The following describes Chinese accounting in the late 1990s:
Financial statements consist of the balance sheet, income statement, statement of changes in financial position (or cash flow statement), notes, and supporting schedules. Consolidated financial statements are required. The purchase method must be used to account for business combinations, and goodwill is amortized over the period benefited.
The equity method is used when ownership of another enterprise exceeds 25 percent. When ownership exceeds 50 percent, the accounts of the subsidiary are consolidated. For overseas subsidiaries, the balance sheet is translated at the year-end exchange rate, the income statement is translated at the average-for-the-year exchange rate, and any translation difference is shown as a reserve in equity. Accounting measurements sometime have a tax orientation. For example, straight-line depreciation is used because tax laws specify this method. Tax law is also referred to in specifying the useful lives of assets and salvage value. Compared to international practice, historical cost is more strictly adhered to and the principle of conservatism is practiced on a more limited basis. These practices also reflect a tax law influence. For example,
1. The lower of cost or market inventory valuation method is not allowed.
2. Provisions for bad debts are allowed only up to 3 percent of the receivables balance.
3. Long-term investments are not written down for permanent declines in value.
Historical cost is the basis for valuing tangible assets. FIFO, average, and LIFO are acceptable costing methods. Acquired intangibles are also recorded at cost and amortized over the periods benefited. Since land and much of the industrial property in China is owned by the state, companies that acquire the right to use land and industrial property rights show them as intangibles. Costs associated with research and development can be capitalized in some circumstances. Guidance is neither provided on accounting for capital versus operating leases, nor for deferred taxes. Contingent losses are not accrued; however, contingency funds may be set up as appropriations of retained earnings. Reserves for future expansion may also be appropriated out of retained earnings.

Required:
Identify the major changes that have occurred in Chinese accounting since the 1990s.