Asus 2014 Annual Report Download - page 182

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(1) Critical judgements in applying the Group’s accounting policies
A. Financial assets - impairment of equity investments
The Group follows the guidance of IAS 39 to determine whether a financial asset - equity
investment is impaired. This determination requires significant judgement. In making this
judgement, the Group evaluates, among other factors, the duration and extent to which the fair
value of an equity investment is less than its cost and the financial health of and short-term
business outlook for the investee, including factors such as industry and sector performance,
changes in technology and operational and financing cash flow.
B. Investment property
The Group uses the main part of the investment property to earn rentals or for capital
appreciation and others for its own use. When the portions cannot be sold separately and cannot
be leased separately under finance lease, the property is classified as investment property only
if the own-use portion accounts for less than 50% of the property.
C. Revenue recognition on a net/gross basis
The determination of whether the Group is acting as principal or agent in a transaction is based
on an evaluation of the Group’s exposure to the significant risks and rewards associated with
the sale of goods in accordance with the business model and substance of the transaction.
Where the Group acts as a principal, the amount received or receivable from customers is
recognized as revenue on a gross basis. Where the Group acts as an agent, net revenue is
recognized representing commissions earned.
The following characteristics of a principal are used as indicators to determine whether the
Group shall recognize revenue on a gross basis:
(A) The Group has primary responsibilities for the goods or services it provides;
(B) The Group bears inventory risk;
(C) The Group has the latitude in establishing prices for the goods or services, either directly or
indirectly.
(D) The Group bears credit risk of customers.
(2) Critical accounting estimates and assumptions
A. Estimation of sales returns and discounts
The Group estimates discounts and returns based on historical results and other known factors.
Provisions for such liabilities are recorded as a deduction item to sales revenues when the sales
are recognized. The Group reassesses the reasonableness of estimates of discounts and returns
periodically.
As of December 31, 2014, provisions for discounts and returns amounted to $18,708,316.
B. Estimation of provisions for warranty
The Group estimates provisions for warranty based on historical results. Provisions for such
liabilities are recorded as costs. The Group reassesses the reasonableness of estimates of
provisions for warranty periodically.
As of December 31, 2014, provisions for warranty amounted to $11,454,228.