The Lease Accounting Standards Change And Deleveraging

Leasing has always been an important means of financing for enterprises,especially for the retail industry,airline industry and other service industries,leasing can effectively expand the scale of the company’s assets and make full use of the company’s resources.As of 2019,Chinese airline companies have more than 3,500 airplanes,more than half of which were introduced by leasing,and the market scale is huge.In 2006,the Ministry of Finance announced the "Accounting Standards for Business Enterprises No.21-Leasing"(hereinafter referred to as the "old leasing standards")to make a large-scale revision to the leasing business.Subsequently,in 2018,the Ministry of Finance officially announced the "Accounting Standards for Business Enterprises No.21-Leasing(Amendment)"(hereinafter referred to as the "new leasing standards")stipulating that different types of enterprises will gradually adopt the International Accounting Standards Committee announced in 2016 from January 1,2019.At the same time,in order to ensure the healthy and sustainable development of the national economy,China has been actively promoting China’s deleveraging process since 2015.In 2018,the asset liability ratio indexes of different state-owned enterprises were regulated differently.The implementation of the new leasing standards will not only greatly limit the role of covering up the real asset liability ratio by operating leasing,expose the real financial situation of enterprises,increase the burden of deleveraging process of state-owned aviation enterprises in China,but also weaken the effect that enterprises have used the means of operating leasing to deleverage.Thus,the paper took China Eastern Airlines as the object.Firstly,the paper analyzed the differences between the old and new leasing standards and conducted data assumptions to study the impact of the changes in the standards on corporate statements,which found that the new leasing standards bring operating lease assets into the balance sheet.Not only does it result in a significant increase in financial expenses,decline the debt solvency index,but also increase the total assets and total liabilities and the asset-liability ratio will rise.Therefore if the enterprises do not actively take measures,the changes in the new leasing standards will lead to assetliability ratio higher than the National key regulatory line standard.Which will increased the pressure on deleveraging.Secondly,through the company announcements,it was found that Eastern Airlines actively adopted the sale and leaseback of old aircraft,the transfer of aircraft purchase rights and operating leases,and the use of cross-shareholding to introduce Juneyao Airlines for deleveraging.After finishing the deleveraging measures,it was found that the new leasing standards will weaken the deleveraging effect of China Eastern Airlines ’sale and leaseback of old aircraft and the transfer of purchase rights and operating leases,but the cross-shareholding investment strategy can not only effectively reduce its Assetliability ratio,but also controlled asset-liability ratio within the National key regulatory line standard.Finally,the financial data in China Eastern Airlines Financial Statements verifies the speculation.In addition,according to the actual operation of China Eastern Airlines,this paper provides suggestions for the future operation of China Eastern Airlines.