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Financial Information
| 95
94 |
2008 Annual Report
The tax effects of deductible temporary differences and loss and tax credit carryforwards that gave rise to
deferred tax assets as of December 31, 2006, 2007 and 2008 were as follows:
2006
2007
2008
NT$
NT$
NT$
US$
(Note 3)
Temporary differences
Provision for loss on decline in value of inventory
$
222,916
$
229,072
$
418,861
$
12,770
Unrealized marketing expenses
245,772
757,691
1,456,074
44,393
Unrealized reserve for warranty expense
348,499
867,489
1,307,151
39,852
Capitalized expense
31,936
39,628
59,474
1,813
Unrealized royalties
942,097
1,009,848
1,535,925
46,827
Unrealized bad-debt expenses
-
16,072
26,503
808
Unrealized valuation loss on financial instruments
19,117
24,064
128,521
3,918
Other
27,770
45,345
11,711
357
Loss carryforwards
7,868
25,293
50,545
1,541
Tax credit carryforwards
9,574
47,484
2,281,856
69,569
Total deferred tax assets
1,855,549
3,061,986
7,276,621
221,848
Less: Valuation allowance
(
1,147,549
)
(
2,026,939
)
(
5,826,064
)
(
177,624
)
Total deferred tax assets, net
708,000
1,035,047
1,450,557
44,224
Deferred tax liabilities
Unrealized pension cost
(
18,505
)
(
23,797
)
(
29,353
)
(895
)
Unrealized foreign exchange gain, net
(
38,254
)
(
43,035
)
(
41,249
)
(
1,258
)
Unrealized depreciation
-
(
5,049
)
(
6,532
)
(
199
)
651,241
963,166
1,373,423
41,872
Less: Current portion
(
428,077
)
(
570,992
)
(
550,530
)
(
16,784
)
Deferred tax assets - noncurrent
$
223,164
$
392,174
$
822,893
$25,088
Details of the tax credit carryforwards were as follows:
Credit
2006
2007
2008
Grant Year
Validity Period
NT$
NT$
NT$
US$
(Note 3)
2004
2004-2008
$
-
$
6,965
$
-
$
-
2005
2005-2009
-
6,479
6,479
198
2006
2006-2010
9,574
15,475
15,475
472
2007
2007-2011
-
18,565
220,270
6,715
2008
2008-2012
-
-
2,039,632
62,184
$
9,574
$
47,484
$
2,281,856
$
69,569
Details of the loss carryforwards were as follows:
Loss
2006
2007
2008
Year
Validity Period
NT$
NT$
NT$
US$
(Note 3)
2005
2006-2010
$
-
$
95
$
95
$
3
2006
2007-2011
31,474
50,703
50,703
1,546
2007
2008-2012
-
50,372
48,885
1,490
2008
2009-2013
-
-
102,497
3,125
$
31,474
$
101,170
$
202,180
$
6,164
Based on the Income Tax Act of the ROC, the
investment research and development tax credits
can be carried forward for four years. The total
credits used in each year cannot exceed half of the
estimated income tax provision, except in the last
year.
Valuation allowance is based on management’s
evaluation of the amount of tax credits that can be
carried forward for four years, based on the
Company’s financial forecasts.
The income taxes in 2006, 2007 and 2008 were as
follows:
2006
2007
2008
NT$
NT$
NT$
US$
(Note 3)
Current income tax
$
1,849,052
$
3,497,798
$
3,602,387
$
109,799
Increase in deferred income tax assets
(
172,381
)
(
309,485
)
(
410,257
)
(
12,508
)
Underestimation (overestimation) of prior year’s income tax
31,704
125,911
(
8,940
)
(
243
)
Income tax
$
1,708,375
$
3,314,224
$
3,183,190
$
97,048
The integrated income tax information of HTC is as follows:
2006
2007
2008
NT$
NT$
NT$
US$
(Note 3)
Balance of imputation credit account (ICA)
$
1,772,897
$
3,005,386
$
5,568,676
$
169,777
Unappropriated earnings generated from 1998
31,991,090
41,403,867
44,626,182
1,360,555
Actual/ estimated creditable ratio (including income tax payable)
5.54 %
(actual ratio)
7.26%
(actual ratio)
12.48%
(estimated ratio)
12.48%
(estimated ratio)