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understanding International Accounting Standards. These include:

International 3rd Edition. Written by Deloitte &

Accounting Standards: Touche, Uni ted Kingdom. Published
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International 2nd Edition. Model financial
Accounting Standards - statements and presentation and
A Practical Guide to disclosure checklists prepared under
Financial Reporting IAS. Published by Deloitte Touche
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IAS in your Pocket 2nd Edition. An 80-page pocket-sized
guide with summaries of all IASB
Standards and Interpretations, updates
on agenda projects, and other useful
IASB-relat ed information.
IAS Plus Newsletter A quarterly newsletter on recent
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Accounting Standards and accounting
updates for individual countries. To
subscribe visit our IAS Plus website.
www.iasplus.com Our IAS Plus website provides up-to-
date news on IAS developments as
well as summaries of IFRS and
Interpretations and reference materials
for download.
Financial Instruments – Related summaries, guidance,
Applying IAS 32 and examples, and US GAAP
IAS 39 comparisons. Published by Deloitte
Touche Tohmatsu.
GAAP Differences in This 20-page booklet identifies and
your Pocket: IAS and explains 81 differences between
US GAAP International Financial Reporting
Standards and US GAAP.
 2002 Deloitte Touche Tohm atsu.
All rights reserved.
Printed in Hong Kong.
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The information in this publication is written in general terms. It is

intended as a guide only and the application of its contents to specific
situations will depend on the particular circumstances involved. It
cannot be applied to a specific situation without appropriate
professional advice. Accordingly, we recommend that readers seek
such professional advice regarding their particular circumstances.
This publication should not be relied on as a substitute for such
professional advice. All offices of Deloitte Touche Tohmatsu would
be pleased to advise you.

While all reasonable care has been taken in the preparation of this
publication, neither Deloitte Touche Tohmatsu, nor any of its offices,
partners or employees, accept any responsibility for any errors it
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on it.
 FOREWORD
What is PRC GAAP?
Generally accepted accounting principles (GAAP) in
the People’s Republic of China (PRC) come from a
number of sources, most notably the law, the Ministry
of Finance (MOF), and, for listed company disclosures,
the China Securities Regulatory Commission (CSRC).
The Law
The Accounting Law of the PRC (last revised as of 1
July 2000) is the highest authority on accounting in
China. It sets out general principles of accounting for
all enterprises, including a definition of the nature and
role of accounting and basic principles. It empowers
the PRC Ministry of Finance to administer accounting
affairs and to establish uniform accounting regulations
and systems. Such regulations and systems have the
force of law.
In 2000, the State Council issued Financial Accounting
and Reporting Rules for Enterprises (FARR). It focuses
on such financial accounting and reporting matters as
bookkeeping, preparation of financial statements, and
reporting practices. It applies to all enterprises other
than very small ones that do not raise funds externally.
Ministry of Finance (MOF)
Pursuant to its mandate under the Accounting Law, the
MOF has issued various accounting regulations that
apply to different categories of enterprises in China:
• In 1993, the MOF adopted the Accounting
Standard for Business Enterprises (Basic
Standard), which serves as the conceptual
framework of accounting in China. However,
many definitions and concepts included therein
have been revised or updated by subsequent
pronouncements such as the FARR.
• The MOF has adopted a series of Chinese
Accounting Standards (CAS), in each case with a
FOREWORD
separate document of supporting implementation
guidance.
• The MOF has recently developed two
comprehensive accounting systems, one that is now
applicable to foreign investment enterprises and
joint stock limited enterprises (including listed
enterprises) and the other applicable to foreign
investment financial institutions and listed financial
institutions.
• The MOF has developed from 1993 various
industry-specific accounting systems, such as those
for agriculture, communication, and transportation,
and systems that apply to different types of unlisted
financial institutions.
• From time to time, the MOF also develops ad hoc
regulations.
Chinese Accounting Standards (CAS). The MOF has
been working to develop a body of Chinese Accounting
Standards that are broadly in line with International
Accounting Standards (IAS). The MOF issued its first
Standard in 1997. To date, 16 standards have been
adopted and others are under active development.
Deloit te Touche Tohmatsu has served as the advisor to
the MOF in its project to develop CAS.
A complete list of CAS is set out in the table on the
next page. The table identifies the category of
enterprises to which each Standard applies.
Accounting System for Business Enterprises. In
January 2001, the MOF adopted a comprehensive
Accounting System for Business Enterprises (the
System). The System is based, in part, on the
experience of the MOF in implementing the Accounting
System for Joint Stock Limited Enterprises and, in part,
on the existing individual CAS issued in the past few
years.
 FOREWORD FOREWORD

Applicability to joint stock limited enterprises. Starting

Accounting Effective Applicability
Standard Date
1 January 2001, all joint stock limited enterprises
(JSLEs) were required to follow the System – other than
1 Disclosure of Related 1 Jan. 1997 Listed enterprises
Party Relationships and enterprises in banking, insurance, and other specialised
Transactions financial industries (for which a separate accounting
2 Cash Flow Statements 1 Jan. 2001 All enterprises system has been adopted – see below).
(minor revision in 2001)
When the System became effective on 1 January 2001,
3 Events Occurring After the 1 Jan. 1998 Listed enterprises the old Accounting System for JSLEs was abolished.
Balance Sheet Date
Starting in 2001, also, enterprises other than JSLEs
4 Debt Restructuring 1 Jan. 2001 All enterprises
(revised significantly in have been encouraged to follow the System as well,
2001) with the proviso that State-owned enterprises require
5 Revenue 1 Jan. 1999 Listed enterprises prior approval from the relevant government authority.
In addition, if a parent company adopts the System, the
6 Investments (minor 1 Jan. 2001 Joint Stock Limited
revision in 2001) Enterprises (prior to parent should require its subsidiaries to adopt the
1 January 2001 it System as well.
was listed
enterprises only) Applicability to foreign investment enterprises. As of 1
7 Construction Contracts 1 Jan. 1999 Listed enterprises January 2002, the MOF extended the applicability of
8 Changes in Accounting 1 Jan. 2001 All enterprises (prior
the System to all foreign investment enterprises – again
Policies and Estimates and to 1 January 2001 it other than banks, insurance companies, and other
Correcti ons of Accounting was listed financial enterprises.
Errors (minor revision in enterprises only)
2001)
Applicability to financial institutions. Early in 2002,
9 Non-monetary 1 Jan. 2001 All enterprises the MOF issued a new separate – though similar –
Transactions (revised
significantly in 2001) Accounting System for Financial Institutions. It must
be applied, starting 1 January 2002, by all listed and
10 Contingencies 1 July 2000 All enterprises
foreign investment banks, insurance companies,
11 Intangible Assets 1 Jan. 2001 Joint Stock Limited
Enterprises
brokerages, leasing companies, and finance companies.
Unlisted financial institutions that are joint stock limited
12 Borrowing Costs 1 Jan. 2001 All enterprises
enterprises are encouraged to follow the new system.
13 Leases 1 Jan. 2001 All enterprises Othe r unlisted financial institutions should continue to
14 Interim Financial Reporting 1 Jan. 2002 Listed enterprises use the old Accounting Systems for financial
15 Inventories 1 Jan. 2002 Joint Stock Limited
institutions.
Enterprises
The Accounting System for Financial Institutions is
16 Fixed Assets 1 Jan. 2002 Joint Stock Limited similar to the one for general business enterprises but,
Enterprises
in addition, includes principles specific to financial
institutions, such as how to recognise interest;
repurchase agreements; securities transactions;
 FOREWORD
insurance reserves; accounting by trusts; and accounting
by investment funds.
China Securities Regulatory Commission
The CSRC has adopted various regulations for
presentation and disclosure of information by listed
enterprises. These generally do not address matters of
accounting recognition and measurement.
Convergence
The primary focus of the IASB is convergence of
accounting standards worldwide. To facilitate
convergence of accounting standards, the IASB has
seven members who serve as official liaisons to national
standard-setters. Countries with formal liaisons are
Australia (including New Zealand), Canada, France,
Germany, Japan, the United Kingdom, and the United
States.
In addition, IASB maintains liaison with other key
countries through the International Accounting
Standards Advisory Council (SAC). Madam Feng
Shuping, Assistant Minister, PRC Ministry of Finance,
is a member of the SAC.
Given the circumstances of individual countries,
differences currently exist between national standards
and IFRS. For instance, our Firm’s recently-published
comparison of IAS and US GAAP identified over 80
differences. The MOF supports internatio nal
accounting harmonisation and is working to achieve
convergence of CAS with IFRS by giving due
consideration of IFRS in the process of drafting each
CAS.
Circumstances where differences arise between CAS
and IFRS include:
• Areas where IFRS allow choices but CAS do not.
For instance, property, plant, and equipment may
FOREWORD
be stated at cost or at revalued amounts under IFRS
whereas CAS generally require cost basis.
• Areas such as hyperinflation where the MOF has
not developed a CAS because of limited
application in China.
• Areas where the MOF is currently developing new
standards. The MOF has an ongoing programme to
issue standards that deal with areas specifically
addressed by IFRS.
• In the light of China’s evolving market economy
and developing accounting profession and the
practical circumstances of Chinese enterprises, the
MOF has not adopted certain accounting
conventions applied in the IFRS, notably the
pervasive use of fair value. The MOF’s approach
is to establish a set of CAS suitable to China’s
circumstances, while striving toward convergence
with IFRS in an orderly manner.
This Publication
This publication summarises some of the differences
between IFRS and PRC GAAP. For this purpose, we
include in PRC GAAP mainly the requirements of the
law, CAS, the Accounting Systems for Business
Enterprises and for Financial Institutions developed by
the MOF, and the regulations of the CSRC.
Therefore, the focus of this booklet is on GAAP
applicable to listed enterprises, other joint stock limited
enterprises, and foreign investment enterprises.
DELOITTE TOUCHE TOHMATSU
Ken Wild, Global Leader
International Accounting Standards
Stephen Taylor, Leader
IAS Centre of Excellence – Hong Kong
September 2002
 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP

1 Classifications of Assets either are Assets must be
The following table sets out some of the differences between assets in the not classified or are classified into
International Financial Reporting Standards (IFRS) and GAAP balance sheet classified into current assets,
in the People’s Republic of China. The significance of these current and long-term
differences – and others not included in this list – will vary with noncurrent.1 investments, fixed
respect to individual companies depending on such factors as assets, intangible
the nature of the company’s operations, the industry in which it assets, and other
operates, and the accounting policy choices it has made. assets.
Reference to the underlying accounting standards and any
relevant national regulations is essential in understanding the 1 Classifications of Liabilities either are Liabilities must be
liabilities in the not classified or are classified into
specific differ ences.
balance sheet classified into current and
current and noncurrent.
noncurrent.1
IAS Topic IFRS PRC GAAP 1 Classification of Classification by Classification by
expenses in the nature or by function.
_ General Principle-based Principle-based income function.
approach standards with standards
statement
limited application accompanied by
guidance. detailed application 1 Specific line Some. Many.
guidance. items required
on the face of
_ Ability to make Some accounting Few choices.
financial
choices choices allowed.
statements
– Financial year - Not specified. Required to be 31
end date December. 1 One year Required both in Required in
comparative financial financial
1 Complete set of Balance sheet, Same, plus prior year statements and in statements but not
financial income statement, statement of financial the notes. in the notes.
statements equity statement, allowance for information CSRC rules require
cash flow impairment, profit listed companies to
statement, plus appropriation include certain
notes. statement, comparative
statement of information in the
segmental notes.
information.
1 Reporting a Permitted, but not Prohibited.
1 Management Encouraged Required as part of separate line required. 1
discussion and “outside the an enterprise’s item for “total
analysis. financial financial and comprehensive
statements”. accounting report, income”
but not part of the combining net
financial profit or loss and
statements. gains or losses
charged directly
to equity

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
1 Departure from Permitted in Not addressed. 8 Non-mandated May either restate Must restate prior
a Standard “extremely rare” changes in prior financial financial
when circumstances “to accounting statements or statements unless
compliance achieve a fair policy include as a impracticable.
would be presentation”. cumulative effect in
misleading net profit and loss
in the current
2 Producers’ May be measured Excluded from the financial
inventories of at net realisable scope of the CAS. statements.1
livestock, value if there is a
agricultural and well -established 8 Change in Change in estimate Change in
forest products, practice in that depreciation (prospective). accounting policy
and mineral ores industry. method for (restate prior period
existing assets financial
7 Presenting cash May use either Must present both statements).
flows from direct method or direct method and
operating indirect method. indirect method. 10 Dividends Non-adjusting Adjusting event.
acti vities declared after event.
the end of a
7 Classification of May be classified Interest paid must financial year
interest received as an operating, be classified as a and before the
and paid in the investing, or financing activity. financial
cash flow financing activity. Classification of
statements are
statement interest received
authorised for
depends on its issue
nature.
11 Inclusion of Included if the Never included.
7 Cash flows Operating unless Always operating.
borrowing costs company’s policy is
relating to they relate to
as costs of to capitalise
income taxes investing or construction borrowing costs.
financing activities. contracts
8 Extraordinary Rare, generally “Abnormal” items
items presented limited to are presented
separately in the expropriations, separately in the
income natural disasters, cash flow
statement and acts of war. 1 statement. In
addition, certain
types of gains and
losses must be
disclosed as
supplementary
information.

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
12 Method of Tax effect May use either (a) 16 Property, plant, Measured at fair Measured at an
accounting for accounting using a tax payable method and equipment value. amount agreed by
income taxes balance sheet (deferred taxes not received as a all investing parties.
approach – recognised) or (b) capital
deferred tax assets tax effect contribution from
and liabilities accounting using owners
recognised for an income
differences in the statement 16 Exchanges of Measured at fair Measured at the
book and tax bases approach – dissimilar fixed value. Gain or loss carrying amount of
of assets and deferred tax assets assets. is recognised. the asset
surrendered. No
liabilities. In and liabilities are
gain or loss is
measuring deferred recognised for
taxes, the tax rate differences in recognised.
expected at amounts 16 Profit or loss on Included in Presented as a
reversal must be recognised in the disposal of fixed operating profit or non-operating gain
used. income statement assets loss. or loss.
and on the tax
return. In 17 Lessee Lower of fair value Lower of lessor’s
measuring deferred measurement of and present value carrying amount
taxes, either the assets acquired of minimum lease and present value
current tax rate or by a finance payments. of minimum lease
the expected tax lease and payments. If
rate may be used. related lease leased assets are
liability 30% or less of total
12 Recognition of Recognised to the Same except that assets, the leased
deferred tax extent that future the reversal period assets and related
assets taxable profits are is normally limited liability may be
probable during the to three years. measured at the
reversal period. undiscounted
14 Companies Listed companies Listed companies minimum lease
required to only. and other payments.
present segment enterprises
information applying the
System.
14 Items of More disclosure for Full disclosures for
disclosure primary segments both business and
required for than for secondary geographical
segments segments. segments.
16 Basis of May use either Generally required
property, plant, revalued amount or to use historical
and equipment historical cost. cost.

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
17 Interest rate The rate that The rate that 18 Measurement of Fair value of the Amount stipulated
used to measure discounts the discounts the revenue consideration in the contract or
the discounted minimum lease minimum lease received or an amount agreed
present value of payments and payments and receivable. to by the buyer and
minimum lease unguaranteed unguaranteed seller.
payments residual value back residual value back
18 Measurement of Discounted present Undiscounted
to the fair value of to the lessor’s
the leased asset. If carrying amount of revenue when value of amounts to amounts to be
that is not known, the leased asset. If payment is be received. received.
use lessee’s that is not known, deferred
incremental use the discount 18 Recognition of Either reduction of Expense.
borrowing rate. factor specified in cash discounts revenue or
the lease for prompt expense.
agreement. If both payment
are unknown, use
the lessee’s bank 18 Recognition of When probable and When received in
borrowing rate. government reliably cash.
refund of VAT m easurable.
17 Initial direct Either expense or Expense. tax
costs (lessors) amortise over the
lease term.1 19 Defined benefit Unfunded liability is In practice, the
pension plans recognised. unfunded liability is
17 Recognition of a If the sales price is The gain is always Expense is not recognised.
gain on a sale fair value, the gain amortis ed recognised during Expense is
and leaseback is recognised proportionately with employee working recognised when
transaction immediately. the lease payments years. payments are
where the Otherwise during the lease made to retired
leaseback is an generally amortise term. employees.
operating lease over the lease
term. 20 Grant received Recognised in Upon completion of
to fund a specific income over the the project, credited
17 Recognition of a Any difference Same except that project project period. directly to equity to
gain on a sale between sales the difference is the extent that the
and leaseback proceeds and deferred and grant has been
transaction carrying amount is amortised as an capitalised as part
where the deferred and adjustment of of the cost of an
leaseback is a amortised over the depreciation. asset.
finance lease lease term.
21 Translation of a Translation Translation
17 Disclosure of Amounts for year 1, Amounts for each foreign operation adjustments are adjustments are
lease years 2 to 5 of years 1, 2, and 3 that is integral to included in net deferred in equity.
commitments combined, and and beyond year 3 the parent’s profit or loss.
beyond year 5 combined. operations
combined. (rather than self-
sustaining)

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
21 Exchange No special Deferred until the 22 Measuring Measured at the Generally
differences treatment. entity commences goodwill difference between measured at the
arising during operations. the cost of the difference between
the pre- acquisition and the the cost of the
operating period acquirer’s share of acquisition and the
the fair values of acquirer’s share of
22 Method of Pooling (uniting) of While there is no
net assets the carrying
accounting for interests is required standard on acquired. amounts (book
business if the acquirer business values) of net
combinations cannot be combinations, most assets acquired.
identified. business
May be measured
Otherwise combinations are
based on
acquisition accounted for as “appraised value”
(purchase) acquisitions of net assets
accounting must be (purchases),
acquired if 100% of
used. 2 though pooling
the shares of a
(uniting) of interests company are
is sometimes used. acquired.
22 Measuring the Discounting Discounting is 22 Amortisation of Amortise over its Amortise over the
cost of an required. prohibited.
acqui sition when goodwill estimated useful investment period,
life, which is if any, stipulated in
payment of presumed to be 20 the investment
some years or less, contract. If none,
consideration is
subject to an amortise over not
deferred impairment test.2 more than 10
22 Recognising a May be recognised Generally not years.
restructuring in limited recognis ed. 22 Measuring the May measure at Must measure at
liability as part of circumstances.2
minority interest either fair value or historical cost.
a purchase portion of historical cost.2
business acquired assets
combination and liabilities in
a purchase
business
combination

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
22 Negative Initially offset Amortise over the 23 Inclusion of Only to the extent Any exchange
goodwill against any investment period, foreign that the exchange difference relating
expected future if any, stipulated in exchange difference is to a project-specific
losses, then the investment differences on regarded as an borrowing to the
amortise any contract. If none, debt as a adjustment to extent that it arises
amounts not amortise over not borrowing cost interest cost. before the
exceeding the less than 10 years. eligible for completion of the
value of acquired capitalisation fixed asset.
non-monetary
assets, any excess 23 Income on Reduces borrowing Does not reduce
temporary cost eligible for borrowing cost
is included in net
investment of capitalisation. eligible for
profit or loss.2
funds borrowed capitalisation.
23 Borrowing costs May either Must capitalise as for construction
related to assets capitalise as part of part of the cost of of an asset
that take a the cost of the the asset.
24 Disclosure of Exempted. 1 Required.
substantial time asset or charge to related party
to complete expense.
information in
23 Assets qualifying Fixed assets, Only fixed assets financial
for capitalisation intangible assets, that take a statements of
of borrowing and inventory that substantial time to wholly owned
costs take a substantial complete, except subsidiaries
time to complete. that property
developers can 24 Disclosure of Exempted. Required if the
related party state-controlled
capitalise information enterprise meets
borrowing costs
relating to property relating to the criteria for a
developed for sale. transactions related party.
between two
23 Types of Includes interest Includes interest on state-controlled
borrowings for incurred on both only project -specific enterprises
which interest project-specific borrowings, except
costs are eligible borrowings and that property 24 Sale to a related Measure revenue For listed
for capitalisation general developers can party at a at the transaction enterprises,
borrowings. capitalise all transaction price price. generally measure
in excess of revenue at the
borrowing costs.
market price estimated market
23 Ancillary costs The amortisation of The full amount of price or cost plus a
incurred in ancillary costs ancillary costs reasonable or
arranging a during the incurred during the defined margin.
borrowing construction period construction period Credit the excess
is capitalised. is capitalised. to equity.

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
27 Preparation of Not required. Required. 27 Other situations Exclude a Same. In addition:
consolidated in which subsidiary that
financial subsidiaries are operates under Exclude a
statements by a excluded from severe long-term subsidiary that, for
company that consolidation restrictions that reasons such as
itself is a wholly- significantly impair bankruptcy,
owned or its ability to transfer negative equity,
virtually wholly- funds to the parent. restructuring or
owned discontinuance of
subsidiary operations, is
unlikely to be able
27 Subsidiaries Consolidated. Excluded from to transfer funds to
whose activities consolidation. the parent.
are dissimilar to
those of its Exclude
parent (banking, subsidiaries that, in
insurance, and the aggregate,
finance have total assets,
subsidiaries of revenue, and profit
non-financial less than 10% of
parents) the corresponding
group totals (this
exemption does not
apply to
subsidiaries with
accumulated
deficits at the
balance sheet date
or those that have
incurred losses for
the year).
27 Accounting for May use cost, Must use equity
investments in equity method, or method.
subsidiaries in available-for -sale
the parent’s accounting.
separate
financial
statements

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
27 Gain on Not addressed. Recognition of gain 28 Impact of Must either (a) No requirement to
“deemed Gain is often is not permitted. different conform accounting conform accounting
disposal” of a recognised. accounting policies and policies, but must
subsidiary as a policies or reporting dates or disclose accounting
result of reporting dates (b) if that is not policy differences.
issuance of of investor and practical, must Associate’s
additional associate (or adjust for any reporting date must
shares by the investee) significant not be more than 3
subsidiary to differences in months earlier or
third parties policy and later than the
subsequent investor’s. While
28 Goodwill implicit Measured at the Measured at the
transactions or accounting
in an equity difference between difference between events. standards do not
method the cost of the the cost of the require adjustment
investment investment and the investment and the
for any significant
investor’s share of investor’s share of
differences in policy
the fair values of the carrying or subsequent
net assets amounts (book transactions or
acquired. values) of net events, in practice
assets acquired.
such adjustments
28 Amortisation Amortise over its Amortise over the are often made.
period of estimated useful investment period, 28 Accounting for May use cost, Must use equity
goodwill implicit life, which is if any stipulated in investments in equity method, or method.
in equity method presumed to be 20 the investment
associates in the available-for -sale
investment years or less, contract. If none, investor’s accounting.
subject to an amortise over not separate
impairment test.2 more than 10 financial
years.
statements
28 Amortisation Initially offset Amortise over the 29 Hyperinflation Adjust the Not addressed.
period for against any investment period subsidiary financial
negative expected future stipulated in the statements for the
goodwill implicit losses; then investment
general effects of
in equity method amortise any contract. If none, inflation, with the
investment amounts not amortise over not gain or loss on net
exceeding the less than 10 years. monetary position
value of acquired
in net income.
non-monetary
assets; any excess 31 Investments in May use either the Proportionate
is included in net joint ventures in equity method or consolidation.
profit or loss.2 which the proportionate
investor has joint consolidation.
control

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
31 Investments in May use either the Equity method. 32 Costs of issuing Deducted from First, deducted
joint ventures in equity method or shares equity. from any interest
which the available-for -sale income earned on
investor has method. investment of
significant subscription
influence but not proceeds during
joint control the subscripti on
period. Then
31 Accounting for May use cost, Must use equity reduce share
investments in equity method, or method. premium. Any
joint ventures in available-for -sale
excess will be
the venturer’s accounting.
deferred and
separate amortised.
financial
statements 33 Disclosures of Basic and diluted For listed
earnings per net profit or loss companies, the
32 Issuer’s Classified Not specifically
classification of according to addressed, but in share per share. Detailed CSRC requires
computational disclosure of two
an instrument as substance: if the practice classified guidance is basic net profit or
debt or equity – issuer is required to according to legal provided. 1 loss per share
overall principle pay cash (such as form. Dividend
mandatorily payments are not figures (based on
average and year-
redeemable deducted in end numbers of
preferred shares) measuring net outstanding shares)
or the holder can profit or loss.
and also return on
demand to receive net assets. CSRC
cash (holder put provides some
option), the computational
instrument is
guidance for basic
classified as debt. EPS that is
If classified as different from IFRS.
debt, dividend
payments are 34 Interim fi nancial Entity may present Entity must present
deducted in statements complete or complete financial
measuring net condensed statements (but an
profit or loss. financial equity statement is
statements. not required).
32 Classification of Split the instrument Classify the entire
convertible debt into its liability and instrument as a 34 Measurement of Use the estimated Use the rate
instruments equity components. liability. income tax annual effective tax applicable to
expense in rate. income of the
32 Amortisation of Effective interest May use effective interim financial current period.
premium or method. interest method or
statements
discount on straight line
long-term debt method.
payable

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 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
35 Discontinuing Detailed Not addressed. 38 Measurement of Interest is imputed. Interest is not
operations presentation and the cost of a imputed.
disclosure purchased
requirements. intangible where
payment is
36 Impairment of Cash generating Specific guidance deferred beyond
assets that do unit concept. is not provided.
normal credit
not generate terms
cash flows
individually 38 Intangible asset Measured at fair Measured at an
received as a value. amount agreed by
37 Measurement of Discounted present Undiscounted capital all investing parties,
provisions value of the best amount of the best contribution from except measured at
estimate to settle estimate to settle
an owner the investor’s
the obligation. the obligation. carrying amount
37 Provisions Recognised only Not addressed when contributed at
arising from when the entity has (excluded from the the time of an initial
restructuring of a detailed formal standard on issue of shares.
an entity plan to restructure contingencies). 38 Intangible asset Measured at fair Measured at
and has either received in a value. carrying amount of
announced or non-monetary asset surrendered.
started to
transaction
implement the plan.
38 Land use rights Accounted for as Accounted for as a
38 Mineral rights Excluded from the Included in the
an operating lease. purchased
and expenditure intangible assets intangible assets Cost of land use intangible asset
to explore, standard. standard.
rights is treated as until the
develop, and
prepaid lease construction or
extract minerals payments.1 development
38 Research and Expense all Expense all commences; then
development research costs. research and accounted for as
costs Capitalise development costs fixed assets under
development costs (except that patent construction or (by
if certain criteria registration and a developer) as
are met. legal costs are property
capitalised). development costs.
On completion,
38 Pre-operating Charged to Deferred until the total costs are
expenses expense when entity begins transferred to
incurred. operations. Then property, plant, and
charged to equipment or (by a
expense. developer) property
held for sale.

Deloitte Touche Tohmatsu 27 28 Deloitte Touche Tohmatsu

 COMPARISON OF IFRS AND PRC GAAP COMPARISON OF IFRS AND PRC GAAP

IAS Topic IFRS PRC GAAP IAS Topic IFRS PRC GAAP
38 Amortisation of Amortis e over the Amortise over the 39 Long-term If classified as held Measured at
intangible assets estimated useful shorter of the investments in to maturity, amortised cost
life, which is estimated useful debt securities measured at subject to
presumed to be 20 life and the amortised cost impairment.
years or less.2 contractual or legal subject to
life or, if no impairment. If
contractual or legal classified as
life, amortise over available for sale,
the estimated measured at fair
useful life, but not value with value
more than 10 years changes
recognised either
38 Revaluation of Permitted only if Prohibited. (a) in net profit or
intangible assets the intangible asset loss or (b) in equity
trades in an active
until the investment
market.
is sold.3
39 Short-term Measured at fair Measured at the
39 Investment Measured at fair Measured at an
investments value. If classified lower of cost and securities value. amount agreed by
as held for trading, market value, with received as a all investing parties.
value changes are a write-down
recognised in net recognised in net capital
contribution from
profit or loss. If profit or loss. an owner
classified as
available for sale, 39 Investment Measured at fair Measured at
measured at fair securities value. carrying amount of
value with value received in a asset surrendered.
changes non-monetary
recognised either transaction
(a) in net profit or
loss or (b) in equity 39 Amortisation of Effective interest May use the
until the investment premium or method. effective interest
is sold.3 discount on method or the
long-term debt straight line
39 Dividends Recognised as Reduce the investments method.
received on revenue when carrying amount of
39 Investment in Conversion feature Conversion feature
short-term receivable. the investment
investments when received. convertible is accounted for as is not separately
bonds an embedded accounted for.
39 Long-term Measured at fair Measured at cost derivative.
investments in value with value less impairment,
equity securities changes with a write-down
recognised either recognised in net
(a) in net profit or profit or loss.
loss or (b) in equity
until the investment
is sold.3

Deloitte Touche Tohmatsu 29 30 Deloitte Touche Tohmatsu

 COMPARISON OF IFRS AND PRC GAAP ABOUT DELOITTE TOUCHE TOHMATSU

IAS Topic IFRS PRC GAAP Deloitte Touche Tohmatsu is one of the world’s leading
professional services organisations, delivering world -
39 Creditor Loss is recognised Loss is recognised
accounting for if the discounted only if the class assurance and advisory, tax, and consulting
debt present value of undiscounted future services through its national practices. More than
restructuring – amounts to be amounts to be 95,000 people in 140 countries serve over one-quarter
modification of received is less received are less of the world’s largest companies, as well as large
terms of a than the carrying than the carrying
receivable amount of the amount of the national enterprises, public institutions, and successful
receivable. receivable. fast-growing global growth companies.
39 Debtor Gain and loss are Gain and loss are In addition to complete geographic coverage, Deloitte
accounting for measured on a measured on an
debt discounted present undiscounted Touche Tohmatsu offers clients deep industry strengths
restructuring – value basis. Gain basis. Gain is and outstanding services delivered consistently
modification of or loss is credited to equity. throughout the world. Our integrated teams of
terms of a debt recognised in net Loss is not internationally experienced professionals are well
payable profit or loss. recognised when
the restructuring
versed in addressing today’s challenges linked to
occurs but, rather, globalisation and the network economy. Our mission is
is recognised as to help our clients and our people excel.
interest expense
over the modified Our IAS contact people:
term.
39 Hedge Detailed standards. Not addressed. DELOITTE TOUCHE TOHMATSU
accounting IAS GLOBAL OFFICE
40 Measurement May use either fair Generally required
basis of value or historical to use historical
Ken Wild, Global IAS Leader kwild@deloitte.co.uk
investment cost. cost (accounted for Paul Pacter paupacter@deloitte.com.hk
property as fixed assets).
IAS CENTRES OF EXCELLENCE
41 Measurement May use either fair Generally required
basis of value or historical to use historical Americas:
biological assets cost. cost (biological John T. Smith iasplusamericas@deloitte.com
and agricultural assets held for
produce. procreation or Asia-Pacific:
production are Stephen Taylor iasplus@deloitte.com.hk
accounted for as Europe -Africa:
fixed assets). Graeme Berry, Johannesburg iasplus@deloitte.co.za
Endnotes: Stig Enevoldsen, Copenhagen iasplus@deloitte.dk
1
Topic is being addressed in the IASB’s Improvements Project. Veronica Poole, London iasplus@deloitte.co.uk
2
Topic is being addressed in the IASB’s Business Combinations Laurence Rivat, Paris iasplus@deloitte.fr
Project.
3
This booklet is available in electronic form at
Topic is being addressed in the IASB’s IAS 39 Amendments www.iasplus.com.
Project.

Deloitte Touche Tohmatsu 31

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