Research On Earnings Management Based On Deferred Income Tax

In recent years,LeTV.com,an Internet company known as "the demon stock",has attracted much attention from the industry.Since its listing in 2010 to 2017,the investment plan has reached 150 billion yuan.What is the support of such a huge investment plan? How is financing over 70 billion yuan realized quickly? In fact,it uses the loopholes in accounting standards,abuses discretion,confirms large deferred income tax assets through the deductible losses and equity arrangements of subsidiaries,and then adjusts profits,using deferred income tax management to shape The illusion that the parent company has good profits has achieved its financing.In the existing research,there are many empirical studies on the management of deferred income tax earnings,and there are few case studies,and the limited case studies mainly focus on the impact of different earnings management methods on the statements.The breadth and depth of research is very limited.This paper uses the case study method to conduct an in-depth study on LeTV’s abuse of discretion to conduct earnings management,and explores the purpose,method and financial statements of the company based on its business model,profitability,financing status and investment status.The degree of influence generated,it is found that enterprises not only have the motive of using the deferred income tax to manage earnings according to their own surplus claims,but also the means are worthy of analysis.Through the analysis of LeTV’s deferred income tax management,it is concluded that LeTV has used the two methods of deferred income tax assets and equity arrangements that can be deducted by subsidiaries to manage earnings.First,the deferred income tax assets mainly come from the deductible losses of the subsidiaries.In addition,the subsidiary company’s tax rate is higher than that of the parent company.Therefore,when the deferred income tax assets are accounted for,the net profit can be inflated to a greater extent;Second,LeTV’s use of subsidiaries’ deductible losses to recognize deferred income tax assets is precisely the use of loopholes in the guidelines,the idea of abusing discretion,and an unreasonable estimate of future taxable income.Thirdly,LeTV will adopt an equity arrangement to transfer the loss-making business to a non-wholly-owned subsidiary,use the shareholding ratio to pass the loss on the minority shareholder,and use the voting rights arrangement to measure the long-term using the cost method.The equity investment makes the operating results of the parent company not affected by the subsidiaries,and achieves the goal of increasing the net profit of the parent company in the financial statements.Through the above literature research,theoretical research and case studies,it reflects that there are problems in the formulation of income tax accounting standards,enterprises in the implementation of standards and the implementation of accounting standards.The main problems are three: First,accounting standards deductible deductible losses The confirmation of income tax assets is not clear,and the forecast of future taxable income is not standardized and guided,thus giving enterprises room for earnings management.Second,enterprises lack professional ethics when implementing the guidelines.For the sake of their own surplus appeals,abuse of discretion and the act of playing the standard edge-to-ball,it also illustrates the low penalty cost of corporate fraud.Third,the supervision of accounting standards has a problem of poor supervision,and there is no strengthening of discretion.The supervision of the use of rights has failed to protect the legitimate rights and interests of investors.In summary,according to the case study,some inspirations were drawn,and suggestions for the case discovery provided suggestions for improvement from three levels.In addition,warning investors should not only focus on the net profit,which will be “adjusted”,and need to improve their judgment to protect their legitimate rights and interests.This paper reveals the behavior of LeTV’s deferred income tax management,which provides a certain idea for corporate governance,enriches the case database of deferred income tax earnings management,and also provides suggestions for improving the formulation,implementation and supervision of income tax accounting standards.