Asus 2012 Annual Report Download - page 182

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(10) Intangible assets and deferred expenses
Intangible assets represent goodwill, trademarks, technology know-how, computer software and
land use rights. Goodwill and intangible assets with indefinite useful lives are subject to tests of
impairment every year, while others are amortized using the straight-line method over their
estimated economic lives. Deferred expenses represent office renovations and decorations, molds
and fixtures which are amortized using the straight-line method over 1~5 years.
(11) Impairment of non-financial assets
A. The Group assesses all applicable assets subject to SFAS No. 35 for indication of impairment
at the balance sheet date. If any indication of impairment exists, the Group then compares the
carrying amount with the recoverable amount of the assets or the cash-generating unit (CGU)
and writes down the carrying amount to the recoverable amount. If the recoverable amount of
an asset other than goodwill has increased as a result of the increase in its estimated service
potential, the Group reverses the impairment loss to the extent that the carrying amount after
the reversal would not exceed the amount (net of amortization or depreciation) that would
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.