Impairment Accounting Of The Assets Of Listed Companies

In Chinese stock market, affected by various factors, the asset value of most listed companies have been overvalued for a long time. The 'bubble' of the assets on the financial report of listed companies has severe impacts on many aspects, such as disturbing decision-making for the information collectors, depressing investors' confidence to the companies and harming the economy development. In order to change the situation, around 1999, Treasury Department released the regulation supplement and accounting rule for allocating impairment of assets reserve on short-term investment, inventory, receivables, long-term investment, fixed asset and intangible asset to provide some regulations on the impairment of assets accounting. In the end of 2000, the new released 'Enterprise Accounting Criteria' defined 'asset' in a new scientific way and emphasized the execution of assets depreciation accounting policy to develop assets accounting gradually. Gradually. However, it was only around 10 years for the development of assets depreciation accounting in China, consequently, there was still a long way to go both in practice and in theory. This paper discusses the confirmation, calculation and disclosure of assets depreciation accounting from the basic theory of impairment of assets accounting. Then the impacts on the execution of the assets depreciation accounting policy by the motivation of surplus management have been proved prominent by the analysis of the execution of assets depreciation accounting policy in the listed companies. Finally, according to deficiency of the theory of impairment of assets accounting both in theory and practice in China, the suggestions on amendment are put forward. The whole paper is composed of four parts:Starting from the concept of asset, the first part analyzes the meaning of assets depreciation and assets depreciation accounting, describes the development and theory foundation of assets depreciation accounting and discusses the significance of executing the assets depreciation accounting on Chinese listed companies.The second part discusses the core problem of impairment of assets accounting including its confirmation, calculation and disclosure. Compared with International Accounting rule, Chinese Enterprise Accounting Rule has a gap on time of confirmation, standard of confirmation, rule of confirmation, mode of confirmation, acquirability of confirmation, standard of calculation and mode of disclosure on impairment of assets accounting. The third part is the key part of this paper to conclude that the execution of 8 items of impairment of assets reserves by the listed companies is incomplete; the allocation of impairment of assets reserves may improve quality of asset; the execution of impairment of assets accounting policy has impact on the profit of listed companies; different economic motivations have influence on the execution of impairment of assets accounting, the listed companies which is converting their deficit or re-offering stock will choose low asset deprecation rate, while the others in deficit or with motivations for flat profit may select higher rate.The fourth part puts forward some suggestions on the development of assets depreciation accounting system in China based on the immature situation of assets depreciation accounting.