A Study On Accounting Standards Of Long-Term Assets Devaluation From Multiple Perspectives

Before 2007,China's accounting standards stipulated that asset impairment provisions could be reversed after satisfying certain conditions.On February 15,2006,the Ministry of Finance promulgated the Accounting Standards for Business Enterprises No.8-Asset Impairment,and the first step is to implement in listed companies since January 1,2007.Article 17 of the standard stipulates that once the long-term asset impairment loss is confirmed,it cannot be reversed in the subsequent accounting period(New asset impairment guidelines exclude items subject to other relevant accounting standards).The long-term asset impairment losses referred to herein mainly include impairment losses on assets such as fixed assets,construction in progress,intangible assets,goodwill and long-term equity investments.The nature of long-term asset impairment provision and whether it is forbidden to reverse in the later period has been widely debated by accounting practitioners,policy makers and the industry.At present,the research on asset impairment and long-term asset impairment accounting standards mainly focuses on theoretical research.Some empirical studies mainly rely on large sample data analysis.Due to the macro nature of large sample empirical research,there is a lack of in-depth analysis of the deep-seated problems that arise from the need to reverse the long-term asset impairment.Therefore,this paper adopts the case study method,hopes that through in-depth and comprehensive analysis of the case,we can find relevant problems and provide some reference for the improvement of China's accounting standards and capital markets.The research in this paper will start from the perspective of earnings management.The asset impairment standard implemented after 2007 has played a very good role in limiting earnings management in the accounting treatment of long-term asset impairment,but it also brings some problems,such as there is a general tendency for companies to carefully accrue long-term asset impairments,as well as "more accruals" and "less accruals" that occur under profit pressures.Secondly,from the perspective of value relevance,this paper tries to analyze the shortcomings in the guidelines and the new problems.After the new standard prohibits the reversal of long-term asset impairment,the assets will still fluctuate with changes in the internal and external environment.When the value of the asset rises,the value correlation of accounting information will decline.Finally,in view of the problems in the current long-term asset impairment accounting standards,this paper will propose improvement measures from various aspects.The research in this paper has certain theoretical and practical value.On the one hand,it hopes to provide relevant basis for theoretical researchers to study the earnings management and long-term asset impairment of listed companies.On the other hand,it can also provide some reference value for investors,auditors and regulators to study long-term asset impairment losses.The research results of this paper show that,the prohibition of long-term asset impairment preparation to be reversed in the later period does not completely shut down the path of long-term asset impairment for earnings management,especially for companies that are in overcapacity industries and where profits are falling or even financial loss.These companies reduce or even do not accrue long-term asset impairment losses in non-loss years,and increase the amount of long-term asset impairment losses in the loss year.From the perspective of value relevance,in fact,the possibility of a late recovery in the value of the asset is ignored,as a result,the value of the asset is less likely to be irrelevant.