1. Land in China: Re-considering comparability in financial reporting
- Author
-
Ying Zhang and Jane Andrew
- Subjects
Asset valuation ,China ,Comparability ,Global financial reporting ,Harmonisation ,Business ,HF5001-6182 - Abstract
This paper re-considers the notion of ‘comparability’ as it has been applied to the accounting standardharmonisation project and its implications for accounting practices that are emerging in China.Comparability is a concept that has been widely referred to within the accounting literature, but has remainedlargely unexplored. In order to encourage what Zeff (2007) described as “genuine comparability” we arguethat the underlying economic substance of an event should be the focus of our accounting choices in order toenable appropriate comparisons. If we focus too heavily on regulatory standardisation that prescribescomparable techniques without considering the broader economic context in which these are applied, theaccounting representations could mislead users. The techniques may distort representations of theunderlying economic substance of business activities, which would hinder the level of a genuinecomparability in global financial reporting. In order to explore this, given the unique legal status of land inChina, we consider how it is classified and represented in Chinese financial reports. This example shows thatthere are still significant challenges that need to be overcome in order to implement IFRS in China and thereare still substantial comparability problems for cross-border users.
- Published
- 2010