Asus 2008 Annual Report Download - page 97

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ASUSTEK COMPUTER INC.
Notes to Non-Consolidated Financial Statements
(In thousands of New Taiwan dollars unless otherwise stated)
 As the bondholder exercises the right to convert the bonds, the book value of the
bonds and the related assets and liabilities are transferred to capital stock and paid-in
capital; no gain or loss is recognized on bond conversion under the par value method.
(2) For bonds issued after January 1, 2006, the policy conforming with the R.O.C. SFAS No.
36 and Interpretation No. 95-290, 97-331, 98-046 by Accounting Research and
Development Foundation consists of the following:
 The issuance costs are allocated to the related liability and equity components based
on the proportion of the initially recognized amounts.
 Convertible bonds with the clause of adjusting price based on market price do not
include the equity component. In the aspect of the liability component, the fair value
of conversion right with clause of adjusting price and call/put options shall be
measured first; then the book value of main liability is assigned with the residual
amount after deducting the fair value of conversion right with clause of adjusting
price and call/put options from issue price.
 Convertible bonds are subsequently measured at amortized cost. Derivatives with
call/put options and conversion right with clause of adjusting price are recognized as
“financial liabilities at fair value through profit or loss” and are subsequently measured
at the fair value. The movements in the fair value of the derivatives would be
recognized as “gain/(loss) on valuation of financial liabilities”.
 As the bondholder exercises the right to convert the bonds ahead of the due date of
the bonds, the Company shall adjust the book value of the liability components to the
value on the conversion date, which would be the recording basis of common stocks
to be issued without recognizing conversion gain and loss.
 If the bondholder could exercise the put option within one year, the bonds payable
should be reclassified as current liability. Those bonds payable could be reclassified
as long-term liability when the put option expires and the liability meets the definition
of long-term liability.
11. Accrued pension liability
The Company makes monthly contributions to the pension fund at 2% of the total monthly
salaries and wages as required by the Labor Standards Laws. The fund is administrated by
the Employees Retirement Fund Committee. The pension fund mentioned above is
considered absolutely separate from the Company after contribution; therefore, it is not
included in the accompanying financial statements.