1, inflated upfront costs and inflated profits.
Fixed assets are gradually compensated from depreciation to income according to their service life. If it is not fixed assets, in fact, the cost of fixed assets is over-calculated in the early accounting period, and the profit and loss are not or under-calculated in the later period.
2. Weakened the management of physical assets.
The management of fixed assets is strict, and the accounting books are monitored comprehensively. Failure to do fixed assets is likely to cause damage or loss.
3. Tax risks, which are in line with fixed assets but not treated as fixed assets, lead to the existence of the first situation, and need to increase enterprise income tax for taxation.