Asus 2012 Annual Report Download - page 181

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(7) 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 Group exceeds 20% or if the Group owns 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 Group does not
purchase new shares proportionately, then the investment percentage, and 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 gains 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 Group and
investees accounted for under the equity method are accounted for in unrealized gain on
inter-affiliate accounts and deferred until realized.
(8) Investment - land use right
Investment - land use right is stated at cost, and amortized using the average method over the
contract period. If an objective evidence of impairment exists and the recovery is remote, an
impairment loss is recognized.
(9) 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.
C. Depreciation is provided under the straight-line method over the estimated useful lives of the
assets. The estimated useful lives of buildings are 3~60 years, machinery and equipment are
2~10 years and other equipment are 1~20 years.