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Write-down of long-term assets:The reflection of fair value or the action of earnings management?

Wang Yuetang,Zhou Xue & Zhang Li  
Compared with short-term assets,long-lived assets are employed longer and it is more difficult to decide their fair value,so the application of impairment policy has an enormous impact on the performance of the company and the subjectivity is pervasive in the process.It is worth researching that how the long-lived asset's write-down policy set out in the Accounting System for Enterprises has been implemented,what effect the retro-adjustment policy has had on the impairment of the company and whether the write-downs have reflected the perspective of the future profit ability of long-term assets or they are just the behavior of earnings management.The result finds that Chinese listed companies wrote down impaired long-term assets at large in the year of the launch of the policy and the total amount of the write-offs really reflected the decline of their future profit ability,and the amount retro-adjusted to the current year's earnings also have the same reflection.It is verified that retro-adjustment provides the policy path for the companies to tamp long-term assets and reflect the true value of them.
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