Chinese Accounting Standards Essay Example | Topics and Well Written Essays - 1000 words

Chinese Accounting Standards - Essay ExampleChina is worlds second largest delivery. oer a fulfilment of liberalization Chinese accounting standards have shifted from a centrally control economy to an open market economy. But the developments of Chinese accounting standards have been highly influenced from the political environment of the country. Because of these constraints there are still major differences between Chinese accounting framework and FIRSs of International Accounting Standards (IAS).In PRC, Ministry of Finance sets out accounting standards. These disposal-defined standards are of 10 less value relevant as the government has its own political compunctions 5. This situation is again complicated due to weak capital market infrastructure.The primary(prenominal) areas where there is appreciable difference between PRC generally accepted accounting principles and IFRS includes the valuation of firm assets over a period of time i.e. depreciation measurements and the amo rtization of intangible assets, the methods of accounting for income taxes, measuring goodwill and intangible assets, amortization of goodwill and intangible asset, mineral rights, the expenditure to explore develop and extract minerals, and research and development be 2.Though Ministry of Finance (MOF) of Peoples Republic of China is trying to fill in the gaps between Chinese GAAP and IFRS there are still many areas where these two accounting standards are differentiate... areas of inventory and temporary enthronization valuation, provision for bad debts, depreciation and revaluation of fixed assets, and amortization of intangible assets. Chinese GAAP rules demand the inventories for an organization to be calculated at historical damages whereas IFRS rules evaluate the inventories according to lower of cost and market (LOCAM) principles. According to Chinese GAAP long-term investment companies having less than 50% share dimension can choose among cost and equity methods for th eir financial auditing. Chinese GAAP is followed for managerial opportunistic purposes though it is quite similar to IFRS in practice. Chinese GAAP allows unrestricted use of accruals by capital expenses for run leases and unsymmetrical allocation of costs between finished and running work processes. Ways in which Chinese rules differ from IFRSThere are many differences between Chinese GAAP and IFRS arising due to non-accounting government regulations. monetary Rules for Enterprises framed by MOF of PRC defines the rules for cost depreciation, residual value and useful life of different fixed assets. Chinese GAAP accounting practices are more practical in measuring depreciation of assets it is found on historical cost of assets or measures the inventory at a planned price, which is in stock to fare value oriented valuation of IFRS standards 2. Financial Rules for Enterprises stases that assets of certain categories should be amortized over a period of minimum ten years, which ma y be an impractical dictate as these assets needs more than ten years to yield any economic benefits. Many industries related to welfare, pension and other special reserves generally require more than ten years to give any tangible economic benefits. The centering Chinese accounting