The Accounting Research On The Problems Of Enterprise Asset Retirement Obligations

Asset retirement obligations refers to the obligations of decommission, removing and environmental restoration that firms should undertake according to the laws and regulations or the contract when the tangible long-lived assets are in retirement stage in future because the firms acquired, constructed, explored and used these assets. There is a big uncertainty for the performance of time and method of asset retirement obligations, so relevant accounting regulations and the difficulty of execution are higher than other non-financial liability. As our country pay more attention to the protection on the environment and the release of the relevant law, some listed companies will have to be faced with more and more strict requirements in asset retirement obligations. Also, there are not systematic accounting standards on the asset retirement obligations. Considering the aspects above, under the background of overall convergence of Chinese accounting standards with International accounting standards, it is very necessary for us to make a deep and systematic research on the problems of asset retirement obligations.The research on the problems of asset retirement obligations is a little late in China. There are a lot of drawbacks which need to be further improved. The paper studies and analyzes the recognition, measurement and related problems on the asset retirement obligations through the theory of different accounting standards boards on the asset retirement obligations. This paper hopes to find out the drawbacks which need to be improved through the theoretical research and case study method so as to provide more help for the enterprises on the asset retirement obligations, which further promotes the development of accounting standards on the asset retirement obligations.There are total five parts in the paper:The first part, which is called introduction, mainly introduced the research background and theoretical significance and practical value in this paper, make reviews on the domestic and foreign research present situation from the aspects of different accounting standard boards and the whole situation of the implementation of asset retirement obligations. At the same time, this part have made the definition of relevant concepts and research methods, described the structure arrangement and the possible innovations of this article.The second part focuses on the basic theory of asset retirement obligations. This part mainly expounds from the following several aspects:Firstly, the paper introduces the basic concept of asset retirement obligations. Then, we talk about the laws related to asset retirement obligations. Finally we analyze difficulties on asset retirement obligations accounting treatment and its influences.The third part introduces the recognition, measurement and disclosure of asset retirement obligations. Firstly we introduce the theory of asset retirement obligations recognition. Through the experience of FASB in asset retirement obligations, we advised that Chinese enterprises can recognize the asset retirement obligations if liabilities can be reasonably estimated. Then, we study the initial measurement, subsequent measurement and amendment of asset retirement obligations, this section covers application of the fair value measurement in the initial measurement and costs capitalization or amortization expenses of asset retirement obligations. Then, the paper discusses disclosure of asset retirement obligations. Also, the paper points out differences among different accounting standards on asset retirement obligations through the analysis on FAS143, IASB39and CAS13. Finally, this article provides a case of asset retirement obligations and analyzes the recognition and measurement so that readers have an overall understanding on the accounting process of asset retirement obligations.The fourth part carries on the statistical analysis about the present situation of the accounting process of asset retirement obligations. First, we explain how to choose the sample:through consulting the annual reports of listed companies, there are139listed companies to recognize the asset retirement obligations involved in mining industry, manufacturing and electric power industry. Second, we make a general statistical analysis for the139listed companies mainly from three aspects: quantity of asset retirement obligations, retirement expenses and proportion of listed companies, the analysis of the nature of enterprise. We discussed the problems existed in Chinese listed companies in terms of asset retirement obligations, mainly from the proportion of recognizing asset retirement obligations, rationality of these data, financial disclosure and so on. Finally, studying the reasons for the problems above, we find out that there are not sound accounting standards on the asset retirement obligations related legal mechanism which are not conducive to the practice of accounting for asset retirement obligations.The fifth part is advice to improve the asset retirement obligations. In view of the existed problems, suggestions are given mainly from three angles:further improving accounting standards about asset retirement obligations, strengthening the construction of laws and regulations related to asset retirement obligations and the awareness of enterprises performance on asset retirement obligations.