Crucial 2012 Annual Report Download - page 248

3
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
2. Accounts receivable
Effective January 1, 2011, the Company assesses accounts receivable to identify whether the existence of
objective evidence indicates an impairment loss on individual accounts receivable at each balance sheet
date. When the result of the assessment indicates that impairment loss on accounts receivable exists, the
Company recognizes an impairment loss. An impairment loss is recognized in profit or loss in the period
when impairment is incurred based on the excess of the carrying value over the present value of estimated
future cash flows at initial effective interest rate. The carrying value of accounts receivable is reduced
through the use of an allowance account.
If the impairment loss decreases in the subsequent period due to the improvement in debtor's credit rating,
the Company reverses an impairment loss recognized in prior periods by adjusting the allowance account.
The carrying value after the reversal should not exceed the balance of accounts receivable assuming no
impairment loss was recognized in prior periods. The reversal of impairment loss is recognized as a gain
in the period when impairment loss decreases.
Prior to January 1, 2011, allowance for doubtful accounts is provided according to the status of collectability
of each account. The amount is determined by considering the past collection experience, credit ratings of
the customers, and aging analysis of the outstanding receivables.
(g) Inventories
Inventory costs include the expenditures required until the inventories are ready for sale or production. The
fixed production overheads are allocated to finished goods and work in process based on the normal capacity
of the production facilities. The variable production overheads are allocated based on actual output. Inventories
are measured at the lower of cost and net realizable value. Net realizable value is based on the estimated selling
price of the inventories in the ordinary course of business, less the estimated costs of completion and selling
expenses.
(h) Property, plant and equipment / Depreciation
Property, plant and equipment are stated at cost net of any impairment write-down less accumulated
depreciation. Interest costs related to the construction of property, plant and equipment are capitalized and
included in the cost of the related assets. Regular maintenance and repairs are expensed when incurred; major
addition, improvement and replacement expenditures are capitalized.