The gain and loss on disposal of an asset is determined with reference to the

The gain and loss on disposal of an asset is

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The gain and loss on disposal of an asset is determined with reference to the asset’s historical carrying amount and included in current earnings. Exchange of assets The cost of property, plant and equipment acquired in an exchange for a similar item of property, plant and equipment is measured at fair value. As the exchange of assets was between entities under common control, the assets received from Sinopec Group Company
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12 are measured at historical cost. Impairment of long-lived assets Impairment charges are recognized when a long-lived asset’s carrying amount exceeds the higher of an asset’s net selling price and value in use, which incorporates discounting the asset’s estimated future cash flows. Determination of recoverability of a long- lived asset is based on an estimate of undiscounted future cash flows is less than the carrying amount of the asset, an impairment loss is recognized. Capitalized interest on investment in associates Investment accounted for by the equity method is not considered a qualifying asset for which interest is capitalized. An investment accounted for by the equity method while the investee has activities in progress necessary to commence its planned principal operations, provided that the investee’s activities include the use of funds to acquire qualifying
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13 assets for its operations, is a qualifying asset for which interest is capitalized. Goodwill amortization Goodwill and negative goodwill are amortized on systematic basis over their useful lives. Goodwill is no longer amortized beginning 1 January 2002, the date that SFAS No. 142 was adopted. Companies included in consolidation This exclusion does not affect the profit attributable to shareholders or share holders’ funds reciliation between IFRS and U.S. GAAP. Related party transactions Transactions of state- controlled enterprises with other state-controlled enterprises are not required to be disclosed as related party transactions. There are no similar exemptions. 3. Should UK readers of these financial statements find the information useful? Yes. Because United Kingdom follows IFRS. 4. Should U.S. readers of these financial statements find the information useful? Yes. United State follows U.S. GAAP.
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14 5. Would you recommend that other companies adopt the multiple standards approach taken by CPCC? Explain. Yes. Because there are no global accounting standards. And there are different results of net profit and stockholders’ under IFRS, U.S. GAAP and PRC GAAP. Multiple standards are good for cross-readers to understand and evaluate the financial statement. Reference
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15 1. Haverty, J. L. (2006). Are IFRS and US GAAP converging?: Some evidence from People's Republic of China companies listed on the New York Stock Exchange. Journal of International Accounting, Auditing and Taxation, 15(1), 48-71. 2. Liu, C. (2011). IFRS and US-GAAP comparability before release No. 33-8879: some evidence from US-listed Chinese companies. International Journal of Accounting & Information Management, 19(1), 24-33. 3. Liu, C., Yao, L. J., Hu, N., & Liu, L. (2011). The impact of IFRS on accounting quality in a regulated market: An empirical study of China. Journal of Accounting, Auditing & Finance, 26(4), 659-676. 4. Peng, S., & van der Laan Smith, J. (2010). Chinese GAAP and IFRS: An analysis of the convergence process. Journal of International Accounting, Auditing and Taxation, 19(1), 16-34.
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  • Fall '14
  • Depreciation, Generally Accepted Accounting Principles, PRC

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