Impact Of New Leases Accounting Standard On Telecommunication Enterprises

In January 2016,IASB issued the IFRS16,and the Enterprise Accounting Standards No.21(CAS21)was also published by China's Ministry of Finance in December 2018,which is called the "New Leases Accounting Standard ".The biggest change of the New Leases Accounting Standard is to cancel the operating leases except special circumstances,and combine it with financial leases,which is recorded in the balance sheet.For the telecom industry,most companies choose communication base stations,computer rooms and the iron towers as operating lease assets,because it is not in the balance sheet.With the development of China 5G network market,the demand of iron towers will be needed steadily.And rental cost,such as iron tower assets,will also enhance greatly.The change of Leases Accounting Standard will have a great impact on telecommunication enterprises.It will also bring great challenges to the lease decision-making mode and financial management mode of telecommunication enterprises' assets.The research question of this paper is: take China Telecom as an example,discuss the influence of the revision of New Leases Accounting Standard on the financial situation,risk management,financial decisions of telecommunication enterprises and whether the revision of the New Leases Accounting Standard is reasonable;come up with corresponding suggestions for the financing mode,economic behavior decisions of telecommunication enterprises and how should China perfect the New Leases Accounting Standard.Research ideas and research methods of this paper is: take the theory of modern property theory,the balance sheet view,right-of-use assets and the economic consequences of accounting standards as the basic point,use case analysis and comparative analysis,obtain the corresponding conclusions and suggestions through financial data comparison and simulation analysis,based on the financial statement of China Telecom in 2018 and 2019.The research findings of this paper include the following six points:(1)The implementation of the New Leases Accounting Standard has a great impact on the financial status of China Telecom: the operating capacity and debt paying ability decline,but the profitability increases.(2)The implementation of the New Leases Accounting Standard increases the financial risks,interest rate risks and exchange rate risks of China Telecom.(3)The implementation of the New Leases Accounting Standard has improved the accounting information quality of China Telecom.(4)The implementation of the New Leases Accounting Standard recognizes the deferred income tax assets in the early period of the lease.(5)China Telecom actively controls the debt scale and financial cost,and selects the appropriate financial transition plan to cope with the change of the New Leases Accounting Standard.(6)The revision of the New Leases Accounting Standard is reasonable.The research significance of this paper lies in:(1)Taking China Telecom as an example,this paper deeply analyzes the comprehensive impact of the New Leases Accounting Standard on telecommunication enterprises,which makes up for the deficiency of the previous impact analysis on telecommunication enterprises.(2)China Telecom has implemented New Leases Accounting Standard since January 1,2019.Under the premise that the content of accounting standards for leases has changed a lot,this paper discusses the influence of the revision of New Leases Accounting Standard,which has a strong timeliness.(3)This paper discusses whether the revision of New Leases Accounting Standard is reasonable,which will help to improve the standards and improve the overall development quality of China's leasing industry.