Research On Accounting Under BOT Model Of The Highway Operating Enterprises

Since the 1980s, developed countries like the UK, Canada and Australia introduced BOT mode to finance infrastructure. This mechanism of market competition not only pulled the local government from debt woes and boost public-service efficiency but also broaden the way for social capital to invest. In long-term cooperation, the fund efficiency can be magnified both in production and management which is help for the participants to achieve their goal. Britain’s experience indicated that social capital participate in infrastructure build spent 5%-20% less than government and improved the quality of the country’s public servants in a shorter time.The BOT mode has been studied extensively on its institutional framework, the bureaucracy, the fiscal constraints, the way to finance and accounting. Notably, there are some brief debate about accounting because of the absence of unified accounting standard and the complexity of the BOT mode. The main issued problems are how the concessions are reported, how to deal with the land-use rights, etc.In 2008, Interpretation No.2 for Accounting Standards for Business Enterprises was issued by the Ministry of Finance aiming to guide the accounting of BOT. But we find that it contains only some principles but not details of the operation, as a result, accountants hold different understanding. Accordingly, we can see the haphazard accounting of BOT in practice.This paper discussed the disputes of BOT mode accounting in highway operating enterprises and put forward some opinions and improving measures.Based on the concept and the basic features of BOT, this paper typed through the development process of BOT and the current state of BOT in highway operating.There are quite a lot choices on accounting policies when SPV dealing with accounting during the preparation of the annual report. The direct result is that similar business in different companies even in the same company was reported differently in the annual report. Among which, the most fundamental issue is the initial recognition and the subsequent measurement of concession.Due to the close relationship between the determination of assets and the definition of property rights, this paper gave detailed analysis of the influence caused by the property right in BOT and tried to put forward some different solutions with the guide of IFRIC12 and Interpretation No.2.First of all, this paper recognized the concession as a separate non-current asset by borrowing lessons from hong kong-listed company. Then the asset was amortized and devalued over the operation period according to the flow of vehicles.Then, In consideration of the use and the amount of expenditure, the subsequent expenditures during operating period were taken separately into account of period charges, deferred expenditures and the value of concession.Finally, this paper tried to confirm the concession after the road infrastructure has been built. The value of concession contained land-use rights, cost and margin of construction contract and capitalized interest.