Research On The Impact Of New International Financial Reporting Standard Of Lease On China's Hotel Industry

Lease is a way that is commonly used to obtain the right of using assets.The current leasing accounting standards in China is numbered 21,which is basically identical to the one applied internationally.Both the two criteria own the same contents,also have no difference in the evaluation.Many believe that the current leasing standards is the one to blame for the distortion of accounting information.To solve the problem and make a further standardize leasing accounting rules,International Accounting Standards Board(IASB)released the new version of leasing accounting standards,which is called IFRS 16,to make a replacement of the current one.And then,Chinese ministry of finance posted a consultation on this subject,to keep up with the trend of international convergence.However,effects of the new leasing standards on accounting practice should be studied still.To make a detailed study on the expected consequences,JINJIANG SHARES is selected as a representation of the hotel industry,to make a case study with the following steps.Firstly,IFRS 16 is applied to make an adjustment of these all financial figures that is relevant to lease.Then,comparing figures mentioned above with that that produced by using of CAS 21,the purpose of which is to find out the changes of financial figures and key financial indicators when standards changes.Finally,industrial representation of this company is analyzed,broadening the scope of application of conclusions to the whole hotel industry in China.And then,coming up with some relevant suggestions.By analyzing,it is found that leased assets occupying an important position in all of the actual business assets used by hotel industry,changes in the rules is expected to lead to significant impacts to the industry.Specifically,the application of the new guidelines will lead to an increasing in assets,as well as in liabilities.During the whole period of leasing,gross profit is not affected,but the amount of profit distributed to a certain year is changed.Similarly,the total cash flow is not affected during the whole period,but the amount of cash flows of each year changes.Accordingly,key financial indicators will also changes.In general,the company's debt paying ability,operating ability,profitability are all worsened.However,the new version of leasing standard owns its advantages.It helps to realize a comprehensively reflection on the company's financial situation,to improve the quality of the accounting information.In addition,the new guidelines put forward a higher requests on the disclosure of leasing business,which is expected to make a great improvement on the company's financial information transparency.From this perspective,external report users will undoubtedly benefit from this change.Facing with all these changes and consequences,specific countermeasures are also put forward at the end of this paper,such as making rearrangements on the current leasing agreements,increasing participation in revising the leasing accounting standards,taking diversified leasing arrangements,and making adequate preparation to get rid of the changes.