HTC 2007 Annual Report Download - page 70

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135134
AN OVERVIEW OFTHE COMPANY'S FINANCIAL STATUS
> In
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2005 2006 2007
NT$ NT$ NT$ US$(Note 3)
Income before income tax $ 12,155,939 $ 26,957,878 $ 32,151,297 $ 991,406
Permanent differences
Losses (gains) on equity-method investments 35,112 12,554 ( 103,997) ( 3,207)
Other 31,012 36,625 45,745 1,411
Temporary differences
Realized pension cost ( 42,098) ( 24,260) ( 21,166) ( 653)
Unrealized bad debt expenses - - 64,603 1,992
Unrealized loss on decline in value of inventory 239,955 304,936 24,625 759
Unrealized royalties 1,183,995 1,930,164 271,000 8,356
Realized depreciation ( 12,058) - - -
Unrealized foreign exchange losses (gains), net 217,995 ( 177,812) ( 94,291) ( 2,908)
Unrealized warranty expense 639,801 429,492 2,075,962 64,014
Unrealized marketing expenses - 983,087 2,023,933 62,409
Unrealized profit from intercompany transactions 8,788 148,934 11,064 342
Unrealized valuation (gain) loss on financial instruments ( 60,085) 76,470 96,256 2,968
Capitalized expense 2,698 ( 19,414) 30,767 949
Other 30,877 ( 1,292) 43,593 1,344
Total income 14,431,931 30,657,362 36,619,391 1,129,182
Less tax-exempt income tax ( 8,734,397) ( 20,914,039) ( 22,787,534) ( 702,668)
Taxable income 5,697,534 9,743,323 13,831,857 426,514
Tax rate 25% 25% 25% 25%
1,424,384 2,435,831 3,457,964 106,628
Income tax credit ( 10) ( 10) ( 10) -
Estimated income tax provision 1,424,374 2,435,821 3,457,954 106,628
Unappropriated earnings (additional 10% income tax) 144,006 436,049 571,507 17,623
Less investment research and development tax credits ( 938,425) ( 1,024,576) ( 648,134) ( 19,986)
Current income tax 629,955 1,847,294 3,381,327 104,265
Less prepaid and withheld income tax ( 13,092) ( 156,308) ( 1,060,575) ( 32,703)
Tax shortage stated in the tax assessment notice - 67,731 193,642 5,971
Income tax payable $ 616,863 $ 1,758,717 $ 2,514,394 $ 77,533
•The tax effects of deductible te
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porary differences and tax credit carryforwards that gave rise to deferred tax assets as of
D
ece
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ber 31, 2005, 2006 and 2007 were as follows:
VI
23.INCOME TAX
The Basic Income Tax Act (BITA), which took effect
on January 1, 2006, requires that the basic income
tax (BIT) should be 10% of the sum of the taxable
income as calculated in accordance with the Income
Tax Act (ITA) plus tax-exempt income under the ITA
or relevant laws. The tax payable of the current year
would be the higher of the BIT or the income tax
payable calculated in accordance with the ITA.
However, if the BIT is higher than the ITA tax,
investment tax credits granted under the provisions
of other laws should not be used to deduct the
difference between the two taxes payable. The effect
of the BIT had been taken into account by the
Company in its tax calculation.
The income tax returns through 2003 had been
examined by the tax authorities. However, the
Company disagreed with the tax authorities'
assessment on its returns for 2002 to 2003 and
applied for the reexamination of its returns.
Nevertheless, under the conservatism guideline, the
Company adjusted its income tax for the tax shortfall
stated in the tax assessment notices.
> Und
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:
Item Exempt from Corporate Income Tax Exemption Period
Sales of pocket PCs and Smartphones 2001.04.26~2006.04.25
Sales of pocket PCs (wireless) and Smartphones 2002.01.01~2006.12.31
Sales of Win CE products 2003.01.01~2007.12.31
Sales of pocket PCs, pocket PCs (wireless) and Smartphones 2004.09.15~2009.09.14
Sales of pocket PCs (wireless) and Smartphones 2004.11.30~2009.11.29
Sales of pocket PCs (wireless) and Smartphones 2005.12.20~2010.12.19
sales of wireless or smartphone whichhas 3G or GPS function 2006.12.20-2011.12.19
FINANCEI INDEPENDENT AUDITORS' REPORT
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