Asus 2009 Annual Report Download - page 103

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ASUSTEK COMPUTER INC.
Notes to Financial Statements
(5) Financial instruments
In accordance with R.O.C. SFAS No. 34 “Financial Instruments: Recognition and Measurement”
and the “Criteria Governing the Preparation of Financial Reports by Securities Issuers”, financial
assets are classified as financial assets at fair value through profit or loss, financial assets carried at
cost, or available-for-sale financial assets, as appropriate. Financial liabilities are classified either
as financial liabilities at fair value through profit or loss, or as financial liabilities at cost.
The Company accounts for purchases and sales of financial assets on the trade date, or the date on
which the Company commits to purchase or sell the asset. At initial recognition, financial assets
are recognized at fair value plus, in the case of investments that are not reported at fair value
through profit or loss, directly attributable transaction costs.
A. Financial assets measured at fair value through profit or loss
These financial assets are subsequently measured at fair value with changes in fair value
recognized in profit and loss. Stocks of listed companies, convertible bonds and closed-end
funds are measured at closing prices on the balance sheet date. Open-end funds are measured at
the unit price of the net assets on the balance sheet date.
B. Financial assets carried at cost
Equity investments without reliable market prices, including emerging and other unlisted stocks,
are measured at cost. If objective evidence of impairment exists, the Company recognizes
impairment loss, which is not reversed in subsequent periods.
C. Available-for-sale financial assets
Available for sale financial assets are those non-derivative financial assets that are designated as
available for sale or not classified as financial assets at fair value through profit or loss, held-to-
maturity financial assets, or loans and receivables. These assets are then measured at fair
value. The gain or loss arising from change in fair value, excluding impairment loss and
exchange gain or loss from the translation of monetary financial assets denominated in foreign
currencies, is recognized in a separate component of stockholders’ equity until such investment
is reclassified or disposed of, upon which the cumulative gains or losses previously charged to
stockholders’ equity are transferred to current profit or loss.
Subsequent to initial recognition, the Company measures all financial liabilities at amortized
cost except for financial liabilities at fair value through profit or loss, which are measured at fair
value.
(6) Allowance for doubtful accounts
Allowance for doubtful accounts is recognized on the basis of the estimated collectability of
accounts receivable and other receivables.