Acer 2007 Annual Report Download - page 72

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69
2. Summary of Signicant Accounting
Policies
(a) Accounting principles and consolidation
policy
The consolidated financial statements are
prepared in accordance with accounting
principles generally accepted in the Republic
of China (ROC GAAP). These consolidated
nancial statements are not intended to present
the financial position and the related results of
operations and cash flows of the Consolidated
Companies based on accounting principles and
practices generally accepted in countries and
jurisdictions other than the ROC.
The consolidated financial statements include
the accounts of the Company and subsidiaries in
which the Company is able to exercise control
over the subsidiary’s operations and financial
policies. The operating activity of the subsidiary
is included in the consolidated statements of
income from the date of acquisition, and is
excluded from the consolidated statements of
income when the Company loses its power
to control the subsidiary. All significant
inter-company balances and transactions are
eliminated in consolidation.
(b) Use of estimates
The preparation of the accompanying consolidated
financial statements requires management to
make estimates and assumptions that affect the
reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at
the date of the consolidated nancial statements
and reported amounts of revenues and expenses
during the reporting periods. Economic
conditions and events could cause actual results
to differ signicantly from such estimates.
(c) Foreign currency transactions and translations
The Company’s reporting currency is the New
Taiwan dollar. The Consolidated Companies
record transaction in their respective local
currencies. Non-derivative foreign currency
transactions are recorded at the exchange
rates prevailing at the transaction date. At
the balance sheet date, monetary assets and
liabilities denominated in foreign currencies
are translated into New Taiwan dollars using
the exchange rates on that date. The resulting
unrealized exchange gains or losses from such
translations are reflected in the accompanying
statements of income. Non-monetary assets
and liabilities denominated in foreign currency
that are measured in terms of historical cost
are translated using the exchange rate at the
date of the transaction. Non-monetary assets
and liabilities denominated in foreign currency
that are measured at fair value are reported at
the rate that was in effect when the fair values
were determined. Subsequent adjustments to
carrying values of such non-monetary assets and
liabilities, including the effects of changes in
exchange rates, are reported in prot or loss for
the period, except that if movement in fair value
of a non-monetary item is recognized directly in
equity, any foreign exchange component of that
adjustment is also recognized directly in equity.