US GAAP vs PRC GAAPQuestionnair.docx

1、US GAAP vs PRC GAAP QuestionnairSubsidiary / Affiliate QuestionnaireSubsidiary / Affiliate InformationNidec Shibaura (Zhejiang) Co., LtdChinaRMBUS GAAPContact for US GAAP Conversion ProjectKiajing TanKiajing Tan6123888861238800InstructionsThis questionnaire is designed to identify potential differen

2、ces, by component, between current reporting and US GAAP reporting. The US GAAP reporting periods to be covered are for 12 months ended December 31, 2005, but if certain differences identified extend to prior reporting periods, please also highlight. The responses should be qualitative only we are n

3、ot looking for quantitative responses at this stage, however, to the extent you consider something immaterial, please note the basis for that assessment. The qualitative answers provided by you below will help identify recognition and measurement differences between your current reporting and US GAA

4、P. ChecklistComponent No.Component NameYour Contact for Each ComponentInput CompletedReview CompletedNotes200Investment securities205Derivatives, Embedded Derivatives210Revenue & Notes and accounts receivable215Inventory 220Other assets225Premises and Equipment230Goodwill & Intangible assets 235Capi

5、talized software costs & R&D240Exit Activities245Leases (lessor)250Leases (lessee)300Notes and accounts payable310Warranty and Other liabilities315Employee Benefits320Tax Accounting325Contingencies330Environmental liabilities400Equity100Financial reporting & other105Consolidation110FIN 46 120Foreign

6、 ExchangeComponent: - Investment Securities N/AUS GAAP BackgroundInvestment securities usually include not only securities such as equity, debt securities, mutual funds but also partnership or other investments, such as venture capital partnerships, etc. Depending on the classification and whether t

7、hey have readily determinable fair values, they are generally accounted for at fair value, amortized cost or acquisition cost.QuestionsResponses1.What types of investment securities does the entity have? Are there any foreign currency denominated investments? Are there any intercompany investments e

8、ntered into with the parent, other subsidiaries or affiliates? Does the entity purchase or sell any shares of the parent, other subsidiaries or affiliates?N/A2.Under US GAAP, investments in equity securities with readily determinable fair values and all investments in debt securities are classified

9、either as (1) trading, (2) available-for-sale or (3) held-to-maturity depending on managements determination. How does the entity classify such investments?N/A3.Under US GAAP, equity and debt securities classified as trading or available-for-sale are recorded at period end fair values generally obta

10、ined from an active exchange. Fair value changes for trading securities are recorded in earnings and fair value changes for available-for-sale securities are recorded in other comprehensive income (“OCI”) in equity. Does the entity use period end fair values to value securities? What are the sources

11、 for the fair values? Where are the fair value changes recorded - net income or other comprehensive income?N/A4.Does the entity have investments in unlisted equity and debt securities? How are they recorded? Are they subject to fair value assessments and reviewed periodically for impairment?N/A5.Und

12、er US GAAP, unrealized losses or impairment of investment securities that is considered other-than-temporary are recognized as realized losses. The cost basis of investment securities are written down to fair value and any subsequent upward adjustments to cost are not allowed. How does the entity as

13、sess for impairment and how are they recognized? N/A6.On what basis does the entity record sales of securities? For instance, first-in first-out (“FIFO”) or weighted average cost basis?N/A7.Under US GAAP, investments in voting common stocks exceeding 20% are generally accounted for using the equity

14、method. Does the entity have such investments and how are they accounted for? N/A8.Under US GAAP, majority owned or over 50% interests in mutual funds or venture capital partnerships are generally consolidated. Are there any such majority owned investments and how are they accounted for?N/AComponent

15、: - Derivatives & Embedded Derivatives N/AUS GAAP BackgroundUnder US GAAP, all derivatives are fair valued on the balance sheet with changes reflected in earnings. Derivatives typically include futures, options, swaps, and forwards.9.What types of derivatives does the entity have? Are those derivati

16、ves entered into within the Lear group or with unrelated parties?N/A10.Under US GAAP, all derivatives, including those that are embedded in other contracts, are recorded at fair value at year end with changes reflected in earnings. Are derivatives fair valued for the entity? If there were any deriva

17、tives which are not recorded at fair value, please explain the nature of the derivatives.11.Have any hedge accounting been applied for the entity? If no, pass the questions 12 15, and go to 16.12.Under US GAAP, to qualify for hedge accounting, extensive hedge documentation for hedge relationships an

18、d periodic effectiveness testing are required. If applicable, what types of documentation or testing does the entity have?13.Under US GAAP, macro hedges in which one derivative instrument is used to hedge multiple items are not permitted. If applicable, does the entity have any macro hedges?14.If yo

19、ur entity applies hedge accounting, how much is the impact on balance sheet and income statements? Please estimate the impact in million yens. 15.Under US GAAP, an embedded derivative instrument must be separated from the host contract and accounted for separately as a derivative instrument at fair

20、value if certain criteria have been fulfilled. If applicable, does the entity identify and bifurcate any embedded derivatives? In addition, does the entity have any embedded derivatives instruments? An examples of an embedded derivative instruments would be:Purchase or sale agreements denominated in

21、 something other than the entitys functional currency may contain embedded forward foreign exchange contracts.Component: Revenue and Notes & Accounts ReceivableUS GAAP BackgroundUS GAAP contains very specific guidance on revenue recognition. Broadly speaking, revenue is recognized when four basic cr

22、iteria are met (1) persuasive evidence of an arrangement exists; (2) delivery has occurred or services have been rendered; (3) the fee is fixed or determinable; and (4) collectibility is reasonably assuredQuestionsResponses16.Describe your entitys general revenue recognition policyThe over sea sales

23、 was recognized upon B/L dateThe domestic sales was recognized upon the client acceptance date17.Does the entity have a practice of using signed contracts for sales orders? What are the general terms of these contracts with a focus on (1) delivery terms; (2) terms which specify when risks and reward

24、s of ownership transfer (i.e. FOB Shipping / FOB Destination or other); (3) payment terms; (4) refund clauses; (5) inspection provisionsYes. Over sea sales : FOB shippingDomestic sales: Based on client acceptance datePayment terms: Different payment terms were set for different clients. Generally th

25、e payment terms variance from 30days 90days.But no other specific inspection provision/refund clauses 18.If applicable, in the absence of signed contracts, what types of sales agreements does the entity have?None noted.19.Does the entity enter into any revenue arrangements which contain multiple del

26、iverables within the same arrangement? If so, how are these multiple deliverables accounted for within the arrangement?N/A20.Does the entity enter into long term supply arrangements / long term sales contracts where the payment terms may vary over the life of the contract (for example, volume discou

27、nts after reaching certain sales targets)N/AThe sales/purchase contract renewed yearly.21.What policies are applied by the entity to account for the allowance for doubtful accounts? The general bad debt provision with specific bad debt provision was provided for accounts receivables and other receiv

28、ables.The policy of general provision is as follows:Bal. within 1 Yr 0.5% Bal. over 1 Yr 100.0%22.Does the entity have significant interest bearing receivables or notes receivable? If so, how is interest income recognized?N/A23.Does the entity enter into any securitization transactions (sales of acc

29、ounts receivable)? Factoring arrangements?N/AComponent: InventoryUS GAAP BackgroundThe primary basis of accounting for inventories is cost, not higher than the net amount realizable from the subsequent sale of inventories. Cost is the acquisition and production costs of the inventory. Abnormal costs

30、, such as idle facility costs, excessive spoilage, or rehandling costs are included in current period income rather than deferred as a portion of inventory costs.QuestionsResponses24.Briefly describe (1) major classes of inventory, (2) costs included within inventory and (3) how each of those classe

31、s of inventory is valued.1)The major classes of inventories are raw material/working in progress/finished goods/Goods in transit2)The major costs included within inventory are raw material cost/labour cost and general production cost3)The class of inventories is valued according to the actual cost allocated for different status of the products.25.Briefly describe the methodology (FIFO, LIFO, average) by which cos