Study On The Impact Of New Income Standards On Chinese Real Estate Industry

On May 28,2014,the International Accounting Standards Board and the US Financial Accounting Standards Committee initiated a joint project,the “International Financial Reporting Standards No.15-Revenue from Customer Contracts"(IFRS15)and the “Accounting Standard Update No.2014-09-Revenue from Customer Contracts”(ASC 606),to improve the existing problems of original revenue criteria,such as inconsistency in revenue recognition requirements.In order to keep up with the pace of international standards and maintain the substantive convergence with the international financial reporting standards,China revised and issued the"Accounting Standards for Business Enterprises No.14-Revenue" on July 5,2017.As Country Garden has taken the lead in applying HKFRS15 in advance as early as August22,2017 and HKFRS15 is basically the same as IFRS15&CAS14(2017),Therefore,this paper takes Country Garden as an example to study the impact of the revised income standard on the four dimensions of real estate enterprise’s revenue recognition,financing status,manager and investor.First of all,this paper introduces the changes of the previous and new standards,and the inevitable reasons behind the change based on the development history of domestic and foreign income standards,and then introduces the income standard application of the real estate industry and Country Garden.Secondly,this paper compares the changes of the four dimensions for Country Garden before and after the new income standard application.On the one hand,it analyzes whether the impact of new income standard application improves the mismatch between income and expenses,cash flow under the previous standards and satisfies the managers and investors expectation.On the other hand,when analyzing the impact of the new standard application from four dimensions,it is found that the new standard application process exists the problem of unclear revenue recognition,unconsummated improvement of cash flow,increased subjective judgment space,and reduced information comparability.In response to the four questions,this article proposes corresponding solutions for enterprises,regulators,investors and other stakeholders.