Asus 2008 Annual Report Download - page 165

161
ASUSTEK COMPUTER INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(In thousands of New Taiwan dollars unless otherwise stated)
15. Derivative financial instruments
The Company and subsidiaries have entered into derivative financial instruments, such as
forward exchange contracts, foreign currency option and swap contracts. These financial
instruments are initially recognized and remeasured at fair value. When the fair value is
positive, the financial instrument is classified as a financial asset; when the fair value is
negative, the financial instrument is classified as a financial liability. The change in fair
value of derivatives shall be recognized as current profit or loss.
Once the derivative meets the criteria for hedge accounting, the Company and subsidiaries
adopt hedge accounting to account for the derivative.
16. Income tax
The Company and domestic subsidiaries adopt the R.O.C. SFAS No. 22 “Accounting for
Income Taxes”, which requires inter-period as well as intra-period income tax allocation.
Under the Statement, the tax effects of taxable temporary differences are recognized as
deferred income tax liabilities while those of deductible temporary differences, net operating
losses, and investment tax credits are recognized as deferred income tax assets. A valuation
allowance on the deferred tax assets is provided based on the realizability of the deferred tax
assets.
The Company and domestic subsidiaries adopt the R.O.C. SFAS No. 12 “Accounting for
Income Tax Credits”. This Statement requires all income tax credits resulting from the
acquisition of equipment or technology, research and development, and employee trainings
to be recognized in the current period.
On the date of earnings distribution approved by the shareholders’ meeting, an additional
10% income tax levied on the undistributed earnings shall be recognized immediately.
The R.O.C. government enacted the Alternative Minimum Tax (“AMT”) Act which became
effective on January 1, 2006. The Company and domestic subsidiaries have taken into
consideration the impact of the AMT in the determination of its current income tax expense
and its future impact when estimating the realizable value of the deferred tax assets.
The income tax for each consolidated entities shall be filed to each individual country and
shall not be reported on a consolidated basis. The consolidated income tax expense is the
total of income tax expenses for all consolidated entities.