Asus 2011 Annual Report Download - page 161

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otherwise result had no impairment loss been recognized in prior periods.
B. The Group assesses the goodwill, intangible assets with indefinite useful lives or that are not
yet available for use periodically on an annual basis and recognizes an impairment loss on the
carrying value in excess of the recoverable amount. The loss is first recorded against the
goodwill allocated to the CGU, with any remaining loss allocated to other assets on a pro rata
basis proportionate to their carrying amounts. The write-down of goodwill cannot be reversed
in subsequent periods under any circumstances.
(12) Convertible bonds payable
Bonds issued after January 1, 2006 are accounted for in accordance with SFAS No. 36 and
Interpretations (95) 290, (97) 331 and (98) 046 by the Accounting Research and Development
Foundation (ARDF) as follows:
A. The issuance costs are allocated to the related liability and equity components in proportion of
the initially recognized amounts.
B. Convertible bonds bearing a clause on conversion price adjustment based on stock market
price do not include the equity component. For the liability components, the fair value of the
conversion right and call/put option is determined first, and then the book value of main debt
component is determined based on the net amount of the issuance price after deducting the fair
value of the call/put option and conversion right with a clause on price adjustment.
C. Convertible bonds are subsequently measured at amortized cost. Derivatives with call/put
options and conversion rights with a clause on price adjustment are recognized as “financial
liabilities at fair value through profit or loss” and are subsequently measured at fair value.
Movements in the fair value of the derivatives are recognized as “gain/(loss) on valuation of
financial liabilities”.
D. If the bondholder exercises the right to convert the bonds ahead of the maturity date of the
bond, the book value of the liability component is adjusted to the value on the conversion date,
which serves as the basis for the recording of the issuance of common stock so that no
conversion gain and loss is recognized thereon.
E. If the bondholder is eligible to exercise the put option within one year, the bonds payable are
reclassified as current liability. When the put option expires, those bonds payable are
reclassified as long-term liability if the liability meets the definition of long-term liability.
(13) Accrued product warranty liability
When a warranty clause is attached to the sale of a product, a warranty liability is accrued based
on historical return rates and repair costs, failure rates and warranty periods. Service warranty
expense is included in the current year’s operating expenses.
(14) Pension
A. Under the defined benefit pension plan, net periodic pension costs are recognized in
accordance with the actuarial calculations. Net periodic pension costs include service cost,
interest cost, expected return on plan assets, and amortization of unrecognized net transition
obligation and gains or losses on plan assets. Unrecognized net transition obligation is
amortized on a straight-line basis over the employees’ remaining service period.