Analysis On The Expected Financial Impact Of The Implementation Of The New Leasing Standard On China’s Shipping Industry

On December 7,2018,the Ministry of Finance of China issued the "Accounting Standard for Enterprises No.21-Leases(Revised)",which stipulates that the new standard will be implemented for enterprises listed in the territory as of January 1,2021.There are currently two main types of leases: operating leases and finance leases in China.In the new standard,a distinction between these two types of leases will no longer be made from the perspective of the lessee,and they will be uniformly presented in the balance sheet under the accounting item of right-of-use assets.Recently,China’s shipping industry has been developing rapidly,and leasing has become one of the important ways to achieve financing for China’s enterprises to expand their business scale.Due to the large amount of off-balance sheet operating leasing business in the shipping industry,the new standard implementation of leasing business are recognized as right-of-use assets included in the financial statements,which will affect the relevant financial statements and financial performance ability of enterprises.For this reason,this paper selects China Merchants Energy Shipping Co.,Ltd.,a leading enterprise in the marine transportation industry,as the research object,and conducts an in-depth study on the financial impact that will be brought by the implementation of the new leasing standards.This paper firstly introduces the characteristics of the shipping industry and the leasing model,followed by finding the differences between the old and new leasing standards by comparing the main contents and the differences in the accounting treatment of lessees.Then,China Merchants Energy Shipping Company is taken as the research object,and the financial data disclosed by the enterprise in 2019 is used as the starting point for the specific analysis.First,the basic overview of China Merchants Energy Shipping Company is introduced.Second,the specific accounting treatment and subsequent measurement of the operating leasing business of China Merchants Energy Shipping Company are carried out to pave the way for the subsequent analysis of its specific impact.Third,based on the above accounting treatment,the financial statements and relevant indicators of financial performance capability are adjusted in accordance with the requirements of the new leasing accounting standards,and the specific numerical changes brought about by the implementation of the new leasing standards are calculated and the possible impact on the business activities of the enterprise is analyzed.The expected impact is mainly reflected in the financial statement data: the total assets and liabilities of the enterprise increase,the total profit decreases,and the total cash flow of the enterprise remains unchanged;the gearing ratio and the equity ratio all increase to different degrees,while the total asset turnover ratio,the net profit margin of sales and the return on net assets all decrease.This indicates that the implementation of the new standard will reduce the solvency,operating capacity and profitability of enterprises,which directly leads to the weakening of enterprises’ ability to withstand risks.Finally,a few suggestions are made according to the impact of the standard on enterprises,hoping that China’s shipping enterprises can successfully eliminate the negative impact brought by the new leasing standard and contribute to the steady development of China’s shipping industry.