Research Of Construction Of Liquidation Accounting Standards

Bankruptcy is one result of economy development; it can’t be avoided during theoperation of economy. Bankruptcy drops enterprises which have poor profitability, orirrational capital structure, or allocating resources uncoordinatedly out of markets. In China,liquidation accounting is under the guidance of the <State—owned Enterprises’ TrialBankruptcy Accounting Treatments Interim Provisions>, issued by Ministry of Finance in1997, based on the <Bankruptcy Law>, which was issued in1988. The <Interim Provisions>pays high attention on recording and report issues, ignoring the importance of recognition andmeasurement, as well some of the methods and contents mentioned are out of date. As <TheEnterprise Bankruptcy Law of the People’s Republic of China> was issued in2006, it hassome divergences with the <Interim Provisions>, such as the order of paying debts. It’s clearthat establishing the <Liquidation Accounting Standards> has urgent practical needs.The practice of establishing the <Enterprise Annuity Fund Guidelines> is a goodreference to the <Liquidation Accounting Standards>——while maintaining its ownindependence, coordinates with other standards at the same time. First part of the<Liquidation Accounting Standards> describes accounting basis, financial reporting objective,accounting assumptions, the quality of accounting information of bankruptcy liquidationaccounting. Second part represents appropriate recognition and measurement requirements ofassets, liabilities, liquidation equity, profits and losses of bankruptcy liquidation accounting.Third part involves finance reports——liquidation balance sheet, liquidation property sheet,liquidation property allocation sheet, liquidation income statement, liquidation debtrepayment sheet, satisfy different needs of different report readers about the accountinginformation of the bankruptcy enterprise.