The Impact Of Income Standard Reform On Construction Enterprises And Its Response

In 2017,the Ministry of Finance issued "Accounting Standards for Business Enterprises No.14-Revenue".The new revenue standard adopts a unified revenue recognition model for different businesses,and stipulates that revenue should be recognized when control is transferred,to a certain extent,solving the problems of unclear transaction form classification and complex revenue recognition.The new standard requires that companies listed at the same time both domestically and abroad will be implemented from January 1,2018,and domestic listed companies will be fully implemented by 2020.Analysis of the impact of companies that have implemented the new standard due to the standard will have important implications for the full implementation of the new standard.In the context of the "Belt and Road",construction industry will surely contain greater profit potential.Revenue is the main source of profit.Only by standardizing revenue recognition,measurement and disclosure can we truly reflect profitability.Only by adapting to the requirements of the new standards can construction companies resolve the pressure caused by the complexity of construction contracts and the increase of international businesses.China Railway Group is a large state-owned company in the construction industry and is representative.Since listing on the Shanghai Stock Exchange and the Hong Kong Stock Exchange at the same time,the company began to implement the new income standard on January 1,2018.The article analyzes the specific business of China Railway Group's construction contract and compares the changes because of the new revenue standard.Base on this,the article points out the key of the construction enterprises when implementing the new standards,and provides relevant operational recommendations.This article is divided into six parts:The first part summarizes the research status of income recognition and establishes the research direction of this article.The second part sorts out the summary of the reform of the income criterion from the theoretical basis and the main changes.The third part introduces the market scale and industry background of China's construction industry,the difficulty of revenue recognition,and the main impact of the new income standard on the construction industry.At the same time,the implementation of the 2018 new income standard was compiled.The fourth part analyzes the specific impact of the new revenue standard on China Railway Engineering Contracting Business from the perspectives of revenue recognition,revenue accounting,contract costs and financial presentation.In terms of revenue recognition,it is more suitable for construction contract to recognize revenue within a period of time and use the input method to measure contract performance.Companies need to follow the five-step standard when calculating revenue.In terms of contract costs,the use of the new standard will reduce the scope of capitalization costs of construction enterprises and expand the scope of expense recognition.At the same time,the new standard relies on the professional judgment of accountants to reserve space for accounting subjects to play freely.In terms of the structure of assets and liabilities,although the implementation of the new standard expands the amount of liabilities,it is helpful to calibrate the inventory turnover rate and improve the objectivity of the asset-liability ratio.The matching degree of cash flow increases the relevance of the profit statement account notes to the business.The fifth part,based on the analysis above,puts forward suggestions for the construction industry to implement the new income standard.In terms of corporate governance,construction companies should strengthen the management of the entire process of sales contracts and pay attention to the management of the financial analysis process.In terms of risk control,in addition to paying attention to capital risks,bidding risks and the application of guidelines should also be considered.