Asus 2011 Annual Report Download - page 105

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(6) Long-term equity investments accounted for under the equity method
A. Long-term investments are accounted for under the equity method when the percentage of
ownership held by the Company and its subsidiaries exceeds 20% or if the Company and its
subsidiaries own less than 20% of the investee’s capital but have significant influence on the
investee’s operations. If an investee company accounted for under the equity method issues
new shares and the Company does not purchase new shares proportionately, then the
investment percentage, and therefore the equity in net assets of the investee, will be changed.
The effect of such change is adjusted against the additional paid-in capital resulting from
long-term equity investments or retained earnings.
B. The difference between the cost of the investment and the amount of underlying equity in net
assets of an investee attributed to depreciable, depletable, or amortizable assets is amortized
over the estimated remaining economic years. The difference attributed to the carrying amount
in excess of or lower than the fair value of assets is written off entirely when the difference
disappear. The cost of investment in excess of the fair value of identifiable net assets is
recognized as goodwill and is no longer amortized. The difference attributed to the fair value
of identifiable net assets in excess of the cost of investment causes a proportional decrease in
the carrying amount of non-current assets. When the carrying amount of non-current assets is
reduced to zero, the remaining difference is recorded as extraordinary gain.
C. When the equity of long-term equity investments under the equity method including
unrealized gain on financial instruments, foreign currency translation adjustments, net loss not
recognized as pension cost, and unrealized losses on cash flow hedges is changed, the changes
in percentage of ownership are reflected in those related accounts and long-term equity
investments under the equity method.
D. Unrealized inter-company profit or loss resulting from transactions between the Company and
investees accounted for under the equity method are accounted in unrealized gain on
inter-affiliate accounts and deferred until realized.
E. The investees over which the Company has control are accounted for under the equity method.
The Company prepares consolidated financial statements on a quarterly basis.
(7) Property, plant and equipment, leased assets and idle assets
A. Property, plant and equipment are stated at cost. Cost associated with significant additions,
improvements, and replacements to property, plant and equipment are capitalized.
Expenditures for regular repairs and maintenance are charged against operating income.
B. Property, plant and equipment leased to other parties under operating leases are classified as
leased assets. The related depreciation is provided under the straight-line method based on the
assets’ estimated useful lives and accounted for as a reduction of rental income. Property, plant
and equipment not currently used in operations are transferred to idle assets. The cost,
accumulated depreciation, and accumulated impairment of the original assets not currently
used in operations are all transferred to idle assets, and depreciated.
C. Depreciation is provided under the straight-line method over the estimated useful lives of the
assets. Salvage value of the fully depreciated assets that are still in use is depreciated over
the re-estimated useful lives. The estimated useful lives of buildings are 3~50 years,
machinery and equipment are 3~8 years and other equipment are 1~15 years.