Asus 2012 Annual Report Download - page 183

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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.
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.