Asus 2014 Annual Report Download - page 243

239
sold, and the customer has accepted the goods based on the sales contract or there is objective
evidence showing that all acceptance provisions have been satisfied.
5. CRITICAL ACCOUNTING JUDGEMENTS, ESTIMATES AND KEY SOURCES OF
ASSUMPTION UNCERTAINTY
The preparation of these separate financial statements requires management to make critical
judgements in applying the Company’s accounting policies and make critical assumptions at the end of
the financial reporting period and estimates concerning future events. The resulting accounting
estimates and assumptions might be different from the actual results, and will be continually evaluated
and adjusted based on historical experience and other factors; and the related information is addressed
below:
(1) Critical judgements in applying the Company’s accounting policies
A. Financial assets - impairment of equity investments
The Company 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 Company 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 Company 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 Company is acting as principal or agent in a transaction is
based on an evaluation of the Company’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 Company acts as a principal, the amount received or receivable from
customers is recognized as revenue on a gross basis. Where the Company 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
Company shall recognize revenue on a gross basis:
(A) The Company has primary responsibilities for the goods or services it provides;
(B) The Company bears inventory risk;
(C) The Company has the latitude in establishing prices for the goods or services, either directly
or indirectly.
(D) The Company bears credit risk of customers.