A Study On Accounting For Assets Impairment

Asset impairment accounting has been a hot topic in the field of financial accounting for a long time. Accounting standards setters have set accounting standards to regulate assets impairment practices. On February 15, 2006, China issued Accounting Standard for Business Enterprise No.8: Asset Impairment Accounting, which has been put into practice since 2007.Conservatism is a nature responses for uncertainty, and an important convention of financial report. The using of conservatism can improve the quality of accounting information under uncertain environment, so conservatism has even been considered as one of accounting information quality. With the development of accounting reform, the function and role of conservatism have been recognized gradually in China. Asset impairment accounting is the application of conservatism on asset' s value under uncertain conditions. The new standard for asset impairment in China not only intensifies the using of conservatism, but also requires strict conservatism measurement.This paper intends to reveal the relationship of conservatism and asset impairment accounting from the view of conservatism. The intensification of conservatism helps to against uncertainty. Meanwhile, the using of conservatism measurement would compress the space of earnings management, and then improve the quality of accounting information. In a word, conservatism helps to improve the effect of asset impairment accounting, and makes it meeting the demand of information user. Finally, the paper also makes some suggestions to improve the application of conservatism in the practice of asset impairment.