International Comparison And Research On Asset Impairment Accounting

I. international comparison of asset impairment accounting (1) China's current provisions on asset impairment accounting.

The "Limited by Share Ltd accounting system" and the Ministry of finance document, which were implemented in 1998, stipulate that the company should make provision for bad debts, prepare for short-term investment price depreciation, prepare for depreciation of inventory and prepare for long-term investment impairment (four reserves).

The enterprise accounting system issued at the end of 2000 requires that all the unreal assets that meet the definition of assets be prepared for impairment of value. At the same time, enterprises are not required to make secret preparations.

Confirmation and measurement of assets impairment allowance 1..

When we confirm assets impairment, we use the reserve method.

In the balance sheet, the impairment of assets is shown as a deduction of assets.

With regard to the measurement of assets impairment, China's enterprise accounting system makes specific provisions on eight items of assets, including inventory, accounts receivable and fixed assets.

2. disclosure of assets impairment.

The assets impairment allowance provided by the enterprise should be disclosed separately in the "asset impairment reserve schedule" when the financial accounting report is provided at the end of the term.

The disclosure includes: the amount of the initial value of each impairment, the amount of change and the amount at the end of the year.

(two) the international view on asset impairment accounting.

The financial accounting standards board (FASB) 121st guidelines for accounting for long term assets impairment and long handled assets to be disposed of require that when assessing the recoverability of long-term assets and certain identifiable intangible assets, the impairment loss should be recognized if the sum of the expected future cash flow generated by the assets and the final disposal is lower than the book value.

The measurement of impairment losses should be based on fair value.

In assessing the recoverable value, FASB adopts the non expected cash flow, while on the basis of fair value when the asset impairment is recognized.

International accounting standards IAS 25 "investment accounting" stipulates that the decrease in book value of long-term investments due to non temporary falls should be included in the profit and loss account unless they can be offset against the previous revaluation.

When the value of investment increases or the reason for price decline is gone, the reduced book value can be reversed.

The IAS 36 "asset impairment" guidelines issued in 1998 have standardized procedures for enterprises to ensure that their assets do not exceed the recoverable amount, and require enterprises to confirm the impairment of assets.

At the same time, IAS 39 also made specific provisions on the judgment and confirmation of the impairment loss of financial assets.

According to the international regulations, the disclosure of assets impairment should include at least the following information: the specific reasons for the occurrence of asset impairment and its impact on asset service capability, the method of recoverable value, the recoverable value of assets, the impairment loss recognized and its presentation, the cause and amount of assets impairment, and the presentation in the statement.

(three) international practice and the difference between China's system and asset impairment accounting.

1. confirmation of assets impairment.

There are three main criteria for determining the impairment of assets: (1) the permanent standard, the possibility standard and the economic standard.

Different countries have different selection criteria.

Some countries in the United States and other countries use the possibility standard, whose main feature is that the basis of recognition and measurement is inconsistent. When we confirm, we should use the unposted value of future cash flow and use fair value when measuring. This may lead to overestimation of asset value. Some countries such as the United Kingdom adopt the permanent standard. It emphasizes that only when the expected future period is impossible to recover, asset impairment losses will be recognized. IAS 36 and other widely adopt economic standards, so long as there is impairment, we will confirm, confirm and measure the same foundation.

Judging from the provisions of China's enterprise accounting system, the recognition standard of asset impairment in China basically tends to economic criteria.

(2) about asset recovery.

The enterprise accounting system stipulates that if the asset value of the impairment provision has been restored, it should be returned within the scope of the provision for impairment.

This has formed a consensus with international accounting standards and British accounting standards.

However, FASB 121 does not allow the return of asset impairment.

2. measurement of assets impairment.

(1) the measurement attribute of asset impairment.

According to the international accounting standards, asset impairment should be measured by determining the net selling price of assets and the high value of the assets in determining the recoverable amount.

The US accounting standards stipulate that assets used and held by enterprises should be measured by fair value, allowing the recognition of unrealized losses or gains.

The British accounting standards stipulate that asset impairment should be measured on the basis of the net realizable value and the high value of the use.

The accounting system of enterprises in China stipulates specifically the measurement attributes according to different assets, and only allows the unrealized losses.

It can be seen that the accounting treatment in our country embodies the principle of prudence more fully.

(2) the value of the recovery can be determined.

There is a different understanding of the recoverable value.

The US FASB adopts the non discounted cash flow.

China's enterprise accounting system stipulates it as the higher of the net sales price and the use value of assets.

There are similar provisions in IAS 36, but in some cases it can be the value of the asset or its net sales price.

Although different countries have different representations, they all reflect the principle of prudence, and they all have an international trend, which further improves the comparability of accounting information in various countries.

When we measure the recoverable amount of assets, our country usually takes a single asset or asset class as the basis, which has limitations in operation.

IAS 36 stipulates that if it is impossible to estimate the recoverable amount of a single asset, the enterprise should determine the recoverable amount of the cash output unit owned by the asset, and the method of "cash output unit" assessment just makes up for the deficiency in China's measurement.

3. disclosure of assets impairment.

International requirements for the disclosure of assets impairment are more detailed, including not only the contents of disclosure in the accounting system of enterprises, but also the events and circumstances leading to the recognition or pfer of impairment losses, which improves the relevance of accounting information and further eliminates the possibility of human manipulation of profits.

Two, further improve and make use of China's asset impairment accounting information proposal.

In real life, some enterprises have large amount of bank credit assets, which are mostly converted into materialized assets.

When enterprises are paralyzed or semi paralyzed, the pformed materialized assets are gradually consumed and become empty shells, and bank losses can not be calculated.

How can we make bank losses less or even less?

The author believes that the impairment loss of the bad assets in the bank loan portfolio should be allowed to record the economic impairment of the loan.

In view of the fact that considering the conversion of credit assets into materialized assets, enterprises may be motivated to gloss over the performance of the reports, make less provision for impairment of assets, increase the current surplus, or change the time of asset impairment provision, reversion and cancellation, and raise the profits of the current period.

This gives false impression to the bank, and mistakenly believes that the enterprise still has the ability to repay the loan and can not perceive the potential risks in the loan.

In order to eliminate the phenomenon of false assets and profit manipulation, the author thinks that a team of enterprise accountants and bank appointants should form a special group to conduct a comprehensive inspection of the materialized assets after the pformation of credit assets at regular or at the end of each year.

It should be pointed out that the credit assets in this article mainly refer to special loans.

The two is to further integrate with the international accounting standards, citing the estimation of "cash output unit".

In the estimation of the recoverable amount of assets, the accounting system of enterprises in China is usually determined on the basis of a single asset or asset class.

There are some limitations in practice.

In many cases, the recoverable value of an asset is not recognized, because in general, many assets work together to generate cash inflows.

The author believes that it is desirable to introduce "cash output unit" for evaluation.

The cash output unit is the smallest identifiable asset portfolio that can generate cash flow for an enterprise without relying on other asset portfolios. It can be a single asset or a combination of assets.

Its proposal lays the foundation for analyzing the recoverable value of assets.

By analyzing the way, function and characteristics of enterprise assets, many assets can be combined.

In the course of its combination, the factors that should be considered include product lines, business characteristics, locations, regions or regions, and relevant policies of the management authorities.

If the recoverable amount of a single asset is difficult to determine, the management should identify the cash output unit of the asset accordingly, estimate the total recoverable amount of the unit, and determine whether the impairment or loss occurs through the comparison between the recoverable amount of the cash output unit and the book value, so as to determine the amount of the impairment loss.

Then, the loss of the impairment is apportioned between the assets of the unit.

The author thinks that the weighted apportionment method can be used for apportionment of the ratio between the book value of each asset in the unit and the book value weighted by the weight of the remaining life of each asset, and at the same time, the balance between assets with faster replacement and relatively stable prices should be considered.