Long-term Assets' Depreciation, Amortization And Impairment

Long-term assets comprise long-term investments, fixed assets, intangible assets, deferred assets and other long-term assets. This paper only discusses the aspects of fixed assets and intangible assets, which are treated as non-realistic original values of assets. As to them, there exists two offset items. One is amortization for depreciation of fixed assets and intangible assets, which, as long as in the phase those assets are available to work, could be classified as current items, due to its annual frequency. Another one is provision for impairment losses of the long-term assets mentioned above, before which requires the conduction of impairment loss tests on the date of balance sheet. Thus this item falls into the category of non-current item, i.e. incidental matters.With regard to the depreciation of fixed assets, accelerated depreciation methods, such as double declining balance depreciation method and sum of the year's digit method, are available, which are also available to be utilized in amortization of intangible assets. Consequently, a group of people argue that provision for impairment losses should not be considered since uncertain elements have been taken into account in the depreciation and amortization of assets, which means to cope with the occurrence of impairment loss. Either depreciation and amortization or impairment of long-term assets is to be in line with sane principle in accounting.In order to illustrate and understand the dialectic relation between each other, this paper, with the purpose of investigation, with the understanding and explanation of academic production, along with the comparison of relevant international guide lines, have gained some staggered production. In this paper, with deep analysis of long-term assets conformation and measurement, related theory, economic and influencing factors of depreciation of fixed assets, amortization of intangible assets and impairment of assets, as well as the dialectic research into internal logical interaction among them and the introduction of evidence analysis, depreciation, amortization and impairment of long-term assets are explored with respect of both theory and evidence. Analyses on practical evidences are also delivered. On this basis, this paper gives proposals on the consummation of our accounting guide lines and the supervision of relevant information disclosure.