《实用资产减值会计》由会员分享，可在线阅读，更多相关《实用资产减值会计（13页珍藏版）》请在金锄头文库上搜索。
1、外文翻译原文：Practical assets devaluation accountingThe last 12 months have been marked by unprecedented volatility in global markets and signs of economic downturn. These market conditions will cause many companies to revisit their business plans and revise financial forecasts. As a result of these chang
2、es management may experience significant impairment charges in the coming months.The basic principle is that an asset may not be carried in the balance sheet at more than its recoverable amount.An assets recoverable amount represents its greatest value to the business in terms of the cash flows that
3、 it can generate. I hat is the higher of:The amount for which the asset could be sold in an arms length transaction between knowledgeable and willing parties, net of costs of disposal (fair value less costs to sell); and the present value of the future cash flows that are expected to be derived from
4、 the asset (value in use). The expected future cash flows include those from the assets continued use in the business and those from its ultimate disposal. Value in use (VIU) is explicitly based on present value calculations.Accounting for asset impairments was not practiced in China until 1998 when
5、 the Chinese government issued the Accounting Regulation for Listed Companies. According to the regulation, listed companies were mandated to recognize asset impairments for four categories of assets, including accounts receivable, inventories, short-term investments, and long-term investments. The
6、requirement was expanded in 2001 to all companies with four additional categories of assets, including fixed assets, construction in progress, intangible assets, and entrusted loans when the ministry of finance promulgated the Accounting System for Business Enterprises. While discretion for impairme
7、nt reversals was explicitly granted in the 2001 regulation, detailed disclosure requirements were not available until 2003 when the ministry of finance issued “Questions and Answers No.2: Implementing the 2001 Accounting System for Business Enterprises and Related Accounting Standards.” According to
8、 this document, listed companies must disclose, in a separate table, two types of decreases in asset impairment provision accounts: (1) unrealized reversals due to the recovery of asset impairments, and (2) write-offs due to the disposal of assets, which include realized reversals. In January 2004,
9、the China Securities Regulatory Commission issued “Questions and Answers No. 1: Disclosure Regulations Nonrecurring Items,” which requires listed companies to disclose the total reversals of asset impairments (both realized and unrealized) as a nonrecurring item.Although the intention of the impairm
10、ent accounting regulations in China is to avoid the overstatement of assets on the one hand and to allow companies to reflect impairment recovery on the other hand, concerns have been expressed in the financial press that companies may manage earnings opportunistically through impairments and revers
11、als. For example, China Securities News published a typical big bath and reversal story on August 22, 2004. Tian Da Tian Cai (stock code ) reported a huge loss in 2003 after deducting an asset impairment loss of renminbi (RMB) 152,800,000. In the following year, the company showed a small profit of
12、RMB 6,380,000 with a relatively large amount of impairment reversal at RMB 63,740,000. Without this reversal, the company would have reported a loss in two consecutive years, which would result in the company being classified as a special treatment (ST) stock. Appendix A contains the disclosure of a
13、sset impairments and reversals by Tian Da Tian Cai in 2004. Interestingly, different from most companies in our sample, Tian Da Tian Cai did not separate the total reversals into realized and unrealized components. While anecdotal stories suggest earnings management, empirical evidence is rare regar
14、ding the determinants and consequences of impairment reversals in China.Prior research on asset impairments is related to this study. Managerial discretion is a focal point in this literature. Managers cannot communicate their private information of asset value to outside parties without necessary d
15、iscretion; however, such discretion also provides opportunities for earnings manipulation. A long-standing emphasis is to examine whether asset write-downs are driven by underlying economics or reporting incentives. A number of studies attempt to distinguish between the two perspectives solely based
16、 on market responses. If asset write-downs reflect the confidence of management about future performance, investors should respond positively (Frantz 1999). Strong and Meyer (1987) provide supporting evidence. Similarly, Francis, Hanna, and Vincent (1996) find that the market responds positively to the announcement of restructuring charges. On the other hand, managers may write down assets even if they have unfavorable information about the future of firm. Taking a big bath in the current p
