1、Annual Corporate Income Tax Return （13 forms）Related Party Transaction Forms（9 Forms）US GAAP does not require comparative information. However, SEC registrants are required to present balance sheets as of the end of the current and prior reporting periods and all other statements for the three most
2、recent reporting periods.The presentation of financial statements of the current period shall at least provide the comparative data of all items of the previous comparative period, as well as the explanations on the understanding of the financial statements of the current period, unless it is otherw
3、ise provided for in other accounting standards. （CAS 30.8）No comparative information is required.SEC rules explicitly require subtotals for current assets and current liabilities （Regulation S-X, Rule 5-02） in balance sheet.Similar to US GAAP.The assets and liabilities shall be presented as current
4、and non-current assets and liabilities, respectively. （CAS 30.12）N/AProperty, Plant and EquipmentProperty, plant and equipment is recognized initially at cost.Similar to US GAAP （CAS 4.7）Similar to US GAAP （CIT Law I/R 56）Property, plant and equipment is depreciated over its usful life.Straight line
5、 methodDeclining balance methodSum-of-the-years-digits methodDepreciation based on use （activity）Similar to US GAAP （CAS 4.17）Only deprecition computed by straight line method is deductible for CIT purpose. （CIT Law I/R 59） Temporary differenceAn item of property, plant and equipment is depreciated
6、even if it is idle, but not if it is held for sale. Land is also not depreciated.Similar to US GAAP. Investment PropertyBuilding is not depreciated （a HFS asset） （CAS 4.14）Land is not depreciated. （CAS 4.14）Idle fixed assets （other than buildings） and fixed assets that is not related to business are
7、 not depreciated.Land accounted for as a fixed asset is not depreciated. （CIT Law 11）Estimates of useful life and residual value, and the method of depreciation are reviewed only when events or changes in circumstances indicate that the current estimates or depreciation method are no longer appropri
8、ate. Any changes are accounted for prospectively as a change in estimate. An enterprise shall, at least at the end of each year, have a check on the useful life, expected net salvage value, and the depreciation method of the fixed assets. （CAS 4.19）Similar to US GAAP （CAS 4.19）Residual value of fixe
9、d assets cannot be changed once determined.（CIT Law I/R 59）Subsequent expenditure is capitalized only when it is probable that it will give rise to future economic benefits.Similar to US GAAP （CAS 4.6）Comprehensive repair cost for fixed assets should be capitalized and amortized over no less than 3
10、years. （CIT Law 13, CIT Law I/R 70）The revaluation of property, plant and equipment is not permitted.Follow PRC GAAP （CIT Law I/R 56）The gain or loss on disposal is the difference between the net proceeds received and the carrying amount of the asset.Similar to US GAAP. In addition, relevant tax exp
11、enses are also deductible in computing the disposal gain or loss. （CAS 4.6）Disposal gain is taxable for CIT.Disposal loss needs to be reported to tax authority before deduction, if the disposed fix asset has reached or exceeded its useful life. Sales loss at fair value in normal business operations
12、needs to be reported to tax authority before deduction.For other losses of fixed assets, the tax authoritys approval shall be required for deduction. （SAT Order 2011 No.25）Intangible Assets and GoodwillIntangible assets are measured initially at fair value.The intangible assets shall be initially me
13、asured according to its cost. （CAS 6.12）Intangible assets cannot be revalued.Similar to US GAAP （CAS 6.12）Goodwill is recognized only in a business combination and is measured as a residual. Similar to US GAAP CAS 20.13Follow PRC GAAPGoodwill and other intangible assets with indefinite useful lives
14、are not amortized, but instead are subject to impairment testing at least annually.Reversal of impairment loss is not allowed.Similar to US GAAP CAS 6.19Similar to US GAAP CAS 8.17Intangible assets that are not related to business cannot be amortized. （CIT Law 12）Intangible assets with finite useful
15、 lives are amortized over their expected useful lives.Similar to US GAAP CAS 6.17Intangible assets should be amortized by straight line method over no less than 10 years or over contractual period.（CIT Law I/R 67）Subsequent expenditures on an intangible asset is not capitalized unless it can be demo
16、nstrated that the expenditure increases the utility of the asset.It only specifies subsequent expenditures on “R&D” projects. R-expense; D-capitalized （CAS 6.10）Borrowig cost could be capitalized.（CIT Law I/R 37）Both internal research and development expenditure is expensed as incurred. Special capi
17、talization criteria apply to in-process R&D acquired in a business combination, direct-response advertising, software developed for internal use and software developed for sale to third parties.The research expenditures for its internal research and development projects of an enterprise shall be exp
18、ensed in current period. （CAS 6.8）The development expenditures for its internal research and development projects of an enterprise may be capitalized as intangible assets （CAS 6.9）The tax position of self-developed intangible assets follows PRC GAAP （development） plus any expenditures to bring the a
19、ssets to expected condition being ready for use. （CIT Law I/R 66）The following costs cannot be capitalized as intangible assets: internally generated goodwill, costs to develop customer list, start-up costs and training costs. Similar to US GAAP （CAS 6.11）Internally generated goodwill cannot be amor
20、tized. （CIT Law 12）Investment PropertyThere is no specific definition of investment property; such property is accounted for as property, plant and equipment unless it meets the criteria to be classified as “held for sale”. Investment property is property held to earn rental income or for capital ap
21、preciation, or both. （CAS 3.2） This standard shall apply to the following investment real estates:（1） The land use right which has already been rented;（2） The land use right which is held and prepared for transfer after appreciation; （3） The buildings which have already been rented. Rental income an
22、d capital appreciation are taxable for CIT.Investment property is recognized initially at cost.Similar to US GAAP （CAS 3.7）Subsequent to initial recognition all investment property is measured using the cost model.Generally cost model should be used.Fair value model is also possible when an active m
23、arket exists and market price is available. （CAS 3.9）For the investment real estate measured through the fair value model, there is no depreciation or amortization made for it. Its book value shall be adjusted on the basis of its fair value on the date of the balance sheet, and the difference betwee
24、n the fair value and its original book value shall be included in the current profits and losses.The revaluation of tax position of investment property is not permitted.（CIT Law I/R 56）Only sales or disposal gain （loss） is taxable （deductible） for CIT.Investment property is accounted for as property
25、, plant and equipment, and there are no transfers to or from an “investment property” category.Where an enterprise which has well-established evidence to indicate that the purpose of the investment property has changed, it shall convert the investment property to other assets or vise versa. （CAS 3.1
26、3）Investment property is treated in the same way as “property, plant and equipment” as well as “land use right” in PRC tax.InventoryGenerally inventories are measured at the lower of cost and market.The inventories shall be initially measured at cost. （CAS 1.5）Where a non-monetary assets transaction
27、 satisfies the following conditions at the same time, the fair value of the assets received and relevant taxes shall be regarded as the transaction cost, and the difference between the fair value of the assets received and the carrying value of the asset transferred out shall be recorded into the pr
28、ofit or loss of the current period:（1） The transaction is commercial in nature; and（2） The fair value of the assets received or transferred out can be measured reliably. （CAS 7.3）1.For the inventory acquired by cash payment, its purchase price and the relevant taxes and expenses paid shall be used a
29、s its cost;2.For the inventory acquired through means other than cash payment, the fair value of such inventory and the relevant taxes and expenses shall be used as cost. （CIT Law I/R 72）Cost includes all direct expenditure to get inventory ready for sale, including attributable overheads.The cost o
30、f inventory consists of purchase costs, processing costs and other costs. （CAS 1.5）Other costs of inventories refers to those costs, other than purchase costs and processing costs, happened in bringing the inventories to their present location and condition. （CAS 1.8）See above （CIT Law I/R 72）“Market” is current replacement cost limited by net realisable value （ceiling） and net realisable value less a normal profit margin （floor）. Net realisable value is the estimated selling price les
