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Discussion of the civil air transport enterprise asset impairment accounting policy choices

Author: RenQiangLi From: www.yourpaper.net Posted: 2009-04-04 22:00:37 Read:
[Abstract] In this paper, the civil aviation industry listed companies, for example, study the provision for bad debts, inventory devaluation preparation and three of the impairment of fixed assets accounting policy on impairment in the use of civil air transport enterprise and its impact on asset quality and profitability, and discover a problem to be solved.

Overview of the economic consequences of a civil air transport enterprise production and management features and the choice of accounting policies

The accounting policies follow accounting principles and enterprise specific accounting treatment adopted. China's enterprise accounting system reform on the one hand to expand the company's accounting policy option; On the other hand, requires companies to choose within the framework of the accounting policies of its own. For civil aviation enterprises, production and management features determines the special nature of the content and methods of accounting, civil aviation enterprises to combine their production and operation characteristics during the accounting in the accounting system and within the framework of the guidelines necessary accounting policy choices.

(A) civil air transport enterprise production and management features
Civil air transport enterprise in the form of products, production processes and the mode of operation has a significant difference with the general industrial and commercial performance in:
Civil aviation enterprises operating results in the performance of the object of labor (ie, goods and passengers) spatial displacement, the value created in addition to the above object of labor, the performance of non-physical form.
2 civil aviation industry has not only in-kind, and incurs consumption in the production process, there is no phase separation process of product sales and the production process and consumption process, ie the process of production, marketing and consumption of its products is a coincidence.
Assets of civil aviation enterprises have a special, on the one hand, a large proportion of fixed assets, the often total assets accounted for 70% or 80%; On the other hand, the proportion of current assets, current assets and low-value consumable nature of current assets (such as spare parts) and fund settlement nature of current assets (such as receivables) occupies a large proportion.

(B) the accounting policy choice overview of the economic consequences of
On the economic consequences of accounting choices from the the contract cost point of view explains the choice of accounting policies (Liu, 2000): enterprise accounting policies on revenue management, increase corporate value, that is, to maximize enterprise value. Management from the point of view of the transfer of wealth and distribution to choose accounting policies that sacrifice the interests of other Parties to acquire wealth, maximize the value that management itself. Thus, the civil aviation enterprises can choose, according to their characteristics and needs of the application of accounting policies, their choices will inevitably have a very close relationship with the level of corporate profits.

Second, civil air transport enterprise implementation of the three impairment policy analysis

(A) changes in the content of the new enterprise accounting system "accounting and civil aviation enterprises accounting select
In accordance with the requirements of the "enterprise accounting system" and "Enterprise Accounting Standards, combined with the production and management features of the civil air transport enterprise, the industry optional accounting policies following:
A provision for bad debts
Civil aviation enterprises in current assets Accounts receivable, other receivables, the nature of the settlement funds assets accounted for a significant proportion of airline fare and sales agents arrears is widespread, rational use of professional judgment to determine the bad debt The amount of provision is an important civil air transport enterprise accounting choices.
Provision for inventory obsolescence provision
Inventory of the civil air transport enterprise mainly aviation materials and high-turnover parts, which is characterized by variety, amount, rotables can be used multiple times, measured in terms of the inventory impairment rotables according to the individual inventory items cost and net realizable value; For variety, low-value aircraft materials, class of inventories measured at cost and net realizable value. In addition, in accordance with the new "enterprise accounting system" for inventory obsolescence provision amount determined by the enterprises themselves. Thus, the civil air transport enterprise in the provision for the withdrawal method and the amount of provision for accounting choices.
Provision for the impairment of fixed assets
The new "enterprise accounting system" requires the provision for impairment of fixed assets, the principle for determining the value of fixed assets at the end of a significant change. The proportion of fixed assets in the total assets of the civil air transport enterprise, the provision for impairment of fixed assets would have a great impact on net profit, civil aviation enterprises should proper use of this accounting policy, impairment of fixed assets preparation, and the accrued amount by enterprises based on professional judgment to determine their own.

(B) civil air transport enterprise implementation of the three impairment policy analysis
This gives the company more self-judgment rights, but the company is properly exercised that right, more robust recognized the income to the extent of the impairment loss occurred quantity and amount of estimated amount depends on the professional judgment of the listed companies, true and fair view of the company's financial position? The following author listed companies of the civil aviation industry, for example, research of impairment policies on the quality of the civil aviation industry profitability of listed companies. First select the five Chinese civil aviation industry listed company (China Southern Airlines, China Eastern Airlines, Shanghai Airlines, Hainan Airlines, Shandong Airlines (B shares)) annual report for 2003 and 2004 for the analysis of object, the policy of the executive impairment allowances and an impact such as Table 1, Table 2:

Impairment implementation of the policy
Table 1 can be seen:
(1) impairment of fixed assets very cautious in 2003 and two years, respectively, each with a company provision for impairment of fixed assets, are Hainan Airlines (600221), and does not rule out the Hainan Airlines use impairment of fixed assets for the possibility of earnings management.
(2) Most companies do not have to explain the reason that no provision for impairment, or a description of the No impairment provision was made an understatement, is only mentioned in the notes to the annual report has not been impaired, and not the reason for this more detailed explanation.
Three provision impact on the company
In five civil aviation enterprises listed three prepared the original value of the average value of the total assets ratio was 73.35%, the average multiple of the provision for impairment loss of net profit of 0.865, three Provision for impairment does have an important impact on the company's asset quality and earnings quality.
(1) due to the impact of SARS, companies in 2003 and 2004 ROE are not comparable, but the provision in the case can be seen to be provision for accounts receivable and inventory net profit to have a greater impact. Among them, in 2003 two the provision amounts and net profit ratio of the average were these two averages of 0.28 and 0.25 in 1.02 and 0.14,2004 years. Be seen, for the civil aviation enterprises, these two ready to net profit of each company is very large.

(2) from 2003 and 2004 provision for the specific circumstances of the analysis can be found Provision for quite different. Provision for inventory allowances as a percentage of the original value proportion in 2003, the highest for Eastern Airlines (30%), the lowest for Shanghai Airlines (1%); highest in 2004 China Eastern Airlines (34.68%), the lowest compared with Shandong Airlines B (0.28%) in the same industry of provision for decline in value of inventories vary so widely, civil air transport enterprise in the management of inventories may also problematic. In contrast, much more will have to regulate civil aviation enterprises in the management of accounts receivable.

Third, the conclusion

In summary, three Provision for impairment provision for accounts receivable, inventory and fixed assets has a considerable impact on the asset quality and profitability of the civil aviation enterprises, which should attract the managers enough attention in the industry. In addition, civil aviation enterprises for asset impairment following problems:

(A) disclosure norms
Most no provision for an impairment ready enterprise did not hold to explain or explain why; understatement description of the No impairment provision was made only mentioned in the notes to the annual report has not been impaired , No more detailed description of the reason for this. From a subjective perspective, for various reasons do not want to provision or less mention reserve. The shortage of funds is one of the main problems facing AG. Many shares the company as much as possible to raise funds, do everything whitewash as possible and report information is naturally a very taboo to use the accounting treatment of asset impairment provision. Objectively speaking, the operability of the extract for asset impairment is indeed subject to environmental constraints. China's current asset information and price the market is not transparent and improve the level of impairment can not be reasonably and objectively determine a certain lack of data base, so that the extraction of reserves. Even if the provision for impairment of assets of listed companies, these preparations extracted reflects the fairness of the accounting information, objectivity is also difficult to measure. At the same time, the provision for asset impairment need a lot of accounting personnel professional judgment, which need enterprise management personnel, accounting personnel, the quality and the ability to be in the new economic form of enrich and improve. But in real life, the level of knowledge of the part of the enterprise's management and accounting personnel, which also affected the impairment of assets required to extract specific operation.
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