Acer 2005 Annual Report Download - page 62

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Deferred credits of long-term equity investments represent the unamortized balance of
deferred gains and losses derived from the transfer of equity investment ownership within the
affiliated companies.
In 2004, there were additional investments of NT$176,247 in Aegis, NT$323,000 in DIF,
NT$110,000 in IP Fund Two Co., NT$230,778 in IP Fund One L.P. and NT$121,285 in iD5
Fund LTP. In 2005, there were additional investments of NT$119,940 in iD Reengineering
Inc., NT$118,541 in IP Fund III L.P., and NT$45,835 in iD5 Fund LTP.
In 2004, the Consolidated Companies sold portions of their investments in BenQ, ALI, eLIFE
and AMT and an aggregate gain of NT$2.05 billion was recognized from these sales. In
2005, the Consolidated Companies sold portions of their investments in BenQ, Wistron, RDC,
Granal Tech and Interserv and an aggregate gain of NT$2.2 billion was recognized from these
sales.
Partial values of long-term investments using the cost or lower-of-cost-or-market method were
impaired. The impaired amounts amounting to NT$628,587 and NT$824,242 for the years
ended December 31, 2004 and 2005, respectively, were recorded as “other investment losses”
in the accompanying statements of income.
The Company decreased its capital surplus by NT$597,980 in 2004 and increased its capital
surplus by NT$985,448 in 2005, respectively, for the following reasons: GDRs issued by its
investees not subscribed by the Company in the proportion to its respective ownership
percentage, stock dividends distributed to employees as bonuses, investees’ convertible bonds
converted to common stock, additional common stock issued to investees’ employees due to
the execution of employee stock options; and sale of stock of investee companies.
In 2004, CDIB, TFNC, InveStar, and YCMC decreased capital and refunded NT$30,000,
NT$900,000, NT$71,858 and NT$5,175, respectively, to the Consolidated Companies. In
2005, AVBVI, IP Fund One, Legend Technology and other investees decreased capital and
refunded NT$126,935, NT$117,907, NT$24,000 and NT$25,993, respectively, to the
Consolidated Companies.
AMBIT’ s stockholders in a meeting on December 24, 2003, resolved to merge with Hon Hai
Corporation at the ratio of 1 share of AMBIT in exchange for 0.672 share of Hon Hai
Corporation. The effective date of the merger was April 1, 2004. After the merger, the
Company acquired 30,310,341 common shares of Hon Hai Corporation and reclassified the
investments to short-term investments.
(7) Property and Equipment, and Property Not Used in Operations
(a) As of December 31, 2004 and 2005, the insurance coverage for depreciable property and
equipment, and property not used in operation, was NT$13,071,116 and NT$11,962,599,
respectively.
(b) In 2005, the economic performance of the Consolidated Companies’ Value lab., Aspire
Learning Copmlex and Acer e-Enabling Data Center located in Aspire Industry Park was
not as well as expected, and it became apparent that the respective buildings may have been
impaired. As such, the Company estimated these buildings’ recoverable amount and
recognized an impairment loss on the excess of carrying value over the recoverable amount
amounting to $752,000. The Company determined the recoverable amount on the basis of
value in use calculations using a discount rate of 7.28%.
(c) As of December 31, 2004 and 2005, property not used in operation was as follows:
December 31, 2004 December 31, 2005
NT$ NT$ US$
Damaged office premises 457,558 457,558 13,935
Land held for sale and development 2,623,082 3,067,141 93,410
Other idle assets 401,500 22,443 684
Less: Accumulated depreciation - (53,000) (1,614)
Accumulated asset impairment (12,466) (15,205) (463)
3,469,674 3,478,937 105,952