[Similar to US GAAP](CAS 6.12)
[Follow PRC GAAP](CIT Law I/R 56)
Goodwill is recognized only in a business combination and is measured as a residual.
[Similar to US GAAP]CAS 20.13
2. Income Statement
3. Statement of Cash Flows
4. Statement of ShareholderEquity
5. Notes to Financial Statements
[Similar to USGAAP]
CAS 30.2
Annual CorporateIncome Tax Return
For other losses of fixed assets,the taxauthority’sapprovalshall be required for deduction.
(SAT Order [2011] No.25)
Intangible Assets and Goodwill
Intangible assets are measured initially atfair value.
Landaccounted for as a fixed assetisnot depreciated.(CIT Law 11)
Estimates of useful life and residual value, and the method of depreciation are reviewed only when events or changes in circumstancesindicatethatthe current estimates or depreciation method areno longer appropriate.
Anychangesare accounted for prospectively as a change inestimate.
An enterprise shall,at least at the end of each year, have a check onthe useful life, expected netsalvage value, and the depreciation method of thefixed assets.(CAS 4.19)
(CIT Law I/R 67)
Subsequent expenditureson an intangible asset isnotcapitalizedunless it can be demonstrated that the expenditureincreases the utility of the asset.
[Similar to US GAAP. Investment Property–Building is notdepreciated(a HFS asset)]
(CAS 4.14)
Land is not depreciated.(CAS 4.14)
Idlefixedassets(other than buildings) andfixedassets that is not related tobusiness are not depreciated.
Therevaluationof property, plant and equipment isnot permitted.
[Similar to US GAAP](CAS 4.6)
[Follow PRC GAAP](CIT Law I/R 56)
Thegain or loss on disposalis the difference between thenet proceedsreceived and thecarrying amountof the asset.
Property, plant and equipment is recognized initially at cost.
[Similar to US GAAP](CAS 4.7)
[Similar to US GAAP](CIT Law I/R 56)
Property, plant and equipment is depreciated over its usful life.
It only specifies subsequent expenditures on“R&D”projects.[R-expense; D-capitalized](CAS 6.10)
Borrowig cost could be capitalized.
(CIT Law I/R 37)
Both internal research and development expenditureisexpensedas incurred. Special capitalization criteria apply to in-process R&D acquired in a business combination, direct-response advertising, software developed for internal use and softwaredeveloped for sale to third parties.
[Similar to US GAAP](CAS 4.6)
Comprehensive repair costfor fixed assets should becapitalizedand amortized over no less than 3 years.
(CIT Law 13, Байду номын сангаасIT Law I/R 70)
The presentation of financial statements of the current period shall atleast provide thecomparative dataof all items of theprevious comparativeperiod, as well as the explanations on the understanding of the financialstatements of the current period, unless it is otherwise provided for in otheraccounting standards.(CAS 30.8)
[Similar to US GAAP. In addition,relevant tax expensesare also deductible in computing the disposal gain or loss.](CAS 4.6)
Disposal gain is taxable for CIT.
"Reversal" of impairment loss is not allowed.
[Similar to US GAAP]CAS 6.19
[Similar to US GAAP]CAS 8.17
Intangible assets that are not related to business cannot be amortized.
(CIT Law 12)
Intangible assets withfiniteuseful lives areamortizedover their expected useful lives.
[Similar to US GAAP]CAS 6.17
Intangible assets should be amortized bystraight line methodover no less than10 yearsor overcontractual period.
Straight line method
Declining balance method
Sum-of-the-years'-digits method
Depreciation based on use (activity)
[Similar to US GAAP](CAS 4.17)
Only deprecition computed bystraight line methodis deductible for CIT purpose. (CIT Law I/R 59)
Comparison between US GAAP, PRC GAAP and PRC Tax–Part I
March 20, 2012
US GAAP
PRC GAAP
PRC Tax
Form and Components of Financial Statements
1. Balance Sheet
[Similar to US GAAP.The assets and liabilities shall be presented ascurrentandnon-currentassets and liabilities, respectively.](CAS 30.12)
N/A
Property,Plant andEquipment
(13 forms)
Related Party Transaction Forms
(9 Forms)
USGAAPdoes not requirecomparative information. However,SEC registrantsare required to presentbalance sheetsas of the end of thecurrent andprior reporting periodsand allother statementsfor thethree most recent reporting periods.