Asus 2011 Annual Report Download - page 162

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B. Under the defined contribution pension plan, net periodic pension costs are recognized as
incurred.
(15) Income tax
A. Income tax is calculated on the basis of accounting income. The differences between the tax
bases and the book values of assets and liabilities are recorded as deferred tax using the
enacted tax rates for the periods in which the deferred tax is expected to be reversed. The tax
effects from taxable temporary differences are recognized as deferred tax liabilities, while the
deductible temporary differences and investment tax credits are accounted for as deferred tax
assets, which are assessed for a valuation allowance based on future realization.
B. Deferred income tax assets or liabilities are classified as current or non-current based on the
classification of items that resulted in the deferred item or based on the timing of the expected
reversal, for certain transactions not directly related to an asset or liability. When a change in
the tax laws is enacted, the deferred tax liability or asset is recomputed accordingly in the
period of change. The difference between the new amount and the original amount, that is,
the effect of changes in the deferred tax liability or asset, is recognized as an adjustment to
current income tax expense (benefit).
C. Over or under provision of prior years’ income tax liabilities is included in current year’s
income tax.
D. For the Company and domestic subsidiaries, the 10% additional income tax on unappropriated
earnings is recorded as current income tax expense when the shareholders resolve not to
distribute the earnings.
E. For the Company and domestic subsidiaries, current income tax is the higher of current income
tax payable or the Alternative Minimum Tax (“AMT”) calculated by applying the Income
Basic Tax Act (“IBTA”). The Group has taken into consideration the impact of the AMT in the
determination of its current income tax expense and its future impact when estimating the
realizable value of the deferred tax assets.
F. The income tax for each consolidated entity is reported on an individual basis with the relevant
country and is not reported on a consolidated basis. The consolidated income tax expense is
the total of income tax expense for all consolidated entities.
(16) Treasury stock
A. When the Company acquires its outstanding shares as treasury stock, the acquisition cost
should be debited to the treasury stock account (a contra account under stockholders’ equity).
B. When the Company’s treasury stock is retired, the treasury stock account should be credited,
and the capital surplus-premium on stock account and capital stock account should be debited
proportionately according to the share ratio. An excess of the carrying value of treasury
stock over the sum of its par value and premium on stock should first be offset against capital
surplus from the same class of treasury stock transactions, and the remainder, if any, debited to
retained earnings. An excess of the sum of the par value and premium on stock of treasury
stock over its carrying value should be credited to additional paid-in capital from the same
class of treasury stock transactions.