Research On Questions Of Assets Impairment And Earnings Management

In recent years, with the rapid development of economy and trade, the enterprises are facing increasing uncertainty and risk, so the quality of assets have been questioned, impaired assets have been concerned commonly for the national accounting profession, at the same time, the understanding and research for impairment of assets are in depth gradually in china. Based on sound principles, our policy of asset impairment was introduced in 1992, the Ministry of Finance repeatedly revised the relevant provisions of impairment of assets following the first attempt to the impairment of inventory and accounts receivable. In 1998, the Ministry of Finance issued the"Accounting System Co. Ltd"and added to the provisions of the short-term investments and long-term investment, to a certain extent, these reduce the arbitrariness in the provision for impairment of assets;"the concept of impairment"was stated by the Ministry of Finance clearly in 2000, in order to reflect the value of assets truly and improve the quality of accounting information, the provision of four impairment would increased to eight. As the accounting about asset impairment in China started latterly, either theory or practice, there are still some problems, the choice to the accounting policy of asset impairment become the tools for earnings management of listed companies. To curb the behavior of earnings management of listed companies by the way of impairment of assets, the "Accounting Standards for Enterprises No. 8 - Impairment of Assets" that formulated by Ministry of Finance in 2006, make major adjustments in many aspects, not only expanded the range of provision for impairment of assets, more clearly stated "the loss of the long-term asset impairment recognized can not be reversed in subsequent periods". However,whether Accounting Standards makers mind realized according the practice of asset impairment, how were the economic consequences of impairment of assets under the new guidelines?This paper selects the basic theory of impairment of assets and Earnings Management as a starting point for research, reviewed the development process of impairment of assets, analysis the motives and means of earnings management of listed companies by assets impairment, comparison the differences between new guidelines and old guidelines in the introduction of the concept, the scope of impairment and Accounting treatment, and further explore the impact on earnings management. The implementation of new guidelines play a role in the containment for earnings management of listed companies. As the gap between theory and practice,there is space for earnings management in the judgement of impairment, the determine of the recoverable amount,the identified of asst group.To reveals the effects of asset impairment policy implementation and proved that the new asset impairment policy reducing the space of the earnings management in some extent, we make descriptive statistics for the report data of Shanghai A-share listed company from 2005 to 2009 and an empirical analysis of cross section data for two years . At the same time, the associated was increased between provision for impairment of assets and the economic factors, the stability to impairment of assets had improved with the gradual implementation of the policy. Finally, in view of the above findings and the problems during the new accounting guidelines, some policy recommendations were advised.