Research On The Impact Of New International Financial Reporting Standard Of Lease On China's Retail Industry From The Perspective Of Lessee

Leasing industry is flourishing worldwide.According to the Global Leasing Report(White Clarke Group,2016),the amount of financial leasing has been up to 944.3 billion dollars among the top 50 countries around the world,which rises 6.83 percent over the last year.In 2014,China has become the world's second largest leasing market where leasing business amounted to 114.9 billion dollars,increasing 31.6 percent compared to that of previous year.On January 13,2016,International Accounting Standard Board(IASB)released International Financial Reporting Standard-Leasing(IFRS 16),which will be effective formally on January 1,2019.As early as April 2,2010,The Roadmap of Continuous Convergence between Chinese Accounting Standards for Business Enterprises and International Financial Reporting Standards was issued by Ministry of Finance of China,which showed that China's introduction of International Financial Reporting Standard-Leasing(IFRS 16)is an irresistible trend.IFRS 16 further perfects the definition of the asset,emphasizes the characteristic of right of use of assets,therefore the operating lease should be capitalized and demonstrated on the Balance Sheet,which can more veritably reflect the financial situation,operating results and cash flow of the enterprise.It is beneficial for Ministry of Finance that strengthen the application research of adoption of IFRS 16 in China to publish accounting standards which are more suitable for China's national conditions and thus enhance the function of Chinese leasing accounting standard to serve the economy.What the effect of the introduction of IFRS 16 will have on the financial situation,operating performance,cash flows as well as various financial indicators of enterprise in retail industry in China? The study of this question will be helpful for Chinese government(Ministry of Finance)to develop a high-quality leasing accounting standard that best suits the actual conditions of China since it is necessary for the retail business to improve the application of the introduction of IFRS 16 in China.The paper using comparative analysis and case study method researches the influence of IFRS16 if it would be brought about to China in early 2015 on the accounting information disclosure of Chinese retail enterprises.Firstly,the industry analysis was made and concluded that if Chinese retail enterprises adopt IFRS16,thus operating lease is capitalizedand reflected on the Balance Sheet.From the perspective of the whole retail industry,in the early stage,debt-to-asset ratio will rise,profits will decline,financial indicators will be worsened.At the same time,the state tax revenues will reduce in the early stage of leasing,but will reverse back in the late,Nevertheless,from the entire leasing period,debt-to-asset ratio will be affected significantly but profits will be not subject to the capitalizing the operating lease.Then taking YONGHUI SUPERSTORES as the case research object,this paper analyses the 2015 Annual Report of YONGHUI SUPERSTORES in detail and the result displays that debt-to-asset ratio,the percentage of total costs accounted for the revenue,current ratio,total assets turnover rate as well as the rate of return on owner's equity are significantly adverse changes,and the financial situation and operating results of enterprise are seriously deteriorated in the current period of introduction of IFRS 16.However,it cannot deny that adoption of IFRS 16 can truly reflect the financial situation and operating results of enterprises,improve the quality of accounting information and also favor the current supply-side structural reform to remove the leverage due to the fact that only identifying the current implicit liabilities in retail enterprises first,deleveraging can be actually realized.Finally,the paper gives the suggestion of how to deal with the introduction of the IFRS16: developing new leasing products,shortening the operating lease period,substituting purchasing directly for leasing,formulating leasing standard suitable for China's conditions,and promoting the training for accountants to coping with the new leasing standard.