2006 Interim Report－A Share.pdf - 中国银行

Notes to the Condensed Financial Statements
For the six month period ended 30 June 2006
(Amount in millions of Renminbi, unless otherwise stated)
I. BASIS OF PREPARATION AND CONSOLIDATION
1. Basis of preparation
The unaudited condensed consolidated financial statements have been prepared in accordance with the Accounting
Standards for Business Enterprises, the Accounting System for Financial Institutions and other relevant accounting
regulations applicable to the Group. The interim financial statements , and should be read in conjunction with the
2005 annual financial statements.
The unaudited condensed consolidated financial statements have been prepared in accordance with the Accounting
Standards for Business Enterprises - Interim Reporting issued by MOF and in accordance with Disclosure -No.3 contents
and reporting formats for listed companies (2003 revised) issued by China Securities Regulatory Commission.
The principal accounting policies adopted in the preparation of the unaudited condensed consolidated financial
statement are consistent with those used in the Group's accounts for the year ended 31 December 2005.
In February 2006, the MOF issued 39 new and revised Accounting Standards for Enterprises as part of the PRC
government's initiative to converge the PRC GAAP with International Financial Reporting Standards. These new
standards, which are mandatory for all listed companies and optional for others, are effective for accounting periods
commencing on or after 1 January 2007. The Group plans to implement these standards, effective 1 January 2007 and
has commenced an assessment of their effect on the Group's existing accounting policies. While management's
assessment of the new standards is not yet completed, principal differences with the Group's existing accounting
policies include the following:
(1) Except for the equity investments held for trading in overseas operations, the Group currently accounts for equity
investments at cost less impairment. Under the new Standards, equity investments other than investments in
subsidiaries, associates and investments held for trading will be classified as available-for-sale securities. Management
plans to classify and account for other equity investments as available-for-sale according to the new Standards and
those investments with active market quotation will be recorded at fair value with gains or losses reported in
shareholders' equity.
(2) The Group currently accounts for investment properties at amortised cost less impairment. Under the new
Standards, these assets can either be measured at fair value or at amortised cost less impairment. The method can not
be changed once it is selected by management. Management plans to account for investment properties using fair
value.
(3) The Group currently accounts for the early retirement benefits on a cash basis when paid. Under the new Standards,
a liability is required to be recorded at actuarially determined value of future early retirement benefits payable to
employees who have commenced early retirement, with changes in the value of this liability reported in the income
statement.
(4) The Bank currently accounts for its investment in subsidiaries using equity accounting method in the Bank's financial
statements. Under the new Standards, these investments are stated at cost in the Bank's financial statements.
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