HTC 2010 Annual Report Download - page 65

128 2 0 1 0 H T C A N N U A L R E P O R T 129
FINANCIAL INFORMATION
12. FINANCIAL ASSETS CARRIED AT COST
Financial assets carried at cost as of December 31, 2009 and
2010 were as followss:
2009 2010
NT$ NT$ US$(Note 3)
Hua-Chuang Automobile
Information Technical
Center Co., Ltd. $ 500,000 $ 500,000 $ 17,164
BandRich Inc. -15,861 545
Answer Online, Inc. 1,192 - -
$ 501,192 $ 515,861 $ 17,709
In January 2007, the Company acquired 10% equity interest in
Hua-Chuang Automobile Information Technical Center Co., Ltd.
for NT$500,000 thousand. The Company also signed a joint
venture agreement with Yulon Group, the main stockholder
of Hua-Chuang. Under the agreement, the Company and
Yulon Group may, between January 1, 2010 and December 31,
2011, submit written requests to each other for Yulon Group
to buy back NT$300,000 thousand at original price, some of
Hua-Chuang’s shares bought by the Company. The buy-back
proposed by Yulon Group becomes eective with a consensus
from the Company.
In March 2004, the Company merged with IA Style, Inc. and
acquired 1.82% equity interest in Answer Online, Inc. as a result
of the merger. In addition, the Company determined that the
recoverable amount of this investment in 2010 was less than
its carrying amount and thus recognized an impairment loss of
NT$1,192 thousand (US$41 thousand).
In April 2006, the Company acquired 92% equity interest in
BandRich Inc. for NT$135,000 thousand and accounted for
this investment by the equity method. In May 2006 and July
2010, BandRich Inc. issued common shares and the Company
did not buy any shares. The Company’s ownership percentage
declined from 92% to 18.08% and lost its significant influence.
As a result, the Company transferred this investment to
“financial assets carried at cost” using book value at the time of
its ownership percentage changed in July 2010.
These unquoted equity instruments were not carried at fair
value because their fair value could not be reliably measured;
thus, the Company accounted for these investments by the
cost method.
In August 2000, the Company acquired 100% equity interest in
H.T.C. (B.V.I.) Corp. for NT$12,834 thousand and accounted for
this investment by the equity method. The Company increased
this investment by NT$385,749 thousand in 2009, consisting
of NT$316,656 thousand transferred from prepayments for
long-term investments because the registration of the related
investment had been completed by the beginning of 2009 and
of a new investment amount of NT$69,093 thousand. Then,
the Company reorganized its overseas subsidiaries’ investment
structure in the fourth quarter of 2009. H.T.C. (B.V.I.) Corp.
transferred some of its subsidiaries to High Tech Computer
Asia Pacific Pte. Ltd. and HTC HK, Limited and reduced its
capital by NT$751,314 thousand.
In 2010, the Company made a new investment of NT$570,991
thousand (US$19,601 thousand), and reorganized its overseas
subsidiaries’ investment structure again. Thus, H.T.C. (B.V.I.)
Corp. transferred some of its subsidiaries to High Tech
Computer Asia Pacific Pte. Ltd. and reduced its capital by
NT$893,506 thousand (US$30,673 thousand). As of December
31, 2010, the Company’s investment in H.T.C. (B.V.I.) Corp.
amounted to NT$855,826 thousand (US$29,379 thousand).
However, because the registration of this investment had
not been completed as of December 31, 2010, an amount of
NT$83,665 thousand (US$2,872 thousand) was temporarily
accounted for under “prepayments for long-term investments.”
In April 2006, the Company acquired 92% equity interest in
BandRich Inc. for NT$135,000 thousand and accounted for this
investment by the equity method. In July 2010 the Company
lost its significant influence and accounted for this investment
by the cost method (Note 12 has more information).
In September 2006, the Company acquired 100% equity
interest in HTC HK, Limited for NT$1,277 thousand and
accounted for this investment by the equity method. In
December 2009, HTC HK, Limited was sold to High Tech
Computer Asia Pacific Pte. Ltd. in line with the reorganization
of the Company’s overseas subsidiaries’ investment structure.
In January 2007, the Company acquired 100% equity
interest in Communication Global Certification Inc. for
NT$280,000 thousand and accounted for this investment
by the equity method. The Company increased this
investment by NT$100,000 thousand (US$3,433 thousand)
in 2010. As of December 31, 2010, the Company’s investment
in Communication Global Certification Inc. amounted to
NT$380,000 thousand (US$13,045 thousand).
In July 2007, the Company acquired 100% equity interest
in High Tech Computer Asia Pacific Pte. Ltd. (“High Tech
Asia”) for NT$560,660 thousand and accounted for this
investment by the equity method. In 2009 and 2010, High
Tech Asia increased its capital by NT$1,339,311 thousand and
NT$3,198,864 thousand (US$109,813 thousand), respectively,
because of the Company’s new cash investment and a transfer-
in due to the reorganization of the Company’s overseas
subsidiaries’ investment structure. As of December 31, 2010,
the Company’s investment in High Tech Computer Asia Pacific
Pte. Ltd. had amounted to NT$6,561,949 thousand (US$225,264
thousand).
In April 2008, the Company made a new investment of US$350
thousand and transferred its bond investment of US$1,000
thousand to convertible preferred stocks issued by Vitamin D
Inc. As a result, the Company acquired 27.27% equity interest
in Vitamin D Inc. for NT$40,986 thousand, enabling the
Company to exercise significant influence over this investee.
Thus, the Company accounts for this investment by the equity
method. In September 2008, January 2009 and June 2009,
Vitamin D Inc. issued new convertible preferred shares, but the
Company did not buy any of these shares. The Company’s
ownership percentage thus declined from 27.27% to 25.59%,
and there was a capital surplus - long-term equity investments
of NT$1,689 thousand, NT$671 thousand in 2008 and 2009,
respectively. In addition, the Company determined that the
recoverable amount of this investment in 2009 was less than
its carrying amount and thus recognized an impairment loss of
NT$30,944 thousand. Vitamin D was dissolved in August 2010.
In July 2008, the Company acquired 100% equity interest in
HTC Investment Corporation for NT$300,000 thousand and
accounted for this investment by the equity method.
In December 2007, the Company and its subsidiary, High
Tech Computer Asia Pacific Pte. Ltd., acquired 1% and 99%,
respectively, equity interest in PT. High Tech Computer
Indonesia for NT$62 thousand and NT$6,122 thousand,
respectively. As a result, the Company accounted for this
investment by the equity method.
13. INVESTMENTS ACCOUNTED FOR BY THE EQUITY METHOD
Investments accounted for by the equity method as of December 31, 2009 and 2010 were as follows:
2009 2010
Carrying Value
Ownership
Percentage Original Cost Carrying Value
Ownership
Percentage
NT$ NT$ US$(Note 3) NT$ US$(Note 3)
Equity method
H.T.C. (B.V.I.) Corp. $ 1,408,470 100 $ 772,161 $ 26,507 $ 973,231 $ 33,410 100
BandRich Inc. 35,117 50.66 -----
HTC HK, Limited - - -----
Communication Global Certification Inc. 286,957 100 380,000 13,045 399,496 13,714 100
High Tech Computer Asia Pacific Pte. Ltd. 3,223,526 100 6,561,949 225,264 7,685,469 263,833 100
Vitamin D Inc. - 25.59 -----
HTC Investment Corporation 300,563 100 300,000 10,299 300,789 10,326 100
PT. High Tech Computer Indonesia 62 1 62 2 62 2 1
HTC I Investment Corporation 295,071 100 295,000 10,127 295,782 10,154 100
HTC Holding Cooperatief U.A. - - 13 1 13 1 1
Huada Digital Corporation - - 245,000 8,410 245,568 8,430 100
Prepayments for long-term investments 454,923 83,665 2,872 83,665 2,872
$ 6,004,689 $ 8,637,850 $ 296,527 $ 9,984,075 $ 342,742