| Since ancient times,agriculture has been the foundation and important link of social and economic development in China.The development level of agriculture largely determines the development level of the whole country and society.Since the 13th Five-Year Plan,the issue of agricultural development has been closely concerned by the Chinese government.In 2017,the development of agricultural economy has maintained a steady and progressive good trend.In 2018,the Ministry of Agriculture has designated it as the "Year of Agricultural Quality".Since the beginning of 2018,a number of agricultural reform policies have revealed the signal of priority development of agriculture.As the leading enterprise in the agricultural industry,the healthy and sustainable development of agricultural listed companies plays an irreplaceable important role in the development of agricultural economy and even the whole national economy.Asset management of agricultural listed companies is very important for the healthy development of agricultural enterprises.The operating characteristics of agricultural enterprises determine that the assets of agricultural listed companies are mainly composed of biological assets.The growth of biological assets can not be separated from the specific natural environment they need,and because the quantity and quality of biological assets will change during their growth and reproduction process,the value of the assets themselves will also change,so the future income of biological assets is usually uncertain.In addition to the complex and changeable natural environment,the agricultural enterprises’bio-asset inventory personnel are limited to their own lack of professional ability and the lack of inventory technology and equipment,so there are often some difficulties in the inventory of bio-asset.Inventory personnel usually use spot checks to determine the quantity and value of biological assets,which makes it difficult for agricultural listed companies to guarantee the authenticity and objectivity in estimating the value of biological assets.Therefore,in the capital market,there have been many cases of financial fraud by agricultural listed companies using the characteristics of inventory assets which are difficult to count and value is difficult to estimate.Because of the particularity of its asset form,the large proportion of its total assets and the selectivity of inventory measurement accounting policy,the impairment of inventory assets has become the preferred target of financial fraud in agricultural listed companies.Therefore,it is of great practical significance to deeply analyze the motivation behind the provision for inventory depreciation of agricultural listed companies and the impact of impairment of inventory assets.After explaining the research background and significance of reserve for stock depreciation of agricultural listed companies,combing and summarizing the existing research literature and theoretical basis,this paper takes Zhangzidao Company as the case study object,and elaborates in detail the process of two huge inventory depreciation incidents in 2014 and 2018 in accordance with the time sequence.Combining with the characteristics of biological assets and asset depreciation of agricultural listed companies,this paper takes Zhangzidao Company as the case study object.Value theory and earnings management theory,in-depth study of two large inventory impairment incidents in Zhangzidao Company intrinsic motivation,and analysis of the two impairment incidents in the short term in the capital market and the impact on the financial report of Zhangzidao Company,to investigate the motive and economic consequences of Zhangzidao Company to prepare for large inventory depreciation.Case studies show that:(1)Economic factors and earnings management motivation are the essential motivation for the preparation of large inventory depreciation in Zhangzidao Company.Asset impairment policy has the characteristics of selectivity,and many factors,such as the characteristics of difficult inventory of biological assets of agricultural enterprises and the flexibility of auditing supervision by accountants,are the motivation and conditions to induce the preparation for inventory depreciation in Zhangzidao Company.In this case,Zhangzidao Company first calculated a huge amount of stock depreciation preparation due to economic factors,and in the different accounting periods after the impairment event,it manipulated the time and amount of stock depreciation preparation to be reversed(or resale).In 2014,Zhangzidao Company declared that the aquaculture area had suffered from "cold water mass".In that year,it raised 34814.59 ten thousand yuan of stock price reduction preparation,turned back to 330.90 ten thousand yuan of stock price reduction preparation,and reselled 29826.57 ten thousand yuan of stock price reduction preparation.Usually,the reserve of reselling stock price is needed only when the inventory is sold.After consulting the financial report,the company’s operating income in 2014 is 266221.15 ten thousand yuan,the operating cost in the same period is 229221.86 ten thousand yuan,and the reserve of reselling stock price in that year is 29826.57 ten thousand yuan.The operating cost of Zhangzidao Company in 2014 is as high as 259048.43 ten thousand yuan,which obviously does not match the increase of operating income in that year.Similar phenomena occurred again in 2018.At the end of 2017,the company set aside 6072.16 ten thousand yuan for stock price reduction,and cancelled 57758.13 ten thousand yuan of expendable biological assets that year.The huge stock price reduction preparation and the day-to-day write-off of consumptive biological assets made the company incur a huge loss of 72576.75 ten thousand yuan that year.The particularity of biological assets and the selectivity of asset impairment policy make agricultural listed companies have the opportunity to manipulate the impairment of inventory assets by means of earnings management.(2)Accounting information of impairment of assets transmits a signal to investors that the quality of assets of enterprises is declining,which reduces investors’expectations of the future profitability of enterprises,thus causing the decline of the stock value of enterprises.The two large inventory impairment actions of Zhangzidao Company in 2014 and 2018 caused sharp fluctuations in the company’s stock price,and its market performance declined significantly in a short period of time.Inventory impairment in 2014 led to a decline in the company’s stock price,but the decline was not significant.Most investors are still waiting.Because of the statement after the SFC that there is no problem of financial fraud in Zhangzidao Company,the company’s stock price once rebounded,and even improved short-term market performance.In the short run,the market returns fell by nearly half.It is evident that investors have doubts about the re-occurrence of inventory impairment in Zhangzidao Company and the market reaction is negative.Up to now,the SFC has not released the results of the investigation on the huge impairment of inventory in Zhangzidao Company in 2018,and the stock price of the company has not been warming up.Two huge inventory impairment incidents have had a significant impact on the accounting profits of Zhangzidao Company.The decline in the size of the company’s assets and the reduction in the area of aquaculture waters have led to a sharp decline in the profitability of Zhangzidao Company.It is very difficult to restore its previous profitability.(3)Compared with the same type of Oriental Ocean Company in the same period,the operating status and profitability of Zhangzidao Company are worrying,and its financial data show obvious traces of human manipulation.Case study shows that the profitability level of Oriental Ocean is stable and rising year by year from 2011 to 2017,and the changing trend of its operating situation is consistent with the changing trend of the fishery industry operating environment in corresponding years.Although the location of Oriental Ocean is close to that of Zhangzidao Company,the environmental factors that caused two huge inventory impairment events in Zhangzidao Company seem to have no impact on Oriental Ocean.On the contrary,because of two huge inventory impairment events,the company’s accounting profit has dropped sharply.After deducting the non-recurring profit and loss,the company’s net profit continued to be negative after the first inventory impairment event in 2014,which shows that the impairment event has a more lasting negative impact on the operation of the case company.By comparing and analyzing the financial data of Dongfang Ocean Company in the same period,it can be found that the operational capacity of Dongfang Ocean Company has increased year by year since 2014,while the operating performance of Zhangzidao Company is not good,and its accounting surplus is obviously manipulated by human.Financial analysis shows that Zhangzidao Company manipulates its profits by taking advantage of stock depreciation reserve and reselling.Accounting standards require that when the net realizable value of expendable biological assets of agricultural enterprises is lower than the historical cost,the assets impairment reserve shall be calculated according to the method of confirmation and measurement of inventory impairment.When the factors causing inventory impairment disappear,the enterprise can turn back the reserve for inventory depreciation within the amount of impairment already calculated.However,the asset impairment criterion does not require enterprises to disclose the relevant basis for the return of inventory depreciation readiness,the particularity of biological assets and the selectivity of asset impairment policy,which leave room for earnings management and affect the quality of accounting information.The results of the case analysis of Zhangzidao Company incident can provide us with the following thoughts or enlightenments:Firstly,at the company level,agricultural listed companies should improve the internal control system of biological assets,especially the disclosure of expendable biological assets information,improve inventory assets management and risk early warning mechanism.Secondly,at the regulatory level,the SFC should strengthen the disclosure of information about inventory impairment projects in agricultural enterprises,strengthen the supervision of biological assets projects,and establish insider reporting system when necessary.Thirdly,at the transaction level,we should establish and improve the inventory procedures of biological assets of agricultural listed companies.At the same time,auditors should consult experts to enhance their audit independence and professionalism,and improve the scientific value estimation of biological assets of agricultural listed companies. |
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