US_GAAP_vs._PRC_GAAP

SemiconductorManufacturingInternationalCorporationUSGAAPvs.PRCGAAPComparisonSemiconductorManufacturingInternationalCorporationFrameworkforFinancialReporting•USGAAP-SFAS,FASBInterpretations,APBOpinionsandARB-FASBTechnicalBulletins,EITF-AICPAIndustryAuditandAccountingGuides,AICPAStatementsofPosition-SECSAB-PCAOBstandards•PRCGAAP-FinancialAccountingandReportingRulesforEnterprises(FARR)-AccountingStandardsforBusinessEnterprises-AccountingSystemforBusinessEnterprises(ASBE)-AccountingSystemsforVariousIndustries-MOFInterpretations,ImplementationGuidesSemiconductorManufacturingInternationalCorporationMajorAreasofGAAPDifferences-Inventories-Investment&Consolidation-Assetsheldforsales-Amortizationofintangibleassets-LanduseRights-Assetsimpairment-Pre-operatingExpenses-EffectsonchangesinforeignexchangeratesSemiconductorManufacturingInternationalCorporationMajorAreasofGAAPDifferences-BorrowingCosts-QuantifyingContingencies-RevenueRecognition-Subsidyincome-IncomeTaxes-AppropriatedStaffWelfareandBonusFunds-CashFlowStatementPresentationSemiconductorManufacturingInternationalCorporationInventories•USGAAP-Inventoriestobestatedatthelowerofcostandmarketvalue(marketisthelowerofreplacementcostandNRVminusnormalprofitmargin).-Reversalofinventorywritedownsisprohibited.-WritedownforLCMisrecordedincostofgoodssold•PRCGAAP-Inventoriestobestatedatthelowerofcostandnetrealizablevalue.-Reversalofinventorywrite-downsrequiredifcertaincriteriaaremet-LCMprovisionisrecordedinG&AexpensesSemiconductorManufacturingInternationalCorporationInvestment&consolidation•USGAAP-Consolidation,equity,andcostmethodsappliedbasedondefinitionsofcontrolandsignificantinfluence-Consolidatespecialpurposeentitybasedonequityrisk-VariableInterestEntities(VIE)shouldbeconsolidatedaccordingtoFIN46•PRCGAAP-ConsolidationofcontrolledsubsidiariesisoptionalforsomesubsidiariesSemiconductorManufacturingInternationalCorporationAssetsheldforsales•USGAAP-long-livedassetstobedisposalbysaleshallbeclassifiedasheldforsale-Thevaluationoftheassetsshallbedeterminedbythelowerofitscarryingvalueorthefairmarketvaluelessanycosttosell-shouldnotbedepreciatedanyfurther-Anygainorlossinresultofthesaleactivityshallbeincludedinincomefromcontinuingoperationbeforeincometaxes•PRCGAAP-NorequirementSemiconductorManufacturingInternationalCorporationAmortizationforIntangibleAssets•USGAAP-Amortizeiftheassethasafinitelife-Donotamortizeiftheassethasanindefinitelife,buttestregularlyforimpairment•PRCGAAP-Amortizeovertheshorteroftheestimatedusefullifeandthecontractualorlegallife-Ifnocontractualorlegallife,amortizeovertheestimatedusefullife,butnotmorethan10years.SemiconductorManufacturingInternationalCorporationLanduseRights•USGAAP-Classifiedasalong-termoperatinglease•PRCGAAP-Classifiedasintangibleassetsbeforeself-usedconstructionordevelopmentandbeginamortization-Uponconstruction,thecarryingamountofthelanduserightistransferredtothecostoffixedassetsunderconstruction-TransfertofixedassetsanddepreciateSemiconductorManufacturingInternationalCorporationAssetsimpairment•USGAAP-Impairmenttriggeredifanasset'scarryingamountexceedstheexpectedfuturecashflowstobederivedfromtheassetonanundiscountedbasis.-Measuredbasedonfairvalue-Reversalisprohibited•PRCGAAP-Impairmenttriggeredifanasset'scarryingamountexceedsthehigheroftheasset’svalue-in-use(discountedpresentvalueoftheasset’sexpectedfuturecashflows)andnetsellingprice.-Measurebasedontherecoverableamount(thehigheroftheasset’svalue-in-useandnetsellingprice).-ReversalRequired,ifcertaincriteriaaremet.SemiconductorManufacturingInternationalCorporationPre-operatingExpenses•USGAAP-Pre-operatingexpensesareexpensedasincurred•PRCGAAP-Pre-operatingexpensesareaccumulateduntiltheentitycommencesoperations,andarethenexpensedSemiconductorManufacturingInternationalCorporationTheEffectsofChangesinForeignExchangeRates•USGAAP-Recordinitiallyattherateofexchangeatthedateofthetransaction(useofaveragespermittedifareasonableapproximationofactual).•PRCGAAP-Recordinitiallyattherateofexchangeatthedateofthetransactionoronthefirstdayofthemonthinwhichthetransactionoccurs.SemiconductorManufacturingInternationalCorporationTheEffectsofChangesinForeignExchangeRates(continued)•USGAAP-Exchangegainsorlossesareincludedinthedeterminationofnetincomefortheperiod.•PRCGAAP-Netexchangedifferencesarisingduringtheset-upperiodaredeferreduntiltheentitycommencesoperations.-Exchangedifferencesrelatingtoproject-specificborrowingfortheconstructionoffixedassetstobecapitalizedtotheextentthatitarisesbeforethecompletionofthefixedasset.-Othersareexpensed.SemiconductorManufacturingInternationalCorporationTheEffectsofChangesinForeignExchangeRates(continued)•USGAAP-foreigncurrencygainsandlossesrelatingtooperationalactivities(receivables,payables,etc.)withinincomefromoperations.-theforeigncurrencyexchangegainsandlossesrelatedtodebt,investmentandcashinotherincomeandexpense.-.•PRCGAAP-ForeigncurrencygainsandlossesrecordedinfinancialexpensesSemiconductorManufacturingInternationalCorporationBorrowingCosts•USGAAP-Generallyincludesonlyinterest-A