D-Link 2005 Annual Report Download - page 38
Download and view the complete annual report
Please find page 38 of the 2005 D-Link annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.10
D-LINK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Continued)
(q) Treasury stock
Pursuant to ROC SFAS No. 30, “Accounting for Treasury Stock”, the outstanding shares of D-
Link purchased back by itself should be recorded as treasury stock at the purchasing cost before
such shares are disposed of or retired.
If treasury stock is disposed of afterward, the difference is recorded as capital surplus when the
disposal price is higher than the carrying amount; when the situation is reversed, the difference is
recorded as a reduction in capital surplus generated from treasury stock transaction, and any
insufficiency is appl,ied to retained earnings. The carrying amount of the treasury stock is
calculated by using the weighted-average method.
When retiring treasury stock, common stock and capital surplus derived from paid-in capital in
excess of par value should be eliminated proportionally. If the carrying amount of retired
treasury stock is higher than the eliminated amount of common stock and capital surplus, then the
difference is recorded as a reduction in capital surplus derived from treasury stock, with any
insufficiency applied to retained earnings; when the situation is reversed, the difference is
recorded as capital surplus.
(r) Net income per common share
Net income per common share is calculated based on the weighted-average number of common
shares outstanding during the period. The effect on net income per common share from the
increase in stock from the transfer of unappropriated earnings, capital surplus, and employee
profit sharing is computed retroactively.
(s) Impairment of assets
Effective January 1, 2005, D-Link and its subsidiaries adopted Statement of Financial
Accounting Standards No. 35 “Accounting for Asset Impairment”. According to SFAS 35, D-
Link and its subsidiaries assess at each balance sheet date whether there is any indication that an
asset (individual asset or cash-generating unit) other than goodwill may have been impaired. If
any such indication exists, D-Link and its subsidiaries estimate the recoverable amount of the
asset. D-Link and its subsidiaries recognize impairment loss for an asset whose carrying value is
higher than the recoverable amount.
D-Link and its subsidiaries reverse impairment losses recognized in prior periods for assets other
than goodwill if there is any indication that the impairment loss recognized no longer exists or
has decreased. The carrying value after the reversal should not exceed the recoverable amount or
the depreciated or amortized balance of the assets assuming no impairment loss was recognized
in prior periods.