Contents - MiTAC

eceivable, notes receivable and other receivables.
7) Inventories
A. Inventories of the Company are stated at standard cost, which is adjusted to
actual cost based on the weighted average method at year end. Inventories of the
consoliated subsidiaries are stated at cost using the weighted average method or
the average method.
B. Inventories of the Company and subsidiary companies are valued at the lower of
cost or market value at balance sheet date.
8) Long-term investments
A. Long-term investments in which the Company or its consolidated subsidiaries
owns less than 20% of the investee company’s voting rights and has no
significant influence on operational decisions of the investee company are
accounted for at the lower of cost or market value for listed companies and at
cost for unlisted companies. The unrealized loss resulting from the decline in
market value of the investment, accounted for under the lower of cost or market
value method, is deducted from stockholders' equity. When it becomes
evidently clear that there has been a permanent impairment in value and the
chance of recovery is minimal, loss is recognized in the current years’ income.
For investments accounted for under the equity methods, the difference between
the Company’s cost and underlying equity in the net assets of the investee
company at the date of investment is amortized over 5~10 years.
B. For investments accounted for under the equity methods, the Company
recognizes investment gains or losses by quarter. The unrealized profits and
losses from intercompany transactions between the Company and investee
company during the current year shall be eliminated.
C. Long-term investments in both listed and unlisted companies in which the
Company and / or its consolidated subsidiaries own at least 20% of the investee
company’s voting rights are accounted for under the equity method, unless the
Company is unable to exercise significant influence over the investee.
D. The exchange difference arising from the translation of long-term investments
denominated in foreign currencies is included in the Company's stockholders'
equity account as "Cumulative Translation Adjustment".
9) Property, plant and equipment
A. Property, plant and equipment are stated at cost. Interest incurred on loans
used to finance the construction of property and plant is capitalized and
depreciated accordingly.
B. Depreciation is calculated on a straight-line basis over the assets estimated
useful lives. Residual values of fixed assets still in use at the end of the
original service lives are depreciated based on the newly estimated remaining
service lives of the assets. The useful lives of the fixed assets are 2 – 10 years,
except for buildings, which are 3 - 55 years.
C. Maintenance and repairs are charged to expense as incurred. Significant
renewals and improvements are treated as capital expenditure and depreciated
accordingly.
D. Idle assets are valued at the lower of book value or net realizable value (based
on the appraised value of real estate appraisal company) and classified as other
assets. Rental assets are valued at cost and classified as other assets; current
depreciation is recorded as non-operating expense.
10) Intangible assets
Land usage rights are amortized on a straight-line method over 48~50 years.
- 53 -