English version of the new enterprise accounting standard Basic StandardAccounting Standard for Business Enterprises Basic Standard Chapter 1 General Provisions Article 1 In accordance with The Accoun

d reporting of financial transactions shall be in accordance with the accrual basis of accounting, unless otherwise specified by laws and regulations or by this Standard. Article 10 An enterprise shall disclose relevant information in the financial reports as required by laws, regulations and this Standard, and provide additional information if necessary to enable the users of financial reports to make informed economic decisions. Article 11 An enterprise shall establish an internal control system to ensure the reliability of accounting information and the effectiveness and efficiency of business operations. Chapter 2 Accounting Principles Article 12 An enterprise shall adhere to the following accounting principles: (1) Prudence principle: when recognising assets, liabilities, income and expenses, an enterprise shall adopt a cautious approach and avoid overestimating assets or income, or underestimating liabilities or expenses. (2) Consistency principle: an enterprise shall maintain consistency in its accounting policies and methods from one period to another, unless there is a valid reason to change them. (3) Materiality principle: an enterprise shall give due consideration to the materiality of an item when making accounting decisions. (4) Reality principle: an enterprise shall reflect the economic substance of transactions and events in its financial reports, rather than merely their legal form. (5) Going concern principle: an enterprise shall assume that it will continue to operate for the foreseeable future. (6) Substance over form principle: an enterprise shall reflect the substance of a transaction or event, rather than merely its legal form. Chapter 3 Recognition and Measurement of Assets, Liabilities, and Equity Article 13 An asset is a resource controlled by an enterprise as a result of past events, from which future economic benefits are expected to flow to the enterprise. Article 14 A liability is a present obligation of an enterprise arising from past events, the settlement of which is expected to result in an outflow of resources embodying economic benefits. Article 15 Equity represents the residual interest in the assets of an enterprise after deducting its liabilities. Article 16 An enterprise shall recognise an asset or a liability when: (1) it is probable that future economic benefits or obligations will result from the transaction or event; and (2) the asset or liability can be reliably measured. Article 17 The initial measurement of an asset or a liability shall be based on its cost. Cost includes the purchase price, plus any directly attributable costs, such as transportation, installation and testing. Article 18 An enterprise shall measure its assets and liabilities at the end of each accounting period, and recognise gains or losses arising from changes in their values. Article 19 An enterprise shall recognise revenue when: (1) it has transferred to the buyer the significant risks and rewards of ownership of the goods or services; (2) the enterprise retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods or services sold; (3) the amount of revenue can be reliably measured; and (4) it is probable that the economic benefits associated with the transaction will flow to the enterprise. Article 20 An enterprise shall recognise expenses when: (1) a decrease in economic benefit related to the expense has occurred; and (2) the amount of expense can be reliably measured. Chapter 4 Presentation and Disclosure of Financial Reports Article 21 An enterprise shall prepare the following financial reports: (1) Balance sheet; (2) Income statement; (3) Cash flow statement; and (4) Notes to the financial reports. Article 22 The balance sheet shall present the financial position of the enterprise at the end of the accounting period, including its assets, liabilities and equity. Article 23 The income statement shall present the financial performance of the enterprise for the accounting period, including its revenue, expenses, gains and losses. Article 24 The cash flow statement shall present the cash inflows and outflows of the enterprise for the accounting period, classified into operating, investing and financing activities. Article 25 The notes to the financial reports shall provide additional information about the financial position, operating results and cash flows of the enterprise, as well as information required by laws, regulations and this Standard. Article 26 An enterprise shall present its financial reports fairly and accurately, and disclose all material information in a clear and concise manner. Article 27 An enterprise shall disclose the following information in its financial reports: (1) Accounting policies and methods; (2) Significant accounting estimates and judgements; (3) Related party transactions; (4) Contingencies and commitments; (5) Capital reserves; (6) Dividends; and (7) Changes in equity. Chapter 5 Supplementary Provisions Article 28 This Standard shall be effective from January 1, 2007. Article 29 The Ministry of Finance shall be responsible for the interpretation of this Standard. Article 30 This Standard shall be subject to review and revision as needed