HTC 2010 Annual Report Download - page 85

168 2 0 1 0 H T C A N N U A L R E P O R T 169
FINANCIAL INFORMATION
ABAXIA SAS BandRich Inc.
Huada Digital
Corporation (Note) Total
NT$ NT$ NT$ NT$
Cash in hand and in banks $ 93,848 $ 34,181 $ 245,000 $ 373,029
Other current assets 62,626 117,589 - 180,215
Properties 4,813 38,960 - 43,773
Other assets 14,041 1,155 - 15,196
Current liabilities ( 140,043 ) ( 160,572) - ( 300,615 )
Total consideration $ 35,285 $ 31,313 $ 245,000 $ 311,598
Cash consideration/cash at the beginning of period $ 530,446 $ 88,510 $ - $ 618,956
Cash at the acquisition date/losing significant
influence date ( 93,848 ) ( 34,181) ( 245,000) ( 373,029 )
Expected net cash outflow (inflow) on the acquisition
of a subsidiary $ 436,598 $ 54,329 $ ( 245,000 ) $ 245,927
Note:
Huada Digital Corporation was included in the consolidated financial statement beginning January 2010. And before that, it was booked on prepayments for long-term investments
on December 31, 2009.
Current/Noncurrent Assets and Liabilities
Current assets include cash, cash equivalents, and those assets held primarily for trading purposes or to be realized, sold or consumed
within one year from the balance sheet date. All other assets such as properties and intangible assets are classified as noncurrent.
Current liabilities are obligations incurred for trading purposes or to be settled within one year from the balance sheet date. All other
liabilities are classified as noncurrent.Financial instruments at FVTPL are initially measured at fair value plus transaction costs that
are directly attributable to the acquisition. At each balance sheet date subsequent to initial recognition, financial assets or financial
liabilities at FVTPL are remeasured at fair value, with changes in fair value recognized directly in profit or loss in the year in which
they arise. Cash dividends received subsequently (including those received in the year of investment) are recognized as income for
the year. On derecognition of a financial asset or a financial liability, the dierence between its carrying amount and the sum of the
consideration received and receivable or consideration paid and payable is recognized in profit or loss.
Financial Assets/Liabilities at Fair Value through Profit or Loss
Financial instruments classified as financial assets or financial liabilities at fair value through profit or loss (FVTPL) include financial
assets or financial liabilities held for trading and those designated as at FVTPL on initial recognition. The Company recognizes a
financial asset or a financial liability on its balance sheet when the Company becomes a party to the contractual provisions of the
financial instrument. A financial asset is derecognized when the Company has lost control of its contractual rights over the financial
asset. A financial liability is derecognized when the obligation specified in the relevant contract is discharged, cancelled or expired.
Financial instruments at FVTPL are initially measured at fair value plus transaction costs that are directly attributable to the acquisition.
At each balance sheet date subsequent to initial recognition, financial assets or financial liabilities at FVTPL are remeasured at fair value,
with changes in fair value recognized directly in profit or loss in the year in which they arise. Cash dividends received subsequently
(including those received in the year of investment) are recognized as income for the year. On derecognition of a financial asset or a
financial liability, the dierence between its carrying amount and the sum of the consideration received and receivable or consideration
paid and payable is recognized in profit or loss.
A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or a financial liability held for trading.
If the fair value of the derivative is positive, the derivative is recognized as a financial asset; otherwise, the derivative is recognized as a
financial liability.
Fair values of financial assets and financial liabilities at the
balance sheet date are determined as follows: Publicly traded
stocks - at closing prices; open-end mutual funds - at net asset
values; bonds - at prices quoted by the Taiwan GreTai Securities
Market; and financial assets and financial liabilities without
quoted prices in an active market - at values determined using
valuation techniques.
Available-for-sale Financial Assets
Available-for-sale financial assets are initially measured at fair
value plus transaction costs that are directly attributable to the
acquisition. At each balance sheet date subsequent to initial
recognition, available-for-sale financial assets are remeasured
at fair value, with changes in fair value recognized in equity
until the financial assets are disposed of, at which time, the
cumulative gain or loss previously recognized in equity is
included in profit or loss for the year.
The recognition, derecognition and the fair value bases of
available-for-sale financial assets are similar with those of
financial assets at FVTPL.
Cash dividends are recognized on the stockholders’ resolutions,
except for dividends distributed from the pre-acquisition
profit, which are treated as a reduction of investment cost.
Stock dividends are not recognized as investment income
but are recorded as an increase in the number of shares. The
total number of shares subsequent to the increase is used for
recalculation of cost per share.
An impairment loss is recognized when there is objective
evidence that the financial asset is impaired. Any subsequent
decrease in impairment loss for an equity instrument classified
as available-for-sale is recognized directly in equity.
Revenue Recognition, Accounts Receivable and Allowance for
Doubtful Accounts
Revenue from sales of goods is recognized when the Company
has transferred to the buyer the significant risks and rewards
of ownership of the goods because the earnings process has
been completed and the economic benefits associated with
the transaction have been realized or are realizable.
Revenue is measured at the fair value of the consideration
received or receivable and represents amounts agreed
between the Company and the customers for goods sold in the
normal course of business, net of sales discounts and volume
rebates. For trade receivables due within one year from the
balance sheet date, as the nominal value of the consideration
to be received approximates its fair value and transactions are
frequent, fair value of the consideration is not determined by
discounting all future receipts using an imputed rate of interest.
An allowance for doubtful accounts is provided on the basis
of a review of the collectability of accounts receivable. The
Company assesses the probability of collections of accounts
receivable by examining the aging analysis of the outstanding
receivables and assessing the value of the collateral provided
by customers.
Inventories
Inventories consist of raw materials, supplies, finished
goods and work-in-process. Eective from January 1, 2008,
inventories are stated at the lower of cost or net realizable
value. Inventory write-downs are made item by item, except
where it may be appropriate to group similar or related items.
Net realizable value is the estimated selling price of inventories
less all estimated costs of completion and costs necessary to
make the sale. Cost is determined using the moving-average
method.
Held-to-maturity Financial Assets
Held-to-maturity financial assets are carried at amortized cost
using the eective interest method. Held-to-maturity financial
assets are initially measured at fair value plus transaction costs
that are directly attributable to the acquisition. Profit or loss
is recognized when the financial assets are derecognized,
impaired, or amortized. All regular way purchases or sales of
financial assets are accounted for using a trade date basis.
An impairment loss is recognized when there is objective
evidence that the investment is impaired. The impairment
loss is reversed if an increase in the investment’s recoverable
amount is due to an event which occurred after the impairment
loss was recognized; however, the adjusted carrying amount
of the investment may not exceed the carrying amount that