Reasonable provision for asset impairment plays an important role in avoiding risks and improving the quality of accounting information. However, the development of asset impairment accounting in China is still in the "primary stage", and both theoretical research, specific norms and practical operation are not perfect. Many listed companies use impairment reserves to manipulate profits and publish false accounting information, and their reporting information lacks credibility, which makes accounting information users unable to make correct decisions. Based on the above considerations, this paper chooses the research of asset impairment accounting as the topic, aiming at discussing the relevant theoretical issues of asset impairment accounting, evaluating how the newly promulgated asset impairment accounting standards are effectively implemented in practice, and then putting forward suggestions for improvement, with a view to further improving China's asset impairment accounting standards.
China's Ministry of Finance issued Accounting Standards for Business Enterprises No.8-Asset Impairment, which was implemented in listed companies. Starting from the theoretical problems of asset impairment accounting, this paper probes into its related concepts and theoretical basis, analyzes the provisions of the new accounting standards on asset impairment confirmation, measurement and information disclosure, and puts forward some problems that may affect the implementation of the new accounting standards. Finally, some suggestions are put forward to improve asset impairment accounting in China.
First of all, the theory of threads
(A) Research background
In order to meet the needs of China's market economy development and economic globalization, the Ministry of Finance promulgated the Accounting Standards for Enterprises No.8-Asset Impairment (draft for comments) on July 19, 2005. On February 15, 2006, the Ministry of Finance issued the basic standards and 38 specific standards of the Accounting Standards for Business Enterprises (hereinafter referred to as the new standards). As a result, China's accounting standards system for business enterprises was formally formed, and achieved substantial convergence with international financial reporting standards. On June 30th, 2006, the Application Guide of Accounting Standards for Business Enterprises was issued, and on October 26th, 2007, the Interpretation AnnouncementNo. 1 was issued. 1 has been sent. In this way, China's accounting standards system has also achieved convergence with international financial reporting standards in the framework structure.
Accounting Standards for Business Enterprises No.8-Impairment of Assets stipulates that once the impairment of assets is confirmed, it cannot be reversed in future accounting periods. The provision for impairment of assets accrued in previous periods shall not be transferred out before the disposal of assets. Mainly consider the impairment of long-term assets such as fixed assets, intangible assets and long-term equity investment. On the one hand, the possibility of value recovery is relatively small, usually permanent impairment; On the other hand, it is beneficial to restrain listed companies from using the withdrawal and reversal of long-term asset impairment reserves for earnings management.
Empirical tests by many scholars make us believe that listed companies in China are likely to have serious earnings management behaviors (especially the use of asset impairment here), such as Lu Jianqiao (1999), Zhao Chunguang (2007) and Wang Jianxin (2007). After the promulgation and implementation of the new standards, many people think that some companies that use asset impairment reserves to withdraw and turn back for earnings management will have special actions at the end of 2006. This situation was also foreseen by the standard setters. At the end of 2006 and the beginning of 2007, they issued the Notice on Doing a Good Job in the Disclosure of Financial Accounting Information Related to the New Accounting Standards and the Notice on Matters Related to the Audit and Information Disclosure of the Annual Report of Securities Companies in 2006, requiring enterprises not to turn back huge impairment reserves before the end of 2006, nor to arbitrarily change the method of drawing assets impairment reserves, requiring auditors to maintain due professional caution and be wary of enterprises manipulating profits during the transition period of the old and new standards.
(B) the purpose and significance of the study
1, research purpose
Reasonable provision for asset impairment plays an important role in avoiding risks and improving the quality of accounting information. However, the development of asset impairment accounting in China is still in the "primary stage", and both theoretical research, specific norms and practical operation are not perfect. Many listed companies use impairment reserves to manipulate profits and publish false accounting information, and their reporting information lacks credibility, which makes accounting information users unable to make correct decisions. Based on the above considerations, this paper chooses the research of asset impairment accounting as the topic, aiming at discussing the relevant theoretical issues of asset impairment accounting, evaluating how the newly promulgated asset impairment accounting standards are effectively implemented in practice, and then putting forward suggestions for improvement, with a view to further improving China's asset impairment accounting standards.
2. Research significance
At the beginning of 2006, China officially promulgated the Accounting Standards for Business Enterprises No.8-Impairment of Assets, which was officially implemented in listed companies from June 5438+ 10/. According to the new accounting standards for business enterprises, in order to solve the problem that some listed companies manipulate profits by withdrawing huge reserves, from 2007, "inventory depreciation reserve", "fixed assets impairment reserve", "construction in progress impairment reserve" and "intangible assets impairment reserve" cannot be withdrawn midway, and can only be recorded after the relevant assets are disposed of. This is mainly to prevent enterprises from adjusting book profits by withdrawing and offsetting impairment reserves. However, there are many problems in the practical application of asset impairment accounting. Therefore, studying the application of asset impairment accounting is not only of certain significance to further improve China's financial accounting theory, but also of certain significance to guide the application of asset impairment accounting in practical work.
Second, the impairment of assets under the new standards has characteristics.
(A) the meaning of asset impairment
International Accounting Standard 36-Impairment of Assets stipulates that if the book value of an asset exceeds the value recovered through use or sale, the asset is measured as exceeding its recoverable value. If so, it shall be deemed that the asset has been impaired, and the enterprise shall confirm the asset impairment loss. The Financial Accounting Standards Board's Standard AnnouncementNo. 12 1 has also made similar provisions.
The Accounting Standards for Business Enterprises No.8-Asset Impairment issued by the Ministry of Finance in 2006 stipulates that asset impairment is the difference between the book value of an asset and its recoverable amount. In essence, the provisions of China Accounting Standards on asset impairment are consistent with international accounting standards. Theoretically, if assets are defined as expected future economic benefits, it is reasonable to record and reflect the asset impairment when the book value of enterprise assets is higher than the expected future economic benefits of assets.
(B) the meaning of asset impairment accounting
In accounting practice, the impairment of assets is confirmed, measured and disclosed, which is asset impairment accounting. Starting from the goal of financial accounting (reflecting fiduciary responsibility and helping economic decision-making), asset impairment accounting is an accounting process that compares and corrects the recoverable amount of assets with historical cost and book cost. It is the fundamental goal and task of asset impairment accounting to correctly measure the book value of enterprise assets and confirm that assets will realize economic benefits in the future.
Asset impairment accounting does not involve special business such as price changes, but mostly re-estimates the value of enterprise assets under normal operating conditions. It does not deny the historical cost principle, but it goes beyond the traditional historical cost model. That is, when the amount of assets reflected on the balance sheet is not higher than its present value (present value generally refers to current cost, current market price, net realizable value, present value of future gold inflow, etc.). ), listed at historical cost; When the present value is lower than the historical cost, the historical cost is no longer used, but listed directly at the present value. This not only helps external stakeholders to grasp the real financial situation of the enterprise, but also shows that the management authorities have made corresponding adjustments to the changes in the business environment [3].
(3) Accounting measurement of asset impairment
Accounting measurement is the core and basic link of financial accounting, and it is also the core issue of asset impairment accounting. Accounting measurement is divided into initial measurement and subsequent measurement. The initial measurement adopts historical cost, and the subsequent measurement often adopts the measurement attributes such as present value of future cash flow, current market price and current cost. The accounting measurement of asset impairment belongs to the scope of subsequent measurement, that is, the present value of future cash flow, current cost, current market price and other measurement attributes need to be adopted.
There are two main methods to evaluate assets in the world: FASB method and IASB method. The former thinks that the value of assets at the current time mainly depends on the fair value of assets at a specific time, and the recoverable amount in impairment measurement is expressed as the fair value of assets; The latter introduces the concept of recoverable amount, that is, the higher of fair value and use value after deducting sales expenses. Both accounting measurement methods have their own advantages and disadvantages, but in China, IASB's view is basically adopted.
1. The recoverable amount test is to ensure that the book value of an enterprise's assets does not exceed its future economic benefits, that is, the consideration of asset recoverability should be based on the future net cash flow of assets of a specific entity. Generally speaking, market participants' expectation of future economic benefits is less than enterprises' expectation of special plant and equipment, so fair value may not accurately reflect the future economic benefits of assets.
2. If the use of assets is more than the cash flow generated by sales, it means that rational companies may misunderstand that the recoverable amount of assets is based on the market price, so they are unwilling to sell assets.
3.FASB believes that, generally speaking, in the absence of public quotation in the market, present value technology is the best technology to evaluate the fair value of long-term assets or portfolio. In particular, the only available information that can estimate fair value without cost and effort is the expected future cash flow of the target.
(4) Accounting method of asset impairment
1. Net sales price
The net selling price refers to the net amount after the fair value is deducted from the disposal expenses after the assets are sold by both parties familiar with the fair trade situation. But in practice, the net selling price is almost equal to the net realizable value, which is widely recognized and adopted. At the same time, the concept of net realizable value needs to meet two conditions: ① inventory can be easily sold at a known price. (2) The extra expenses or costs are certain or can be reasonably estimated.
2. Recoverable amount
For recoverable amount, recoverable amount in American accounting standards refers to fair value; In Britain, it is defined as high net realizable value or use value; In China, the actual meaning of recoverable amount is the undiscounted value of future cash flows. The Accounting System for Business Enterprises is interpreted as "the higher of the net selling price of an asset and the present value of the expected future cash flow formed by the continued use and disposal of the asset at the end of its service life".
According to the relevant provisions of the Accounting Standards System for Business Enterprises (2006), if there are signs of impairment of assets, the recoverable amount should be estimated. The recoverable amount is determined according to the higher of the net amount of the fair value of the asset after deducting the disposal expenses and the present value of the expected future cash flow of the asset. Therefore, the recoverable amount of fixed assets is determined according to the higher of the following two amounts of fixed assets: ① the net amount after deducting disposal expenses from fair value; ② Present value of estimated future cash flow of fixed assets. The former reflects the cost recovered by the disposal of fixed assets, while the latter reflects the cost recovered by the use of fixed assets.
Three. Problems in the application of asset impairment in the new standards
Due to the different economic and legal environment, management practice and management level of Chinese enterprises, although the new standards regulate the related treatment of asset impairment, they do not give a clear and unified basis for the treatment of some problems, which leads to great difficulty in specific operation and many problems.
(1) It is difficult to confirm the provision for asset impairment.
The recognition conditions of asset impairment need professional judgment. Although the new standard gives clear criteria for judging the signs of asset impairment, the situation of asset impairment is very different, and it is impossible for the standard to list all the signs of asset impairment. Therefore, for some signs listed in the standards, enterprises are required to comprehensively consider various factors and make professional judgments according to these signs, which requires accountants to have high professional judgment ability. Judging from these signs, some are too general. For example, the first condition for judging the impairment of assets is that the decline of market prices is significantly higher than the expected decline. What is the boundary of "obviously high"? This needs to be judged according to the changes of external business environment, law, market and technology, and information is not easy to obtain.
Case 1: When auditing the accounting statements of Dahua Company, Wen Li, a certified public accountant, learned that the short-term investment of Dahua Company was priced by mature cost method or market price whichever is lower at the end of the period, and the short-term investment impairment reserve was accrued according to the classification comparison method. However, the audit found that H shares held by Dahua Company accounted for 70% of the total short-term investment.
Article 52 of the Accounting System for Enterprises explains: "An enterprise shall conduct a comprehensive inspection of all short-term investments at the end of the period. Short-term investment shall be measured according to the lower of cost and market price, and the short-term investment impairment reserve shall be accrued for the market price below cost. When the use cost of short-term investment is lower than the market price, the enterprise may, according to its specific situation, make provision for impairment separately according to the overall investment, investment category or individual investment. If the amount of short-term investment is significant (such as accounting for more than 65,438+00% of the total short-term investment), the impairment reserve shall be calculated and determined on the basis of a single investment. "
Accordingly, when Dahua Company chooses classified comparison method to make provision for impairment, because its H shares account for 70% of the whole short-term investment, it should make provision for impairment separately by single comparison method, and then make provision for impairment for other items by classified comparison method.
(b) The determination of the fair value of assets is very subjective.
Although fair value is a bright spot in the new accounting standards, its implementation is still insufficient. First of all, fair value is subjective and arbitrary. Secondly, the actual operation of fair value measurement is difficult. At present, China's factor market is immature and lacks an active market, so fair value is often difficult to obtain. Thirdly, under the fair value measurement mode, the changes of economic risk status and the changes of the enterprise's own credit will cause fluctuations in the financial statements of enterprises, and may even mislead the users of the statements. Finally, fair value is likely to become a tool to adjust profits, making it difficult to be fair. Judging from some specific accounting standards that have been promulgated in China, the fair value measurement is explicitly avoided, but the present value measurement is obviously increased. However, there are many uncertainties in the determination of present value, such as discount rate, future cash flow and risk factors.
Case 2 Wu Sheng, a certified public accountant, learned about the intangible assets and accounting treatment of Huawei in 20001year when auditing its accounting statements:
1. patent a: the book balance is 6,543,800 yuan, and the impairment reserve is zero. This patent has exceeded the legal protection period, but it can bring economic benefits to enterprises. Huawei made full provision for impairment.
2. Trick B: The book balance is 600,000, and the impairment reserve is zero. This proprietary technology has been replaced by other new technologies, and its ability to create economic benefits for enterprises has been greatly adversely affected. After analysis, Huawei believes that although the value of the proprietary technology has been greatly affected, it still has a residual value of about 200,000 yuan, and a provision for impairment of 400,000 yuan has been made.
Analysis According to the provisions of Articles 60 and 62 of the Accounting System for Business Enterprises and the basic conditions for determining the provision for impairment of assets, certified public accountants put forward the following audit opinions on the above intangible assets accounting matters of Huawei Company:
1. For patent A, only when the intangible assets have exceeded the legal protection period and can no longer bring economic benefits to the enterprise, can the full impairment reserve be withdrawn. Although patent A has exceeded the legal protection period, it still has certain economic value. Huawei's full impairment of patent A will cause enterprises to overcharge and underreport profits. Exaggerate the value of intangible assets. Therefore, certified public accountants should suggest that Huawei first transfer the accrued impairment reserve, objectively analyze its residual value, hire relevant experts to confirm its value, and make reasonable impairment reserve accordingly. At the same time, consider the impact of this adjustment on current profits and income tax.
2. For patented technology B, when the intangible assets of the enterprise are replaced by new technologies, if there is no use value and transfer value, the impairment reserve will be fully accrued; If only its ability to create economic benefits is greatly affected and still has certain value, its residual value should be analyzed to determine the impairment reserve that should be accrued in this period. Therefore, certified public accountants should recognize Huawei's analysis and accounting treatment of patented technology B.
(3) Asset impairment losses shall not be reversed, which is inconsistent with the actual situation.
The recoverable amount of assets may be lower or higher than the book value of assets, which is a "natural phenomenon" in the market economy. The new standard stipulates that once the asset impairment loss is confirmed, it cannot be reversed in future accounting periods. This practice does not conform to the laws of market economy and the actual situation of enterprises. Although this provision can prevent enterprises from abusing asset impairment to a certain extent, it can curb listed companies from manipulating profits by using asset impairment losses. However, the provision for asset impairment is made to meet the requirements of accounting information relevance. If the value of impaired assets does show signs of recovery, but it is not in line with objective reality to make it irreversible. Moreover, it may also force enterprises to go to the other extreme, that is, enterprises use the uncertainty of fair value, discount rate, cash flow estimation, time distribution and other factors to make as little or no provision for asset impairment as possible. Excluding provisions will overestimate assets, which is inconsistent with the actual situation; However, if it cannot be reversed after withdrawal, it means underestimating assets, which is also inconsistent with reality. Finally, from the purpose of drawing the fixed assets impairment reserve, the purpose of asset impairment is to prevent overestimation of the value of fixed assets, which is mainly based on accounting estimation, and the reversal of fixed assets impairment loss can be regarded as a revision of the original accounting estimation. Therefore, it is necessary to reverse the asset impairment loss.
Case 3 ST Jiangzhi (600053) turned losses into profits in mid-2004 and resumed listing. ST Jiangzhi's mid-year report in 2004 showed that the company realized a net profit of 20.7 million yuan, of which the impairment reserve turned back was as high as 88.47 million yuan. Obviously, if there is no huge impairment reserve, the company will suffer huge losses in mid-2004. The annual report shows that the net profits of ST Jiangzhi in 2004, 2003 and 2002 were: 65.438+005 million,-458 million and-332 million respectively; In 2004, the impairment reserve was transferred back to 324 million, and in 2003 and 2002, the impairment reserve was 3.5/kloc-0 and 226 million respectively. It can be seen that the main reason for ST Jiangzhi's losses in 2003 and 2002 was the large impairment reserve, while the reason for turning losses into profits in 2004 was to turn back the huge impairment reserve. If the impairment reserve is not reversed, the company will be delisted due to huge losses in 2004.
Since there is no huge impairment reserve to be reversed in 2005, the company recently issued a performance forecast, and the interim results in 2005 will drop by more than 50% year-on-year. The disadvantages of provision for impairment and reversal can be seen.
(D) Insufficient disclosure of asset impairment information
The new accounting standards for business enterprises require disclosure of the causes, classification and impact of asset impairment. These disclosures will help information users to better understand the situation of enterprise's provision for asset impairment, analyze the reliability of company's accounting information and make correct decisions. At present, although many listed companies have disclosed the basis, method, proportion and amount of impairment reserve, their disclosure is only a repetition of the corresponding provisions in the system, and the disclosure lacks the analysis and judgment process of various assets impairment by relevant departments and professionals, so readers of accounting statements cannot know whether the working procedures of enterprise impairment reserve are complete and whether the extraction ratio and amount are reasonable. Therefore, it is not conducive to report users to clearly understand the reasons for asset impairment and the status of assets, and it is impossible to know whether enterprises use asset impairment accounting for earnings management.
1. Significant asset impairment has not been fully disclosed.
The main problem of asset impairment disclosure of listed companies in China is that important asset impairment is not fully disclosed in the notes of accounting statements, which is the most common problem in asset impairment information disclosure of listed companies at present. Most listed companies only vaguely disclose the amount and reasons for the impairment of important assets, and almost all listed companies have not disclosed in detail the reasons for the large amount of provision for asset impairment. Information about the recoverable amount of assets, such as the assumptions on which future cash flows are expected, the calculation method of discount rate and the calculation basis of net sales price, are often not disclosed, and the reasons for the impairment of important assets are too general or lack of substantive content, which makes it impossible for report users to understand and judge the company's asset impairment.
Case 4 Kelon Electric Appliances (000921) made a profit of 206 million yuan in the first three quarters of 2004 and lost 60 million yuan by the end of the year. According to Kelon Electric's 2004 annual report, quarterly report and related announcements, at the end of 2004, Kelon Electric accrued about 7 1 10,000 yuan for impairment loss of Huayi compressed equity investment, and 47 million yuan for inventory depreciation loss. In the fourth quarter, it accrued about 30 million yuan for bad debts, totaling about 654,380+0.48 billion yuan. Because the large asset impairment losses were not accrued until the end of the year, it seriously affected investors' judgment on the company's performance.
2. Lack of disclosure requirements on the impact of earnings management.
The new standards do not require disclosure of the impact of asset impairment reserves on earnings management of enterprises. In view of the vague disclosure of assets impairment by enterprises, or even the failure to disclose relevant information to cover up the manipulation of profits, we should speed up the formulation of guidelines to strengthen information disclosure. The original intention of accounting system to formulate impairment policy is to truly reflect the value of enterprise assets and prevent asset overvaluation. Because there are many subjective estimation factors in the process of determining the amount of impairment, some companies inevitably use these subjective factors for earnings management for some economic motives. Some listed companies realize losses or profits by withdrawing or turning back huge assets impairment reserves for their own purposes. Prohibiting the reversal of impairment losses may also lead to abuse. For example, a large number of losses were confirmed in a certain year, which led to a decrease in depreciation and amortization in the later period, which in turn led to an increase in profits. In addition, listed companies can also use short-term asset impairment reserves to adjust profits. Because enterprises mainly use bad debt reserve, inventory depreciation reserve and short-term investment depreciation reserve when using asset impairment for earnings management, these new impairment reserve standards are still allowed to be reversed. In addition, when assets are realized, huge profits are also generated. According to relevant regulations, when assets are actually realized, their original impairment reserves must be reversed at the same time to offset the current costs and increase the total profits. Although the practice of the standards can prevent the company from manipulating profits at will to a certain extent, it cannot control the company to obtain high profits in the current period when assets are actually realized. There is no requirement in the new standards to disclose the impact of the above-mentioned asset impairment reserves on earnings management of enterprises. It is necessary to strengthen management and supervision and clarify the disclosure of asset impairment information.
Four, improve the new standard of asset impairment accounting suggestions
In view of the shortcomings of the new standards, this paper puts forward some suggestions and opinions, hoping to improve the asset impairment standards, better control the behavior of adjusting profits, and provide better decision-making information for accounting information users.
(A) learning international accounting standards
The new standard is based on the actual situation in China and draws lessons from international practices as much as possible. These regulations have effectively promoted the international harmonization and convergence of China's accounting standards, and narrowed the differences between China's accounting standards for business enterprises and international financial reporting standards. But at the same time, we should also see some differences in international research on asset impairment accounting, and we need to further strengthen international cooperation and exchanges on the basis of fully considering China's actual situation.
(2) Reasonable impairment loss of transferred assets
It is not an expedient measure not to let the fixed assets turn back. Theoretically speaking, when there are signs of impairment that assets have been impaired, impairment losses should be recognized. Then, when there are signs that the impairment losses recognized in previous years have been reduced or no longer exist, it is reasonable for the enterprise to retest the recoverable amount of assets and transfer back to the originally recognized impairment losses accordingly. On this issue, the author thinks that it is more in line with the principle of prudence to take the book value of fixed assets when losses are not recognized in previous years as the maximum limit for the reversal of fixed assets impairment, and it can also prevent overestimation of assets and the purpose of drawing impairment reserves. Different methods are used to measure different impairment: if the fixed assets may be impaired due to depreciation without proper adjustment, retrospective adjustment should be made; If the fixed assets may be impaired due to significant changes in use, the impairment difference can be directly included in profit and loss after comparison with relevant measurement standards. Although the fixed assets impairment reversal policy has been seriously abused in China, as a practical correction policy, its existence can improve the accuracy of enterprise financial data. The key to solve the existing problems is not whether to prohibit the reversal, but to further improve accounting standards, formulate relevant systems and regulations, and standardize the use of asset impairment reversal.
Three. Strengthen the disclosure of impairment provision information.
The disclosure of asset impairment information in the annual financial reports of listed companies in China is too simple, which leads to the inability of accounting information users to fully understand asset impairment information. Therefore, China's accounting standards for asset impairment must further improve the disclosure system of asset impairment information, and disclose in detail the number of asset impairment losses, the number of reversal, the number of write-offs and the items listed in the statements in relevant accounting statements and notes, so as to enhance the transparency of asset impairment information disclosure and realize the original intention of formulating asset impairment policies. This not only expands the disclosure space, but also narrows the scope of accounting policy selection and accounting estimation, which is conducive to reducing the possibility of enterprise management using asset impairment to manipulate profits to whitewash financial reports and improve the quality of accounting information.
(D) improve the overall quality of accounting personnel.
The confirmation and measurement of asset impairment accounting requires high comprehensive quality of accountants, which requires not only solid accounting professional knowledge, but also strong comprehensive analysis and judgment ability and rich enterprise management experience. First of all, the most important thing is to ensure the authenticity and reliability of accounting information. Secondly, accountants should be familiar with the basic connotation of the new standards, have proper accounting professional ethics and skilled professional skills, such as computer, auditing and other related skills, and provide the necessary foundation for improving their professional judgment ability. Thirdly, accountants should master the knowledge of economics, law, management and other related disciplines, and then improve their innovative ability to analyze and solve new problems. Finally, accountants should be familiar with the basis of fair value assets impairment recognition and related technologies of cash flow determination.
(V) Strengthen the independent audit of asset impairment.
The audit of certified public accountants can be said to be the last line of defense to prevent accounting fraud in enterprises. At present, asset impairment preparation has become an important tool for some listed companies to control profits, which greatly increases the audit risk of certified public accountants and accounting affairs, and also increases the work difficulty and audit cost of certified public accountants. Therefore, independent auditing standards related to impairment reserves should be formulated, and specific auditing procedures of various impairment reserves should be clarified. Through independent auditing by certified public accountants, efforts should be made to curb enterprises' use of asset impairment reserves for profit manipulation, so as to standardize the accounting treatment of asset impairment. This will play a very important role in reducing audit risk, ensuring audit quality and preventing audit failure, so that certified public accountants can really play the role of "economic police".