Acer 2010 Annual Report Download - page 63

ACER INCORPORATED 2010 ANNUAL REPORT
122
FINANCIAL STANDING
123
5. Transactions with Related Parties
(1) Names and relationships of related parties with the Consolidated Companies
Name Relationship with the Company
Wistron Corporation (“Wistron”) Investee of the Company accounted for by equity method
Cowin Worldwide Corporation (“COWIN”) Subsidiary of Wistron
Bluechip Infotech Pty Ltd. (“SAL”) Investee of the Company accounted for by equity method
E-Life Mall Corp. (“E-Life”) Investee of the Company accounted for by equity method
iDSoftCapital Inc. Its chairman is one of the Company’s supervisors
Directors, supervisors, chief executive ofcers and vice presidents The Consolidated Companies’ executive ofcers
(2) Signicant transactions with related parties as of and for the years ended December 31, 2009 and 2010 were
as follows:
(a) Net sales and related notes and accounts receivable
(i) Net sales to:
2009 2010
NT$ NT$ US$
SAL 768,379 904,917 31,065
E-Life 690,738 680,814 23,371
Other (individually less than 5%) 77,605 97,149 3,335
1,536,722 1,682,880 57,771
The sales prices and payment terms to related parties were not signicantly different from those of
sales to non-related parties.
(ii) Notes and accounts receivable from:
December 31, 2009 December 31, 2010
NT$ NT$ US$
COWIN 315,929 411,850 14,138
SAL 116,156 104,956 3,603
E-Life 109,090 137,077 4,706
Others (individually less than 5%) 59,131 65,141 2,236
600,306 719,024 24,683
(b) Purchases and related notes and accounts payable
(i) Purchases from:
2009 2010
NT$ NT$ US$
Wistron 32,351,566 19,993,042 686,339
Others 214 109,302 3,752
32,351,780 20,102,344 690,091
The trading terms with related parties are not comparable to the trading terms with third parties as
the specications of products are different.
The Consolidated Companies sold raw material to Wistron and its subsidiaries and purchased back
the nished goods after being manufactured. To avoid double-counting, the revenues from sales of
raw materials to Wistron and its subsidiaries amounting to NT$142,542,535 and NT$122,256,130
for the years ended December 31, 2009 and 2010, respectively, were excluded from the consolidated
revenues and cost of goods sold. Having enforceable rights, the Consolidated Companies offset the
outstanding receivables and payables resulting from the above-mentioned transactions. The offset
resulted in a net payable balance.
(ii) Notes and accounts payable to:
December 31, 2009 December 31, 2010
NT$ NT$ US$
Wistron 10,172,553 7,733,546 265,484
Others 59,811 32,552 1,118
10,232,364 7,766,098 266,602
(c) Spin-off of assets
On February 28, 2002, the Company spun off its design, manufacturing and services business from its
brand business and transferred the related operating assets and liabilities to Wistron. The Company
agreed with Wistron that Wistron is obligated to pay for the deferred income tax assets being transferred
only when they are actually utilized. In 2006, the ROC income tax authorities examined and rejected
Wistron’s claim of investment credits transferred from the spin-off in the income tax returns for the years
from 2002 to 2004. Wistron disagreed with the assessment and led a request with the tax authorities
for a reexamination of the aforementioned income tax returns. The Company recognized income tax
expense of NT$875,802 based on the tax exposure estimated in 2006 and provided a valuation allowance
against the receivables from Wistron.
In 2008 and 2009, the tax authorities subsequently concluded that Wistron could utilize portions of the
aforementioned deferred tax assets resulting from the spin-off. As a result, the valuation allowance was
reversed to current income tax benefit in the amount of NT$72,449 for the year ended December 31,
2009.