| In recent years,convertible and redeemable preferred stock as a kind of innovative capital that has aroused excitement and activeness among investors has been continuously entered the public consciousness,as a "new favorite" of private equity.This innovative financial instrument with a flexible way of stock offering is pursued by investors,and its stock in the capital market is becoming increasingly extensive.However,due to its priority and particularity,its identification in the accounting process is quite inaccurate,so that it is difficult to distinguish clearly whether it is a liability or equity.For the reason that there is no unified consensus,this kind of financial processing treatment for the convertible and redeemable preferred stock gives priority to whether there is a gap between the financial report of the issuing unit and the real operating performance of the company,and even how big the gap is,which has become a concern of many investors.Under this situation,it is of great practical significance to study the treatment of preferred stocks in current accounting standards and explore the source of the problem,which promotes the use of preferred stocks in the capital market of China.The brand of Xiaomi is an internet company that successfully landed in Hong Kong stocks in 2018.The company was founded in April 2010 in Beijing,China,and has been committed to the development,research and marketing of intelligence software and electronic products.In July 2018,Xiaomi's successful listing in Hong Kong,China also dropped a bombshell into the investment market —it identified the convertible and redeemable preferred stock issued by the company as financial liabilities with reference to international accounting standards and allowed it to be held at fair value.As we all know,in recent years,with its growing influence in capital market,it became inevitable that its shares would be overvalued during the issuing date.Therefore,such treatment of preferred stocks will immediately lead to huge losses in the company's financial reports.In May 2018,Xiaomi submitted and announced its prospectus to the Stock Exchange of Hong Kong Ltd.Firstly,the author deeply analyzes the situation of preferred stocks and conducts a comprehensive analysis and research in conjunction with the mid-year and annual report published by Xiaomi Group in 2018 and comprehensively consider the current international practice on the basis of IFRS and GAAP to compare the differentiated performance between these two accounting standards in judging and processing preferred stocks.Secondly,the author further analyzes and studies the primary cause of the fact why the information disclosed in Xiaomi's financial report prepared in accordance with IFRS is very different from its actual operating results and analyze its issues from the aspects of the issuing of the preferred stocks of Xiaomi,accounting treatment,and defects caused by accounting treatment.Then,the author analyzes the impact of this case on the financial report from three aspects: debt paying ability,profitability,and EPS and further discusses the impact of the financial report after the conversion of shares.Finally,based on the comparison between IFRS and GAAP,the author proposes an improved processing method for convertible and redeemable preference stocks and compares the processing results.This thesis studies the preferred shares issued by Xiaomi based on two issues.Firstly,seeing that the application of different accounting standards will lead to a situation where the consequences of accounting treatment are inconsistent with the actual operating conditions,the author will analyze this method of handling preferred stocks,which provides reference opinions for enterprises in such situations at the technical level.Secondly,Xiaomi's treatment of preferred stock can be used as a case for extensive discussion and analysis.This also provides innovative thinking mode and reference to adjust such innovative affairs on the basis of Chinese accounting standards. |
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