1999 Annual Report - Delta Electronics

27
2) Cash surrender value of life insurance.
The cash surrender value of life insurance is recorded as an asset and classified as long-term investment. The
increase in cash surrender value during the period is accounted for as an adjustment to insurance premiums paid.
Property, plant and equipment
1) With the exception of land, which is carried at appraised value, property, plant and equipment are carried at cost
which includes capitalized interest.
2) Depreciation of the Company and the subsidiary, DNI are provided on a straight-line method over the estimated
useful lives of the assets, plus one year as salvage value, except for leasehold improvement, which is based on
contract period or the life of the asset, whichever is shorter. Salvage value of assets, which are still in use after the
end of their estimated useful lives, are depreciated based on a new estimated remaining useful life. Depreciation of
DIH and its subsidiaries are provided on a straight-line method over the estimated useful lives of the assets, cost
less salvage value. The salvage value is calculated on 10% of cost. The estimated useful lives of fixed assets are 2
to 20 years, except for buildings and equipment which are 3 to 55 years.
3) Renewals and improvements are treated as capital expenditures and are depreciated accordingly. Maintenance and
repairs are charged to expense as incurred. When an asset is sold or retired, the cost and accumulated depreciation
are removed from the respective accounts and the resulting gain or loss is included in current non-operating results.
Gains on disposal of property, plant and equipment, net of applicable income tax, are transferred to capital reserve
in the current year.
Intangible Assets
1) Goodwill
The excess of investment cost over the net assets of the investee company is capitalized and amortized over 5 years.
2) Other intangible assets
Land use rights are recorded at actual cost and amortized over the lease term.
Deferred charges
Deferred charges are recorded at actual cost and amortized over the estimated useful lives based on the straight-line
method, except for the issuance costs for convertible bonds which are amortized over the outstanding period of the
bonds. The unamortized bonds issuance costs related to the bonds converted or redeemed before the maturity date are
transferred to expense at the date of redemption or conversion.
Retirement plan
1) The Company maintains a non-contributory and funded, defined benefit employee retirement plan (the Plan)
covering all regular employees. Benefits under the Plan are generally determined based upon years of credited
service, age at retirement and average compensation. The Company contributes the pension fund to an
independent retirement trust fund commencing in 1986. As approved by the government, in November 1990, the
Company suspended contributing to the independent retirement trust fund. The Company resumed contributing to
the fund at a fixed rate equal to 2% of monthly salaries and wages since July 1999. The trust fund assets are not
reflected in the Company's financial statements.
2) Pension cost, which includes service cost, interest cost, expected return on plan assets and amortization of net
obligation at transition, is recognition based on an actuarial valuation. The unrecognized net asset or obligation at