On The Changes Of New Accounting Standards

Compared with the existing accounting standards, the important changes of the new accounting standards are reflected in 6 aspects:

1, the foundation of measurement has changed considerably.

In the two basic principles of accounting and the measurement of accounting elements, the new basic norms have changed greatly.

The basic principles of accounting in the new basic principles continue to retain the importance principle, the prudence principle, the substance over form principle, and also emphasize the comparability, consistency, clarity and so on.

The accrual basis is regarded as the basis for accounting recognition, measurement and reporting of enterprises instead of being a general principle. The principle of "actual cost valuation" is no longer regarded as the general accounting principle but also abolished the principle of proportioning principle and the division of income expenditure and capital expenditure.

Due to the application of fair value, metrology has become a highlight in the revision of the guidelines.

American accounting standards and international financial reporting standards focus on the application of fair value to reflect the relevance of accounting information.

It is reported that the Ministry of finance has discussed the relevant issues with the international accounting standards board for many times.

Taking into account the current situation of China's market development, the standard system mainly adopts fair value in terms of financial instruments, investment real estate, merger under non joint control, debt restructuring and non monetary pactions.

Generally speaking, the new principle system is to change, supplement and perfect the relevant basic principles in the original basic principles, thus further emphasizing the relevance of accounting information.

2, cancel the "last in first out" method for issuing inventory cost.

The new guidelines stipulate that enterprises should adopt the FIFO, weighted average or individual valuation method to determine the actual cost of issuing inventories, that is, the new method of determining the cost of inventories includes three methods, namely, FIFO, weighted average and individual valuation methods, eliminating the two methods of moving average and last in first out.

According to the survey, the actual cost of in stock first out method is not universality. It can not truly reflect the stock circulation, and can not provide accounting information that is consistent with the actual pactions or events occurring in the enterprise.

The impact of the inventory first in first out valuation method on enterprises is embodied in the fluctuation of inventory prices. The change of accounting method will enable enterprises to use the modified inventory valuation method to regulate the current profit level, and the conventional means can no longer be used, so that all enterprises' inventory cost is reflected in the actual historical cost. There is no artificial adjustment factor, which facilitates the analysis and comparison of the business performance of enterprises, and improves the use value of accounting information.

3, asset impairment provision changes.

China's enterprise accounting system stipulates that when the end of the year, the enterprise should prepare the impairment loss reserve if it is higher than the book value of the loss preparation, it should make up the loss preparation according to the difference; if it is lower than the book value of the loss preparation, it should prepare the balance of the losses already made, and the assets impairment loss that has been confirmed and sold back should be adjusted if it is recovered later.

As for how to calculate and calculate the proportion, it is entirely determined by the actual situation of the enterprise, which gives the management authority the possibility of whitewashing the financial statements and operating results.

In the light of the problem of preparing and returning profits by borrowing and reducing the value, the new asset impairment criterion is clear, and the provision for impairment must not be reversed. This is also one of the substantive differences between the new accounting standards system and the international accounting standards.

It should be noted that the non reversion here is for long-term assets impairment, and the impairment of current assets such as inventory, short-term investments and receivables should be regulated by other criteria.

It is noteworthy that some companies that make use of a large margin to make the adjustment of profit margins to adjust profits are likely to rush back to the value reduction in 2006. Otherwise, the "hidden profits" will never emerge again after the implementation of the new accounting standards in 2007.

According to the actual provision for impairment of listed companies, some companies' depreciation allowance even exceeds the net profit of the current period.

If these companies return part of the impairment allowance in the 2006 annual report, their profits will be greatly affected.

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4, the restructuring of debt has changed.

"Accounting standards for Enterprises No. twelfth - debt restructuring" emphasizes the prerequisite for debtors in financial difficulties, and highlights the real conditions for creditors to make concessions, and improves the accuracy of the application of the guidelines.

In accounting treatment, the new debt restructuring standard has changed the "one size fits all" rule. It has introduced the liability of the debtor's exemption or less repayment to capital accumulation because of the creditor's concession. It has changed the debt restructuring income into the non business income, and introduced fair value as the measurement attribute for the physical debt paying business.

According to the new regulation, if some companies are unable to repay their debts, once the debt is fully or partially exempted, their earnings will be directly reflected in the current profit statement, which may greatly enhance their earnings per share level.

Therefore, companies with higher liabilities and potential debt forgiveness will get a higher level of earnings, which is worth investors' attention.

5, the reform of income tax has been changed.

The income tax criterion is this enterprise.

An important part of the revision of the system.

In accordance with the original Interim Provisions on accounting treatment of enterprise income tax, the present guidelines do not divide the differences between pre tax accounting profits and taxable income into permanent differences and time differences. Instead, they draw lessons from the relevant spirit of international accounting standards twelfth - income tax, and introduce the concept of tax base and implement the balance sheet liability method.

The new income tax standard takes the balance sheet as the focus of accounting, and the definition, confirmation and measurement of assets and liabilities become the core content of financial accounting research. The logical rationality of balance sheet is taken seriously, and no items that do not conform to the definition of assets and liabilities are allowed to be included in the balance sheet.

The deferred income tax assets or deferred income tax liabilities are calculated on the basis of temporary differences. The income tax expense thus recognized includes the current income tax expense and the deferred income tax expense.

If the applicable tax rate changes, the deferred income tax assets and deferred income tax liabilities shall be recalculated. Except for deferred income tax assets and deferred income tax liabilities arising directly from pactions or events directly recognized in the rights and interests, the amount of their impact should be included in the current income tax expense.

6, the accounting method of enterprise consolidated statements has changed.

(1) the pformation of accounting methods for business combinations.

The enterprise merger under the same control is based on book value as the basis of accounting treatment, and the fair value should be waiver to avoid profit manipulation.

At present, the merger of enterprises in China is mostly the merger of enterprises under the same control. The form of the merger consideration is confirmed by the fair value recognized by both sides, and in essence, it is not the value recognized by both sides. Although the fair value is to be confirmed by the intermediaries, the artificial manipulation factors interfere too much with the realization of the fair value.

Therefore, quite a few listed companies get rich overnight through merger and reorganization.

Therefore, the new accounting standards stipulate that accounting for enterprise merger consideration based on the book value of assets is based on the current situation of China's capital market and the reality of the development of market economy.

It standardizing the earnings management behavior of enterprises and improving the credibility of corporate profits.

(2) the basic theory of consolidated statements.

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Compared with the Interim Provisions on consolidated financial statements, the basic consolidation theory based on the new consolidated financial statements has changed from the focus on the parent company theory to the entity theory.

The determination of the scope of consolidated statements is more concerned with substantive control. The parent company needs to incorporate all the controlled subsidiaries into the scope of merger rather than considering the equity ratio.

A subsidiary whose owner's equity is negative should be included in the scope of merger as long as it continues to operate.

This change will have a greater impact on the profits of the consolidated statements of listed companies, and at the same time, the behavior of listed companies to manipulate profits by using parent companies or subsidiaries will be greatly restricted.

Guided by advanced and scientific ideas, based on the reality of China, the new accounting standards take full account of China's national conditions on the basis of international accounting standards, and better handle the relationship between accounting internationalization and Chinese characteristics.

The promulgation and implementation of the new accounting standards system has ended the history of two skins of China's accounting system and guidelines, which will have a significant and far-reaching impact on China's accounting and economic development.

Wang Jun, Vice Minister of finance, said: "after the implementation of the new guidelines, the accounting information and audit quality of our enterprises has been significantly improved, and the decision-making position and the level of accounting audit have been greatly improved, which is of great significance to the long-term healthy development of our capital market and the deepening of enterprise reform."

We should apply the new accounting standards, and dare to face the new situation and new problems in the actual work.

This requires accountants to seriously study and understand the spiritual essence of the new accounting standards, and constantly improve their professional knowledge and professional level, so as to improve their professional judgement level.

China's enterprises are able to adapt themselves to changes in the survival of the fittest through the implementation of new accounting standards, and finally become winners in adapting to the international environment.