Ministry of Finance, Answers to Questions Relevant to the Implementation of the «Enterprise Accounting System» and Relevant Accounting Guidelines(2)

Issued: March 17 2003

Main contents: Newly established enterprises other than small enterprises and financial enterprises shall audit and prepare financial reports in accordance with the Enterprise Accounting System (Item One). The Answers set out the enterprise conglomerates that are required to provide consolidated accounting statements, such as listed companies and those foreign trading enterprises required to do so (Item Three). Parent companies and their subsidiaries shall adopt the same accounting policies in preparing consolidated accounting statements. If either the parent company or a subsidiary has adopted the Enterprise Accounting System, adjustment should be made accordingly (Item Five). Item Seven details how consolidated accounting statements should be prepared when the company sells or buys subsidiaries during the reporting period. The change of the depreciation term and the estimated residual value of fixed assets shall be deemed to be a change of accounting policy in the first year of implementation and be dealt with as provided (Item 13). Income tax rebates as a result of preferential tax treatment shall be offset against the income tax for the period when the tax rebates are actually received (Item 14). Item 20 explains the confirmation and calculation of estimated debts arising from providing guarantees.