Impairment Of Goodwill And Earnings Management

Assets impairment policy have significant impact on listed enterprise firms in which reflect the general value of company assets. Providing the essential information for users decision and revealing the potential risky of all aspects. In recent years the notorious scandals arose the public attention among the capital market that have a high similarity. Consequently Guangda securities company was fined and uncertain the subsidy companies cash flow while havent conduct Goodwill impairment accounting policy immediately. Compared with zhongxin securities firm,its havent drew a ground conclusion yet. According to the expectation the 2nd year fine would lay a burden on the subsidy companies, obscure the cash flow amount and implement Goodwill impairment accounting policy. Why those two enterprise have such a high degree similarity-the choice toward the Goodwill impairment issue. After analysising the differences between both company assets impairment policy, we known that economic environmental factors would post the impact on assets impairment and accounting policy. However under the same circumstance the companies performance did play a indispensable role in earnings management motive. Undergone the same condition and face the challenges administration inspection in particular. The enterprise performance based earnings management motives felt various pressures. Whenever rising the expectation of earnings management, they are reluctant to implement assets impairment and accounting policy without violate accounting law and administrative regulations. Whenever declining the expectation of earnings management, they will conduct assets impairment and accounting policy as much as they could within the scope of capital market inspection and legal system. Therefore we could learn from Doc. Peng Changgui,that strategic optional speaking model and establish assets impairment policy based expectation model,of that well explain how earnings management motive of a company could influence on assets impairment accounting policy.