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WHAT ARE THE MAIN DIFFERENCES BETWEEN PRC GAAP, IFRS AND US GAAP?

Chinese accounting standards vs USgaap

PRC GAAP(New Accounting Standard for Enterprises issued by Ministry of Finance of P.R.C on Feb.15, 2006)IAS/IFRSUS GAAP

InventoryUse of LIFO to calculate inventory delivery cost is prohibited.

Inventory provisions confirmed in earlier stage can be reversed back when the price rises in the later stage.

–Use of LIFO permitted. Reversal of write-down is prohibited.

Long-term investments in equity securitiesWrite-down recognised in income statement.

Investment in branches is accounted by cost method; investment in affiliated companies or joint ventures is accounted by equity method

It is not specified on the operation / assets in joint control.

The parties of joint ventures can only adopt equity method for the investment in joint ventures in consolidatedstatements

Measured at fair value with value changes recognised either (a) in income statement or (b) in equity until the investment is sold.

In the separate financial statements of parent company, cost method or IAS39 is adopted to account equity investment in subsidiaries, affiliated companies or joint ventures.

Regulation: IAS31

Parties of joint ventures can adopt proportionate consolidation method or equity method for investment in joint ventures in consolidated statements.

Same as IFRS

Long-term investments in debt securitiesIf it is categorized in “hold-to-maturity investment”, amortizedcost minuses possible Impairment measurement. If it is categorized in investment “for the sold”, it is measured by fair value and the value change is included in equity until it is sold.If classified as held to maturity, measured at amortised cost subject to impairment. If classified as available for sale, measured at fair value with value changes recognised either (a) in income statement or (b) in equity until the investment is sold.Same as IFRS

Fixed assets (exclude investment real estate)Only cost mode is allowed.Cost mode and evaluation mode are both allowed.–

Measurement of investment real estateInvestment real estate can adopt both cost mode and fair value mode to measure. Fair value mode doesn’t do accrual depreciation, but does impairment test regularly.Revaluated price or lower price in historical cost can be adopted.

Lease of the land use right can choose to be included in investment real estate, but fair value mode must be adopted to include it in investment real estate.

Same as PRC GAAP

Property, plant, and equipment received as a capital contribution from ownersMeasured at an amount agreed by all investing parties.Fair valueFair value

Profit or loss on disposal of fixed assetsPresented as a non-operating gain or loss.Included in operating profit or loss.Similar to IFRS

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