Lorenzo Riccardi China Accounting Standards Introduction and Effects of New Chinese Accounting Standards for Business Enterprises Springer
Contents 1 Introduction to New Accounting Standards for Business Enterprises 1 2 ASBE's Main Features and General Differences of New China GAAP Versus US GAAP and IFRS 5 3 Impact and Results on Financial Statements 9 4 Effects of the New PRC GAAP 11 5 Accounting Standards for Business Enterprises No. 1 Inventories 13 5.1 Chapter I: General Provisions 13 5.2 Chapter II: Recognition 13 5.3 Chapter III: Measurement 14 5.4 Chapter IV: Disclosure 16 5.5 Comments 16 5.6 Examples 17 6 Accounting Standards for Business Enterprises No. 2 Long-Term Equity Investments 19 6.1 Chapter I: General Provisions 19 6.2 Chapter II: Initial Measurement 19 6.3 Chapter III: Subsequent Measurement 20 6.4 Chapter IV: Disclosure 23 6.5 Comments 23 6.6 Example 24 7 Accounting Standards for Business Enterprises No. 3 Investment Real Estates 25 7.1 Chapter I: General Provisions 25 7.2 Chapter II: Recognition and Initial Measurement 26 7.3 Chapter III: Follow-Up Measurement 26 7.4 Chapter IV: Conversion 27 V
7.5 Chapter V: Disposal 7.6 Chapter VI: Disclosure 7.7 Comments 7.8 Examples Accounting Standards for Business Enterprises No. 4 Fixed Assets 8.1 Chapter I: General Provisions 8.2 Chapter II: Recognition 8.3 Chapter III: Initial Measurement 8.4 Chapter IV: Subsequent Measurement 8.5 Chapter V: Disposal 8.6 Chapter VI: Disclosure 8.7 Comments 8.8 Examples Accounting Standards for Business Enterprises No. 5 Biological Assets 9.1 Chapter I: General Provisions 9.2 Chapter II: Recognition and Initial Measurement 9.3 Chapter III: Subsequent Measurement 9.4 Chapter IV: Harvest and Disposal 9.5 Chapter V: Disclosure 9.6 Comments 9.7 Examples Accounting Standards for Business Enterprises No. 6 Intangible Assets 10.1 Chapter I: General Provisions 10.2 Chapter II: Confirmation 10.3 Chapter III: Initial Measurement 10.4 Chapter IV: Subsequent Measurement 10.5 Chapter V: Disposal and Discarding 10.6 Chapter VI: Disclosure 10.7 Comments 10.8 Examples Accounting Standards for Business Enterprises No. 7 Exchange of Non-Monetary Assets 11.1 Chapter I: General Provisions 11.2 Chapter II: Confirmation and Measurement.... 11.3 Chapter III: Disclosure 11.4 Comments 11.5 Examples 27 28 28 29 31 31 31 32 33 34 34 35 36 37 37 38 39 41 41 42 43 45 45 45 47 47 48 48 49 50 51 51 52 53 53 54
Contents vii 12 Accounting Standards for Business Enterprises No. 8 Impairnient of Assets 55 12.1 Chapter I: General Provisions 55 12.2 Chapter II: Recognition of Assets with Potential Impairment 56 12.3 Chapter III: Measurement of Recoverable Amount of Assets 56 12.4 Chapter IV: Determination of Losses of Asset Impairment 59 12.5 Chapter V: Recognition of Group Assets and Treatments of Impairment 59 12.6 Chapter VI: Treatment of Impairment of Business Reputation 61 12.7 Chapter VII: Disclosure 62 12.8 Comments 64 12.9 Examples 66 13 Accounting Standards for Business Enterprises No. 9 Employee Compensation 67 13.1 Chapter I: General Provisions 67 13.2 Chapter II: Confirmation and Measurement 67 13.3 Chapter III: Disclosure 68 13.4 Comments 69 13.5 Examples 70 14 Accounting Standards for Business Enterprises No. 10 Enterprise Annuity Fund 71 14.1 Chapter I: General Provisions 71 14.2 Chapter II: Confirmation and Measurement 71 14.3 Chapter III: Disclosure 73 14.4 Comments 74 14.5 Examples 75 15 Accounting Standards for Business Enterprises No. 11 Share-Based Payments 77 15.1 Chapter I: General Provisions 77 15.2 Chapter II: The Equity-Settled Share-Based Payments 78 15.3 Chapter III: The Cash-Settled Share-Based Payments 79 15.4 Chapter IV: Disclosure 79 15.5 Comments 80 15.6 Examples 81 16 Accounting Standards for Business Enterprises No. 12 Debt Restructuring 83 16.1 Chapter I: General Provisions 83 16.2 Chapter II: Accounting Treatment of Debtors 83
viii Contents 16.3 Chapter III: Accounting Treatments of the Creditor 84 16.4 Chapter IV: Disclosure 85 16.5 Comments 85 16.6 Examples 86 17 Accounting Standards for Business Enterprises No. 13 Contingencies 87 17.1 Chapter I: General Provisions 87 17.2 Chapter II: Recognition and Measurement 87 17.3 Chapter III: Disclosure 89 17.4 Comments 89 17.5 Examples 90 18 Accounting Standards for Business Enterprises No. 14 Revenue 91 18.1 Chapter I 91 18.2 Chapter II: Revenue from Selling Goods 91 18.3 Chapter III: Revenue from Providing Labor Services 92 18.4 Chapter IV: Revenue from Abalienating the Right to Use Assets 94 18.5 Chapter V: Disclosure 94 18.6 Comments 95 18.7 Examples 96 19 Accounting Standards for Business Enterprises No. 15 Construction Contracts 97 19.1 Chapter I: General Provisions 97 19.2 Chapter II: The Split Up and Combination of Contracts 97 19.3 Chapter IE: Contract Revenue 98 19.4 Chapter IV: Contract Costs 99 19.5 Chapter V: Recognition of Contract Revenue and Contract Costs 100 19.6 Chapter VI: Disclosure 101 19.7 Comments 102 19.8 Examples 103 20 Accounting Standards for Business Enterprises No. 16 Government Subsidies 105 20.1 Chapter I: General Provisions 105 20.2 Chapter II: Recognition and Measurement 105 20.3 Chapter III: Disclosure 106 20.4 Comments 107 20.5 Examples 107
Contents ix 21 Accounting Standards for Business Enterprises No. 17 Borrowing Costs 109 21.1 Chapter I: General Provisions 109 21.2 Chapter II: Recognition and Measurement 109 21.3 Chapter III: Disclosure 112 21.4 Comments 112 21.5 Examples 114 22 Accounting Standards for Business Enterprises No. 18 Income Taxes 115 22.1 Chapter I: General Provisions 115 22.2 Chapter II: Tax Base 115 22.3 Chapter III: Temporary Difference 116 22.4 Chapter IV: Recognition 116 22.5 Chapter V: Measurement 117 22.6 Chapter VI: Presentation 118 22.7 Comments 119 22.8 Examples 119 23 Accounting Standards for Business Enterprises No. 19 Foreign Currency Translation 121 23.1 Chapter I: General Provisions 121 23.2 Chapter II: Determination of Functional Currency 122 23.3 Chapter III: Accounting Treatment for Foreign Currency Transactions 123 23.4 Chapter IV: Translation of Foreign Currency Financial Statements 123 23.5 Chapter V: Disclosure 124 23.6 Comments 125 23.7 Examples 126 24 Accounting Standards for Business Enterprises No. 20 Business Combinations 127 24.1 Chapter I: General Provisions 127 24.2 Chapter II: Classification of Leases 127 24.3 Chapter III: Accounting Treatments of Lessees in Finance Leases 129 24.4 Chapter IV: Accounting Treatments of Lessors in Finance Leases 130 24.5 Chapter V: Accounting Treatments of Lessees in Operating Leases 131 24.6 Chapter VI: Accounting Treatments of Lessors in Operating Leases 131 24.7 Chapter VII: Sale and Leaseback Transactions 132
x Contents 24.8 Chapter VIII: Presentation 132 24.9 Comments 133 24.10 Examples 134 25 Accounting Standards for Business Enterprises No. 21 Leases 135 25.1 Chapter I: General Provisions 135 25.2 Chapter II: Classification of Leases 135 25.3 Chapter III: Accounting Treatments of Lessees in Finance Leases 137 25.4 Chapter IV: Accounting Treatments of Lessors in Finance Leases 138 25.5 Chapter V: Accounting Treatments of Lessees in Operating Leases 139 25.6 Chapter VI: Accounting Treatments of Lessors in Operating Leases 139 25.7 Chapter VII: Sale and Leaseback Transactions 139 25.8 Chapter VIII: Presentation 140 25.9 Comments 141 25.10 Examples 142 26 Accounting Standards for Business Enterprises No. 22 Recognition and Measurement of Financial Instruments 145 26.1 Chapter I: General Principles 145 26.2 Chapter II: Classification of Financial Assets and Financial Liabilities 147 26.3 Chapter III: Embedded Derivative Instruments 151 26.4 Chapter IV: Recognition of Financial Instruments 152 26.5 Chapter V: Measurement of Financial Instruments 153 26.6 Chapter VI: Impairment of Financial Assets 156 26.7 Chapter VII: Determination of the Fair Value 159 26.8 Chapter VIII: Definition of Financial Assets, Financial Liabilities, and Equity Instruments 162 26.9 Comments 163 26.10 Examples 165 27 Accounting Standards for Business Enterprises No. 23 Transfer of Financial Assets 167 27.1 Chapter I: General Provisions 167 27.2 Chapter II: Recognition of Transfer of Financial Assets 167 27.3 Chapter III: Measurement of Transfer of Financial Assets 170 27.4 Comments 174 27.5 Examples 174
Contents xi 28 Accounting Standards for Business Enterprises No. 24 Hedging 177 28.1 Chapter I: General Principles 177 28.2 Chapter II: Hedging Instruments and Hedged Items 178 28.3 Chapter III: Recognition and Measurement of Hedging 180 28.4 Comments 185 28.5 Examples 187 29 Accounting Standards for Business Enterprises No. 25 Direct Insurance Contracts 189 29.1 Chapter I: General Provisions 189 29.2 Chapter II: Determination of Original Insurance Contracts... 190 29.3 Chapter III: The Income from Original Insurance Contracts... 190 29.4 Chapter IV: Reserves for Original Insurance Contracts 191 29.5 Chapter V: Cost of Original Insurance Contracts 192 29.6 Chapter VI: Presentation 194 29.7 Comments 194 29.8 Examples 195 30 Accounting Standards for Business Enterprises No. 26 Reinsurance Contracts 199 30.1 Chapter I: General Principles 199 30.2 Chapter II: Accounting Treatment of Ceded-Out Business... 199 30.3 Chapter III: Accounting Treatment of Ceded-In Business 201 30.4 Chapter IV: Presentation 202 30.5 Comments 203 30.6 Examples 204 31 Accounting Standards for Business Enterprises No. 27 Exploitation of Petroleum and Natural Gas 207 31.1 Chapter I: General Provisions 207 31.2 Chapter II: Accounting Treatments of Rights and Interests of Mining Areas 207 31.3 Chapter III: Accounting Treatments of Oil and Gas Exploration 210 31.4 Chapter IV: Accounting Treatments of Oil and Gas Development 211 31.5 Chapter V: Accounting Treatments for the Oil and Gas Production 212 31.6 Chapter VI: Disclosure 213 31.7 Comments 214 31.8 Examples 215
xü Contents 32 Accounting Standards for Business Enterprises No. 28 Changes of Accounting Policies and Accounting Estimates and Error Correction 217 32.1 Chapter I: General Provisions 217 32.2 Chapter II: Accounting Policies 217 32.3 Chapter III: Changes in Accounting Estimates 219 32.4 Chapter IV: Corrections of Prior Period Errors 219 32.5 Chapter V: Disclosure 220 32.6 Comments 221 32.7 Examples 222 33 Accounting Standards for Business Enterprises No. 29 Events After the Balance Sheet Date 223 33.1 Chapter I: General Provisions 223 33.2 Chapter II: Adjusting Events After the Balance Sheet Date.... 223 33.3 Chapter III: Non-adjusting Events After the Balance Sheet Date 224 33.4 Chapter IV: Disclosure 225 33.5 Comments 225 33.6 Examples 226 34 Accounting Standards for Business Enterprises No. 30 Presentation of Financial Statements 227 34.1 Chapter I: General Provisions 227 34.2 Chapter II: Basic Requirements 227 34.3 Chapter HI: Balance Sheets 229 34.4 Chapter IV: Profit Statements 231 34.5 Chapter V: Statements of Changes in the Owner's Equities... 232 34.6 Chapter VI: Notes 232 34.7 Comments 233 34.8 Examples 235 35 Accounting Standards for Business Enterprises No. 31 Cash Flow Statements 239 35.1 Chapter I: General Provisions 239 35.2 Chapter II: Basic Requirements 239 35.3 Chapter III: Cash Flows Arising from Operating Activities... 240 35.4 Chapter IV: Cash Flows Arising from Investing Activities... 241 35.5 Chapter V: Cash Flows Arising from Financing Activities... 241 35.6 Chapter VI: Disclosure 242 35.7 Comments 243 35.8 Examples 244
Contents xiii 36 Accounting Standards for Business Enterprises No. 32 Interim Financial Reporting 247 36.1 Chapter I: General Provisions 247 36.2 Chapter II: Contents of Interim Financial Reports 247 36.3 Chapter III: Recognition and Measurement 250 36.4 Comments 251 36.5 Examples 252 37 Accounting Standards for Business Enterprises No. 33 Consolidated Financial Statements 253 37.1 Chapter I: General Provisions 253 37.2 Chapter II: Introduction 253 37.3 Chapter III: Consolidation Procedures 254 37.3.1 Consolidated Balance Sheet 255 37.3.2 Consolidated Income Statement 256 37.3.3 Consolidated Cash Flow Statement 258 37.3.4 Consolidated Statement of Changes in Owner's Equity 258 37.4 Chapter IV: Disclosure 259 37.5 Comments 260 37.6 Examples 261 38 Accounting Standards for Business Enterprises No. 34 Earings per Share 265 38.1 Chapter I: General Provisions 265 38.2 Chapter II: Basic Eamings per Share 265 38.3 Chapter III: Diluted Eamings per Share 266 38.4 Chapter IV: Presentation 267 38.5 Comments 268 38.6 Examples 269 39 Accounting Standards for Business Enterprises No. 35 Segment Reporting 271 39.1 Chapter I: General Provisions 271 39.2 Chapter II: Identification of Segments 271 39.3 Chapter III: Identification of Reportable Segments 272 39.4 Chapter IV: Identification of Primary and Secondary Reportable Segments 273 39.5 Chapter V: Segment Information Disclosure 274 39.6 Comments 275 39.7 Examples 276 40 Accounting Standards for Business Enterprises No. 36 Related Party Disclosures 277 40.1 Chapter I: General Provisions 277 40.2 Chapter II: Affiliated Parties 277
xiv Contents 40.3 Chapter III: Affiliated Party Transaction 278 40.4 Chapter IV: Disclosure 279 40.5 Comments 280 40.6 Examples 281 41 Accounting Standards for Business Enterprises No. 37 Presentation of Financial Instruments 283 41.1 Chapter I: General Provisions 283 41.2 Chapter II: Presentation of Financial Instruments 284 41.2.1 Liabilities and Equity 284 41.3 Compound Financial Instruments 285 41.3.1 Settlement in the Enterprise's Own Equity Instruments 286 41.4 Treasury Shares 286 41.5 Offsetting a Financial Asset and a Financial Liability 286 41.6 Chapter III: Disclosure of Financial Instruments 287 41.7 Balance Sheet 288 41.7.1 Income Statement and Statement of Changes in Owner's Equity 290 41.8 Other Disclosures 290 41.9 Nature and Extent of Risks Arising from Financial Instruments 292 41.10 Comments 295 41.11 Examples 297 42 Accounting Standards for Business Enterprises No. 38 Initial Implementation of Accounting Standards for Enterprises 299 42.1 Chapter I: General Provisions 299 42.2 Chapter II: Recognition and Measurement 299 42.3 Chapter III: Presentation 302 42.4 Comments 303 42.5 Examples 304 43 Accounting Standards for Business Enterprises 2014 307 43.1 Accounting Standards for Business Enterprises Reviewed in 2014 307 43.1.1 Accounting Standards for Business Enterprises No. 33 Consolidated Financial Statements 307 43.1.2 Accounting Standards for Business Enterprises No. 35 Segment Reporting 308 43.1.3 Accounting Standards for Business Enterprises No. 37 Presentation of Financial Instruments 308
Contents xv 43.2 New Accounting Standards for Business Enterprises Added in 2014 309 43.2.1 Accounting Standards for Business Enterprises No. 39 Fair Value 309 43.2.2 The Provisions of Chapter XII of Convergence 322 43.3 Summary 323 43.3.1 Accounting Standards for Business Enterprises No. 40 Joint Venture Arrangements 323 43.4 Summary 327 43.4.1 Accounting Standard for Business Enterprises No. 41 Disclosure of Interest 328 43.5 Summary 333 References 335