Contents - MiTAC

combined total assets or operating revenues of all such non-consolidated
subsidiaries exceed 30% of the Company’s non-consolidated total assets or
operating revenue, then each individual subsidiary with total assets or operating
revenue of more than 3% of the Company’s non-consolidated total assets or
operating revenues shall be consolidated.
2) Translation of foreign currency transactions
The accounts of the Company and its consolidated subsidiaries are maintained in
their functional currencies. Transactions denominated in foreign currencies, except
for forward contracts, are translated into their functional currencies at the rates of
exchange prevailing on the transaction dates. Receivables, other monetary assets
and liabilities denominated in foreign currencies are translated into their functional
currencies at the rates of exchange prevailing at the balance sheet date. Exchange
gains or losses are included in the current year's net income.
The financial statements of foreign subsidiaries are translated into New Taiwan
dollars using the exchange rates prevailing at balance sheet date for asset and
liability accounts, average exchange rates for profit and loss accounts and historical
exchange rates for equity accounts. The cumulative translation effects for
subsidiaries using functional currencies other than New Taiwan dollar are included
in the cumulative translation adjustment in stockholders’ equity.
3) Derivative financial instruments
The foreign currency amounts on non-speculative forward contracts are translated
into New Taiwan dollars using the spot rate at the date of inception of the contract.
The difference between the contract forward rate and the spot rate is amortized over
the life of the forward contract. The foreign currency amounts of outstanding
contracts are also translated into New Taiwan dollars at the rates of exchange
prevailing at the balance sheet date. Exchange gains or losses are included in
determining current year's net income. Exchange gains or losses accounted for at
the date when a forward contract has expired are also included in determining net
income for the current year.
Premiums on foreign currency options are translated into New Taiwan dollars using
the spot rate at the date of inception of the contract and are amortized over the life
of the contract. Unrealized gain or losses for known foreign currency transactions
are recognized in current year’s earnings but unrealized gain or losses for foreign
currency commitments are deferred until the underlying transaction is recorded,
unless deferral will result in recognizing losses in later period.
The foreign currency amounts on non-speculative swap contracts are translated into
New Taiwan dollars using the spot rate at the date of inception of the contract.
Unrealized gain or losses for known foreign currency transactions are recognized in
current year’s earnings but unrealized gain or losses for foreign currency
commitments are deferred until the underlying transaction is recorded, unless
deferral will result in recognizing losses in later period.
4) Cash equivalents
Cash equivalents are short-term, highly liquid investment, which are readily
convertible to known amounts of cash and with maturity dates that do not present
significant risk of changes in value because of changes in interest rates.
5) Marketable securities
Marketable securities are recorded at cost when acquired. The carrying amount of
the marketable securities portfolio is stated at the lower of its aggregate cost or
market value at the balance sheet date.
6) Allowance for doubtful accounts
Allowance for doubtful accounts is provided based on the collectibility of accounts
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