Research On Accounting For Impairment Of Assets

With the development of economics, accounting for impairment of assets hasbecome the central issue concerning the regulation of accounting system around theworld owing to the increasing of uncertainty and risk in economic environment . In1999 Ministry of Finance issued accounting rule for allocating impairment of fourassets reserve. In 2001 another four items of assets were added, and by then businesscan allocate impairment of assets reserve on accounts receivable, inventory,short-term investment, long-term investment, fixed asset, intangible asset, works inbuilding, and entrusted loan. In February, 2006 special accounting principle of assetsimpairment has been issued. The regulation for allocating impairment of assets isbecoming more perfect. The performance reports of listed companies show thataccounting policies on impairment of assets are adopted as a tool for profitmanipulation. It includes reasons on aspect of rules and governance ecology of listedcompanies. This text aimed at finding the reasons and providing some suggestions.This text discussed from the basic theory of accounting for impairment of assets,which include the definition of related conceptions, analysis of theory basics of it, andsignificance of executing accounting for impairment of assets in china.Then it studied the process and method of accounting for impairment of assetsincluding confirmation, calculation and disclosure. They are central issues ofaccounting for impairment of assets.Thirdly it researched on the practice of accounting for impairment of assets inour country. It introduced the development of accounting for impairment of assets inchina;total situations that listed companies allocate impairment of assets reserve;theinfluences of allocation of impairment of assets reserve on the assets and operatingperformance of listed companies, different company's motivation of allocation ofimpairment of assets reserve. It further studied the impairment of accounts receivable,inventory, and fixed asset, which are common allocated and have more influence onoperating performance of listed companies.At last, it analyzed the reasons of non-standardization of execution of accountingfor impairment of assets in our country and provided some suggestions to improve it.