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PRC GAAP
Financial Accounting and Reporting Rules for Enterprises (FARR) Accounting Standards for Business Enterprises Accounting System for Business Enterprises (ASBE) Accounting Systems for Various Industries MOF Interpretations, Implementation Guides
Inventories
US GAAP
Inventories to be stated at the lower of cost and market value ( market is the lower of replacement cost and NRV minus normal profit margin). Reversal of inventory write downs is prohibited. Write down for LCM is recorded in cost of goods sold
PRC GAAP
Inventories to be stated at the lower of cost and net realizable value. Reversal of inventory write downs required if certain criteria are met LCM provision is recorded in G& A expenses
PRC GAAP
Consolidation of controlled subsidiaries is optional for some subsidiaries
PRC GAAP
No requirement
PRC GAAP
Amortize over the shorter of the estimated useful life and the contractual or legal life If no contractual or legal life, amortize over the estimated useful life, but not more than 10 years.
PRC GAAP
Classified as intangible assets before selfused construction or development and begin amortization Upon construction, the carrying amount of the land use right is transferred to the cost of fixed assets under construction Transfer to fixed assets and depreciate
Assets impairment
US GAAP
Impairment triggered if an asset's carrying amount exceeds the expected future cash flows to be derived from the asset on an undiscounted basis. Measured based on fair value Reversal is prohibited
PRC GAAP
Impairment triggered if an asset's carrying amount exceeds the higher of the assets valueinuse (discounted present value of the assets expected future cash flows) and net selling price. Measure based on the recoverable amount (the higher of the assets valueinuse and net selling price). Reversal Required, if certain criteria are met.
Pre-operating Expenses
US GAAP
Preoperating expenses are expensed as incurred
PRC GAAP
Preoperating expenses are accumulated until the entity commences operations, and are then expensed
PRC GAAP
Record initially at the rate of exchange at the date of the transaction or on the first day of the month in which the transaction occurs.
PRC GAAP
Foreign currency gains and losses recorded in financial expenses
Borrowing Costs
US GAAP
Generally includes only interest All interest cost incurred during the assets' acquisition periods Adjustment on borrowing selection consolidated level or own level
PRC GAAP
Includes interest, amortizations of discounts or premiums,certain ancillary costs, exchange differences Only interest of project specific loan can be capitalized
Quantifying Contingencies
US GAAP
Low end of the range of possible amounts
PRC GAAP
Undiscounted amount of the best estimate to settle the obligation
Revenue Recognition
US GAAP
Completion of percentage method only used for long term construction type contracts More detail guidance, such as SOP 97 2, software revenue recognition, EITF 00 21, Revenue Arrangement with Multiple Deliverables , etc Sales discounts net off with sales
Semiconductor Manufacturing International Corporation
PRC GAAP
Completion of percentage method Required whenever costs to complete can be reasonably estimated, and project crosses an accounting period Sales discounts recorded separately
Subsidy income
US GAAP
Subsidy received based solely on a capital expenditure, can reduce the cost of the asset by the amount of the grant or treat the amount of the grant as a deferred credit and amortizing it over the useful life of the asset on the same basis used to depreciate the asset Grants related to income are sometimes presented as a credit in the income statement
PRC GAAP
Technology development subsidy from the government is recorded in capital surplus after the project and the related assets were finished Grants related to assets, recorded in capital surplus Grants related to income, recorded in income statement
Income Taxes
US GAAP
Current tax asset or liability for taxes payable or refundable for current year Deferred tax asset or liability resulting from temporary differences Measurement based on enacted tax laws Deferred tax asset reduced to amount expected to be realized
PRC GAAP
May use either (a) tax payable method (deferred taxes are not recognized) or (b) tax effect accounting using an income statement approach (deferred tax assets and liabilities are recognized for differences in amounts recognized in the income statement and on the tax return) Measurement based on either current tax rate or expected tax rate
PRC GAAP
Appropriated directly from Retained Earnings after Board of Directors resolution
PRC GAAP
The Direct Method of presentation with a supporting note reconciling operating result to cash flows arising from operations is the only permitted method Interest paid classified as a financing activity Interest received depends on its nature
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Semiconductor Manufacturing International Corporation