What are the main differences between PRC GAAP, IFRS and US GAAP?⑴

Published on 2018-05-11
Topic PRC GAAP（New Accounting Standard for Enterprises issued by Ministry of Finance of P.R.C on Feb.15, 2006） IAS/IFRS US GAAP
General approach Principle-based standards accompanied by detailed application guidance. Principle-based standards with limited application guidance. Same as IFRS
Ability to make accounting choice Few choices. Some accounting choices allowed. Same as IFRS
Financial year end date Required to be 31 December. Not specified. Same as IFRS
Complete set of financial statements Include but not limited to balance sheet, income statement, equity statement, cash flow statement plus notes. Balance sheet, income statement, equity statement, cash flow statement, plus notes. Similar to IFRS
Classifications of assets in the balance sheet Assets must be classified into current assets and non-current assets. Assets either are not classified or are classified into current and non-current. Same as IFRS
Classifications of liabilities in the balance sheet Liabilities must be classified into current and non-current. Liabilities either are not classified or are classified into current and non-current. Same as IFRS
Classification of expenses in the income statement Classification by function Classification by nature or by function. Classification by function
Presentation of cash flows from operating activities Must be presented using both direct method and indirect method. May use either direct method or indirect method. Same as IFRS
Classification of interest received and paid in the cash flow statement Interest paid must be classified as a financing activity. Classification of interest received depends on its nature. May be classified as an operating, investing, or financing activity. Must be classified as operating cash flows.
Presentation of extraordinary items in the income statement “Abnormal” items, such as loss from a natural disaster, etc., are presented as non-operating expenses or income in the income statement. Notes to disclose the nature are required if the amounts are material. Rare, generally limited to expropriations, natural disasters, and acts of war. Rare, negative goodwill is presented as an extraordinary item.
Non-mandated changes in accounting policy Must restate prior financial statements unless impracticable. May either restate prior financial statements or include as a cumulative effect in net profit and loss in the current financial statements. Include effect in current year income statement. Disclose pro-forma comparatives.
The measurement of the financial asset

 

 Measure at fair value. If it is classified in “transaction monetary assets”, fair value change is included in the current profits and losses. If it is classified in “financial asset for the sold”, fair value change is included in capital reserve until it is sold and turned into income from investment. Measured at fair value. If classified as held for trading, value changes are recognised in net profit or loss. 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