Friday, March 1, 2019

China Petroleum and Chemical Corporation Essay

The net profit figure of RMB 19,011 reported under PRC generally accepted accounting principles was change magnitude to RMB 21,593 under IFRS. The increase of RMB 2,582 under IFRS was due to the future(a) reasons Dep. and tendency of oil and gas properties RMB3,044 encyclopedism of subsidiaries 443 capitalization of general borrowing be 389 Gain from issuance of shares by subsidiary 136Gain from debt restructuring 82 followup of land enjoyment rights 18 4,112Unrecognized losses of subsidiaries (182)Pre-operating expenditures (169)Effect on taxation (1,179)(1,530)2,582The net profit figure of RMB 21,593 reported under IFRS was increased to RMB 25,577 under U.S. generally accepted accounting principles. The increase of RMB 3,984 under U.S. GAAP was due to the spare-time activity reasons Dep. of revalued PPE RMB 3,998 tendency of PPE 1,316Capitalized interest on associates 141Reversal of deficits on revaluation of PPE 86 strange exchange gains and losses76Reversal of impairment of long-lived assets 47Exchange of assets23 capitalization of PPE12 5,699Deferred tax effect of U.S. GAAP adjustments (1,715) 3,984 2.The differences for CPCC among PRC GAAP and IFRS, and among IFRS and U.S. GAAP are given in the case. As mentioned in the case, treatments of the following items under PRC GAAP and IFRS are distinguishableDepreciation and disposal of oil and gas propertiesCapitalization of general borrowing costsAcquisition of subsidiariesGains from issuance of shares by a subsidiaryGains from debt restructuringRevaluation of land use rightsUnrecognized losses of subsidiariesPre-operating expendituresImpairment loses on long-lived assetsGovernment grants (Refer pp.5-72 5-75 in the textbook)Treatments of depreciation and disposal of oil and gas properties seem to have a significant impact on reported profit. As mentioned in the case, treatments of the following items under IFRS and U.S. GAAP are differentForeign exchange gains and lossesCapitalization an d revaluation of property, appoint and equipmentExchange of assetsImpairment of long-lived assetsCapitalization of interest on investment in associatesGoodwill amortizationCompanies include in consolidationRelated party transactions (Refer pp.5-77 5-82)Treatments of depreciation of revalued property, plant and equipment, and disposal of property, plant and equipmentseem to have a significant impact on reported profit 3.U.K. readers of the fiscal statements may non find them real useful, as the data is not reconciled to the U.K. GAAP. There are differences between U.K. GAAP and IFRS, and between U.K. GAAP and U.S. GAAP. With the adoption of IFRS in the EU, this may not be a major problem anymore. However, UK companies use IFRS as select by the EU which in some cases differs from the IFRS issued by the IASB. 4.U.S. readers should find the information useful. However, it would be better for them if the information was reconciled directly from PRC GAAP to U.S. GAAP.5.When a compan y is listed on a foreign stock exchange, it is eer useful to explain the differences, if any, between accounting standards used inpreparing financial statements, and those that are stipulated by the listing requirements. The need for such explanation is cut if the two sets of standards are comparable. However, differences can still exist due to different interpretations of the requirements. Therefore, the approach taken by CPCC can be recommended to other companies.

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