The Empirical Research On Making Use Of Allowances For Assets Impairment To Operate Profit

For the past few years, it is becoming fiercer and fiercer for the listed companies to make use of assets impairment to operate profits and this phenomenon, which seriously affects the truth of the accounting information, is focused on more and more by social circles. Ministry of Finance promulgated assets impairment accounting standard in order to contain the behavior of driven profits and forbid switch back the allowance of assets impairment. But it is still a focus point for accounting practice circles to argue whether it is necessary to switch back the allowance of assets impairment. This paper expounds the relevant theory about assets impairment and shows the staple means of making use of assets impairment to operate profits in the listed companies. The conclusion of this paper has important practice significance for the listed companies to strength the supervision and management and to improve the quality of accounting information.This paper selects 84 listed companies which are divided into four categories: huge losses,to be processing by ST,weak profits and lucrative profits. It uses statistical analysis from three aspects of provision, right back and the influence to profit. Then it compares the provision with the switching back of the company with the same styles in the different years, and concludes that the companies in huge losses apt to increase period losses and provide huge allowances for assets impairment to clear up non-performing assets and get ready for profiting; the companies in processing by ST apt to raise period profits and switch back huge allowances for assets impairment to avoid losses and suspending or stopping to be listed; the companies in weak profits apt to raise period profits and be more allowances for assets impairment to compete for weak profit and avoids weak losses; the companies in lucrative profits apt to reduce period profits and be more provision of allowances for assets impairment to store secret profiting preparation for the year after next. Statistical analysis of the typical company's empirical research paves the way for DF Company. This paper deeply analyzes DF Company' data of the impairment form the aspects of provision, the impact on net profit, causes analysis and so on, and comparatively analyzes the detailed items. Then it proves that DF in the lucrative annual should have more provision for diminution, reduce period profits and smooth to the later period profits; Huge losses in the annual Provision for diminution should increase period losses; processing by ST in the annual back should raise period profits and make up the deficits and get surpluses; More flat annual profits should be back to raise period profits and avoid period losses; the main targets to terms and back are inventory and receivables, and the function of new standard "containment to driven profits " has little effectiveness to DF Company.This paper suggests that diminution back is allowed and is credited to the capital features, and can to be transferred to income when assents disposal. It has important reference value to standardize the information disclosure, increase the vigor of penalties irregularities, give full play to social auditing oversight functions, formulate the relevant policies by supervisory section and strengthen the supervision and management.