China Petroleum and Chemical Corporation Essay Example for Free

China Petroleum and Chemical Corporation EssayThe net profit figure of RMB 19,011 report under mainland China generally accepted accounting principles was increased to RMB 21,593 under IFRS. The increase of RMB 2,582 under IFRS was due to the following reasons Dep. and disposal of oil and throttle properties RMB3,044Acquisition of subsidiaries 443 Capitalization of ecumenical borrowing costs 389 Gain from issuance of shares by subsidiary 136Gain from debt restructuring 82Revaluation of land use rights 18 4,112Unrecognized losses of subsidiaries (182)Pre-operating expenditures (169) cause on valueation (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. GAAP. The increase of RMB 3,984 under U.S. GAAP was due to the following reasons Dep. of revalued PPE RMB 3,998 disposal of PPE 1,316Capitalized interest on invest.in associates 141Reversal of deficits on revaluation of PPE 86 contrary exchange gains and losses76Reve rsal of impairment of long-lived assets 47Exchange of assets23Capitalization of PPE12 5,699Deferred tax effect of U.S. GAAP adjustments (1,715) 3,984 2.The differences for CPCC between PRC GAAP and IFRS, and between 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 differentDepreciation 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 and revaluation of property, plant and equipmentExchange of assetsImpairment of long-lived assetsCapitalization of interest on investment in associatesGoodwill amortisationCompanies included 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 financial statements may not find them very useful, as the information 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 adopted 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 company is listed on a foreign stock exchange, it is always useful to explain the differences, if any, between accounting standards used inpreparing financial statements, and those that are stipulated by the listing requirements. The occupy for such explanation is reduced 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.