received from the donation shall be recorded according to the actual donation received.

Borrow: Cash (or bank deposit).

Credit: Capital Reserve.

2) Donated fixed assets.

Borrow: Fixed Assets (according to the market of the same type of assets** or relevant vouchers) Credit: Capital Reserve (Net Fixed Assets).

Credit: Accumulated depreciation.

3) The actual purchase price of the donated goods, etc., determined according to the relevant information, shall be recorded in the account (if the inventory goods are calculated by the selling price, the difference between purchase and sale shall also be carried forward).

Borrow: Inventory of goods.

Credit: capital reserve, etc.

2.Difference in capital translationThe difference between the relevant asset account and the paid-in capital account converted to the base currency of the account due to exchange rate changes when the enterprise actually receives foreign currency investment

Borrow: Bank deposit.

Borrow: Fixed assets.

Credit: Paid-in capital loan or capital reserve.

3.The difference between the amount of capital contribution paid by the investor and the registered capital is included in the capital reserve.

Borrow: bank deposits, etc.

Credit: paid-up capital.

Credit: Capital Reserve.

4.Revaluation and appreciation of legal property.

Borrow: materials and materials.

Borrow: Fixed assets.

Credit: Capital Reserve.

2. Borrowed money.

Equity premium For example, the total amount of dividends distributed is 4 million, and the total par value of dividends is 2 million.

Borrow: Profit distribution 4 million.

Credit: share capital of 2 million.

Capital reserve of 2 million.

1. The statutory provident fund must be withdrawn in accordance with the law. In accounting, the statutory provident fund is generally referred to as the statutory surplus provident fund. When the company distributes the after-tax profits of the current year, 10% of the profits shall be withdrawn and included in the company's statutory provident fund.

2. The company's provident fund is used to make up for the company's losses, expand the company's production and operation or increase the company's capital. According to the mandatory provisions of the law, the provident fund can also be divided into statutory surplus reserve fund and arbitrary surplus provident fund according to whether the withdrawal is based on the mandatory provisions of the law. If the company's statutory reserve fund is insufficient to make up for the company's losses in the previous year, it shall first use the profits of the current year to make up for the losses before withdrawing the statutory reserve fund in accordance with the regulations.

3. When the provident fund is converted into capital by the resolution of the general meeting of shareholders, new shares or the par value of each share will be increased according to the proportion of the original shares of the shareholders. However, when the statutory reserve fund is converted into capital, the reserve fund retained shall not be less than 25% of the registered capital of the company before the conversion.

1. The difference between statutory reserve fund and capital reserve.

Capital reserve refers to the company's various value-added caused by the invested capital itself, which is generally not due to the company's production and business activities, and is not directly related to the company's production and business activities. Including the premium of capital (or share capital), acceptance of cash donations, preparation for equity investment, transfer of appropriations, etc.

The capital reserve is not accrued, while the statutory reserve fund needs to be accrued in accordance with the regulations. The statutory reserve fund can be used to cover the company's losses, while the capital reserve cannot be used to cover the company's losses.

2. The difference between the statutory provident fund and the arbitrary provident fund.

1. Differences in nature.

The statutory provident fund, also known as the mandatory provident fund, must be withdrawn in accordance with the laws and regulations of our country, under normal circumstances, 10% of the net profit of the current year should be withdrawn, and if the accumulation of the provident fund exceeds 50%, the withdrawal of the statutory provident fund can no longer be carried out.

Compared with the statutory provident fund, the discretionary provident fund has greater autonomy and decisiveness, and the company can decide the amount of the arbitrary provident fund to be withdrawn through the articles of association or the resolution of the shareholders' meeting.

2. The degree of legal restrictions is different.

There is a strict limit on the degree to which the statutory provident fund can cover the company's losses, while there is no clear standard limit on the discretionary provident fund.

3. The order of profit distribution is different.

For the net profit of the current year, the statutory provident fund shall be withdrawn first, and the remaining reserve fund can be withdrawn only after the statutory provident fund is withdrawn.

Capital reserves are not for withdrawal.

Capital reserve is the part of the accumulation of the enterprise in addition to profits, and it is the "quasi-capital" of the enterprise, and its only purpose is to increase the capital according to law, and it shall not be distributed as investment profits or dividends. The conversion of capital reserve into capital by an enterprise in accordance with legal procedures is a change in the internal structure of the owner's equity, and does not change the total amount of the owner's equity.

It generally does not change each investor's share of the total owner's equity. Capital reserve is a component of the owner's equity, and its increase will directly lead to an increase in the net assets of the enterprise, so capital reserve information is very important for the decision-making of investors, creditors and other users of accounting information.

** of capital reserve

In China, the content of capital reserve includes: capital premium or ** premium and gains and losses directly included in the owner's equity. Capital reserves** include capital (or equity) premiums as well as gains and losses directly credited to owners' equity.

A capital (or equity) premium is an investment that a business receives from investors in excess of its share of the business's registered capital or share capital.

Gains and losses directly included in the owner's equity refer to the gains or losses that should not be included in the current profit or loss, will lead to an increase or decrease in the owner's equity, and are not related to the owner's capital investment or the distribution of profits to the owner. According to the provisions of China's company law and other laws, the use of capital reserve is mainly to increase capital (or share capital). However, for other capital reserve items, they cannot be used to increase capital or share capital until the relevant assets are disposed of.

Generally, there are two types of surplus reserves: one is the statutory surplus reserve. Under the current system, corporate enterprises are required to withdraw 5% to 10% of their after-tax profits.

The statutory surplus reserve of the listed company shall be withdrawn according to 10% of the after-tax profit, and the statutory surplus reserve may not be withdrawn when the cumulative amount of the statutory surplus reserve has reached 50% of the registered capital.

The second is the arbitrary surplus reserve. The discretionary surplus reserve is mainly withdrawn by the listed company in accordance with the resolution of the general meeting of shareholders. The difference between statutory surplus reserve and discretionary surplus reserve lies in the different basis for their respective accruals.

The former is extracted on the basis of national laws or administrative regulations; The latter is withdrawn at the discretion of the company.

There are three main situations involved in the accounting entries of capital reserve, namely, capital (share capital) premium, other capital reserves, and capital reserve to increase capital, as follows:

Capital (equity) premium entries.

1.Capital premium.

Borrow: Bank deposit.

Credit: paid-up capital.

Capital Reserve - Capital Premium.

2.Equity premium.

Borrow: Bank deposit.

Credit: Equity. Capital reserve - equity premium.

If the transaction costs such as handling fees and commissions incurred in the issuance of shares are issued at a premium, they should be deducted from the premium to offset the capital reserve-share capital premium Liji; If there is no premium or the amount of the premium is insufficient to deduct, the part that is insufficient to deduct shall be deducted from the surplus reserve and undistributed profit in turn.

Other Capital Corporations.

Specific accounting treatment:

Borrow: Long-term equity investment - other equity changes.

Credit: Capital Reserve – Other Capital Reserve (or reverse entry).

Borrow: Capital Reserve - Other Capital Reserve.

Credit: Investment income (or reverse entries).

Capital reserve is converted into capital entries.

The amount of capital reserve converted into capital shall be increased according to the amount of capital reserve.

Borrow: Capital reserve.

Credit: Paid-in capital (share capital).

The capital reserve is converted into capital, and the total owner's equity of the enterprise remains unchanged.

Explanation of capital reserve.

1. Capital reserve is the increase in capital of an enterprise due to non-production reasons such as accepting donations, capital premiums and revaluation and appreciation of statutory property, and the annual carry-over figure remains unchanged under normal circumstances. Capital reserve is divided into two detailed accounts: capital premium and other capital reserve. The purpose is mainly to increase capital, that is, to increase paid-up capital (or share capital).

2. On the one hand, the conversion of capital reserve into capital can change the capital structure of the enterprise and reflect the potential of the company's steady and sustainable development; On the other hand, for shares, it will increase the shares held by investors, thereby increasing the liquidity of the company, thereby activating the stock price and improving the trading volume and capital liquidity.

3. For creditors, paid-in capital is the most essential embodiment of the owner's equity and an important influencing factor for them to consider the risk of investment. Therefore, converting capital reserve into capital can not only better reflect the rights and interests of investors, but also affect the credit decisions of creditors.