PART III The GAAP adjustments related to prepaid cards subsequent to privatization are: (1) a djustments for prepaid cards  transaction before incorporation from additional paid-in capital and (2) adjustments for such transactions occurred between  incorporation and privatization from retained earnings which still have remaining expected customer service periods.  Under US GAAP, revenue from prepaid cards is deferred at the time of sale and recognized as revenue as consumed.  Prior to incorporation and privatization, the Company was subject to the laws and regulations applicable to state-owned  enterprises in Taiwan which differed from ROC GAAP as applicable to commercial companies. As such, revenue from  selling prepaid phone cards was recognized at the time of sale by the Company. Upon incorporation, net assets greater  than capital stock was credited as additional paid-in capital. Part of additional paid-in capital was from unearned revenues  generated from prepaid cards as of that day. Upon privatization, unearned revenue generated from prepaid cards was  deferred at the time of sale and recognized as revenue as consumed in accordance with ROC GAAP.  Under US GAAP, the 10% tax on unappropriated earnings is accrued during the period the earnings arise and adjusted to  the extent that distributions are approved by the stockholders in the following year.  In ROC, a 10% tax is imposed on unappropriated earnings (excluding earnings from foreign consolidated subsidiaries).  Under ROC GAAP, the Company records the 10% tax on unappropriated earnings in the year of stockholders’ approval.  Under US GAAP, no revaluation of property, plant and equipment is permitted. Under ROC GAAP, property, plant and equipment, excluding land, may be revalued when the price fluctuation is greater  than 25% and upon approval from the tax authority. Similarly, land may be revalued if there is any appreciation of land  based on the present value of land announced by the government. This revaluation component is recorded as a special  reserve in equity at the time of revaluation and is subsequently depreciated. Upon sale or disposal of property, plant and  equipment, the cost and any related revaluation increment less accumulated depreciation calculated after the revaluation are  removed from the accounts, and any gain or loss is credited or charged to income. This revaluation adjustment also created  differences in the opening balances of additional paid-in capital upon incorporation of the Company on July 1, 1996.  The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the  Republic of China (ROC GAAP), which differ in the following respects from accounting principles generally accepted in the  United States of America (US GAAP): 36.  SUMMARY OF SIGNIFICANT DIFFERENCES BETWEEN ACCOUNTING PRINCIPLES FOLLOWED BY THE  COMPANYAND GENERALLYACCEPTED ACCOUNTING PRINCIPLES IN THE UNITED STATES OFAMERICA a.  Property, plant and equipment b. 10% tax on unappropriated earnings c.  Deferred income from prepaid phone cards F-63