Asus 2008 Annual Report Download - page 98

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ASUSTEK COMPUTER INC.
Notes to Non-Consolidated Financial Statements
(In thousands of New Taiwan dollars unless otherwise stated)
Effective from 1995, the Company adopts, on a prospective basis, the R.O.C. SFAS No. 18
“Accounting for Pensions”. This Statement requires that the accumulated pension
obligation and the pension expense be determined on an actuarial basis.
The funding status of the pension plan as of December 31, 1995 was measured on an
actuarial basis. Because the accrued pension liability is equal to the funding status of
pension plan, no unrecognized transitional net assets or net obligations shall be amortized in
the future. According to the R.O.C. SFAS No. 18, net pension cost was recognized from
January 1, 1996. However, except for few foreign employees, the Company has closed out
all seniority of employees as of December 31, 2007.
For employees subject to the Labor Pension Act of the R.O.C. (“the Labor Pension Act”),
which prescribes a defined contribution scheme, the Company makes monthly contributions
to the employees’ individual pension accounts on a basis no less than 6% of the employees’
monthly wages.
12. Derivative financial instruments
The Company has entered into derivative financial instruments, such as forward exchange
contracts and foreign currency option 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 adopts hedge
accounting to account for the derivative.
13. Income tax
The Company adopts 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.