What are the main differences between PRC GAAP, IFRS and US GAAP?⑶

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
Intangible asset received as a capital contribution from an owner It should specify by the value regulated in investment contract or agreement, except that the value is not fair. Measured at fair value.


Cost mode and evaluation mode are both allowed (if the fair value is obtained from reference of active market)

Same as IFRS
Amortisation of intangible assets For intangible assets with a limited service life, the amortization amount should be amortized reasonably and theoretically during the service life. Intangible assets of which service life is not sure shouldn’t be amortized. Amortise over the estimated useful life, which is presumed to be 20 years or less. Not subject to regular amortization.

The carrying amount is to be tested for impairment annually.


Land use right Accounted for as a purchased asset until the construction or development commences; then accounted for as fixed assets under construction or as property development costs. On completion, total costs are transferred to property, plant, and equipment or property held for sale.


Land use right is usually included as intangible assets, but if the use is changed to earn rent or capital appreciation, it should be changed to investment real estate.

Accounted for as an operating lease. Cost of land use rights is treated as prepaid lease payments. Accounted for as fixed assets. Not amortised or depreciated unless impairment occurs.
Measurement of revenue when payment is deferred Undiscounted amounts to be received. Discounted present value of amounts to be received. Fair value
Recognition of cash discounts for prompt payment Recognized as financial expense. Either expense or reduction of revenue. Same as IFRS
Pre-operating expenses Deferred until the entity begins operations. Then charged to expense. Charged to expense when incurred. Same as IFRS
Companies required to present segment information Listed companies and other enterprises. Listed companies only. Same as IFRS
Disclosure items required for segments information Both business and geographical segments. More disclosure for primary segments than for secondary segments. Similar to IFRS
Translation of a foreign operation that is integral to the parent’s operations Translation adjustments are deferred in equity. Translation adjustments are included in income statement. Similar to IFRS
Disclosure of related party information in financial statements of wholly owned subsidiaries Required. Exempted. Similar to IFRS