Letter To Shareholders - Mitac

6) Nature and extent of the restrictions on fund remittance from subsidiaries to the
parent company: None.
7) Contents of subsidiaries’ securities issued by the parent Company: Refer to Note 4
(20).
8) Information on convertible bonds and common stock issued by subsidiaries: DLC
Technology Corporation increased their capital amounting to $65,000 in 2008.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements of the Group are prepared in
accordance with the “Rules Governing the Preparation of Financial Statements by
Securities Issuers” and accounting principles generally accepted in the Republic of China.
The Group’s significant accounting policies are summarized below:
1) Basis for preparation of consolidated financial statements
All majority-owned subsidiaries and controlled entities are included in the
consolidated financial statements. Effective January 1, 2008, the Company prepares
consolidated financial statements on a quarterly basis. Significant inter-company
transactions and assets and liabilities arising from inter-company transactions are
eliminated.
2) Translation of financial statements of foreign subsidiaries
Assets and liabilities of foreign subsidiaries are translated into New Taiwan dollars
using the exchange rates at the balance sheet date. Equity accounts are translated at
historical rates except for beginning retained earnings, which are carried forward
from prior year’s balance. Dividends are translated at the rates prevailing at the date
of declaration. Profit and loss accounts are translated at weighted-average rates of
the year. The resulting translation differences are included in “cumulative
translation adjustments” under stockholders’ equity.
3) Foreign currency transactions
A. The Company and its consolidated subsidiaries maintain their accounts in New
Taiwan dollars and their functional currencies, respectively. Transactions
denominated in foreign currencies are translated into New Taiwan dollars and
their functional currencies at the spot exchange rates prevailing at the
transaction dates. Exchange gains or losses due to the difference between the
exchange rate on the transaction date and the exchange rate on the date of actual
receipt and payment are recognized in current year’s profit or loss.
B. Receivables, other monetary assets and liabilities denominated in foreign
currencies are translated at the spot exchange rates prevailing at the balance
sheet date. Exchange gains or losses are recognized in profit or loss.
C. When a gain or loss on a non-monetary item is recognized directly in equity, any
exchange component of that gain or loss shall be recognized directly in equity.
Conversely, when a gain or loss on a non-monetary item is recognized in profit
or loss, any exchange component of that gain or loss shall be recognized in
profit or loss. However, non-monetary items that are measured on a historical
cost basis are translated using the exchange rate at the date of the transaction.
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