Case 6-1 China Petroleum and Chemical Corporation Essay

631 WordsOct 21, 20143 Pages
Chapter 6 (Case 6-1 CHINA PETROLEUM AND CHEMICAL CORPORATION) 1. The net profit figure reported under PRC GAAP is RMB 19,011 million. This is RMB 2,592 million lower than the amount under IFRS, and RMB 6,566 million lower than the amount under U.S. GAAP. The net profit figure of RMB 19,011 reported under PRC GAAP 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 gas properties RMB3,044 Acquisition of subsidiaries 443 Capitalization of general borrowing costs 389 Gain from issuance of shares by subsidiary 136 Gain from debt restructuring 82 Revaluation of land use rights 18 4,112 Unrecognized losses of subsidiaries (182) Pre-operating expenditures (169) Effect on taxation (1,179)(1,530) 2,582 The 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 1,316 Capitalized interest on invest.in associates 141 Reversal of deficits on revaluation of PPE 86 Foreign exchange gains and losses 76 Reversal of impairment of long-lived assets 47 Exchange of assets 23 Capitalization of PPE 12 5,699 Deferred 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 different: * Depreciation and disposal of oil and gas properties * Capitalization of

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