HTC 2010 Annual Report Download - page 94

186 2 0 1 0 H T C A N N U A L R E P O R T 187
FINANCIAL INFORMATION
Deductible temporary dierences and tax credit carryforwards that gave rise to deferred tax assets as of December 31, 2009 and 2010
were as follows::
2009 2010
NT$ NT$ US$(Note 3)
Temporary dierences
Provision for loss on decline in value of inventory $ 536,717 $ 596,374 $ 20,473
Unrealized marketing expenses 1,716,445 2,705,547 92,879
Unrealized reserve for warranty expense 1,058,820 1,539,698 52,856
Capitalized expense 40,747 74,433 2,555
Unrealized royalties 1,691,142 2,879,421 98,847
Unrealized bad-debt expenses 147,309 64,353 2,209
Unrealized contingent losses of purchase orders 95,699 206,795 7,099
Unrealized exchange losses 155,790 30,482 1,047
Other 43,497 66,947 2,298
Loss carryforwards 48,566 1,523 52
Tax credit carryforwards 3,157,393 3,148,156 108,073
Total deferred tax assets 8,692,115 11,313,729 388,388
Less: Valuation allowance ( 6,772,111 ) ( 7,788,708 ) ( 267,378 )
Total deferred tax assets, net 1,920,004 3,525,021 121,010
Deferred tax liabilities
Unrealized pension cost ( 27,597 ) ( 27,063 ) ( 929 )
Unrealized valuation gains on financial instruments ( 3,626 ) ( 76,547 ) ( 2,628 )
Unrealized depreciation ( 8,836 ) ( 3,727 ) ( 128 )
1,879,945 3,417,684 117,325
Less: Current portion ( 812,254 ) ( 1,051,196 ) ( 36,086 )
Deferred tax assets - noncurrent
$
1,067,691 $ 2,366,488 $ 81,239
Details of the tax credit carryforwards were as follows:
2009 2010
Credit Grant Year Validity Period NT$ NT$ US$(Note 3)
2006 2006-2010 $ 15,475 $ - $ -
2007 2007-2011 220,249 4,404 151
2008 2008-2012 874,619 833,163 28,602
2009 2009-2013 2,047,050 2,310,589 79,320
$ 3,157,393 $ 3,148,156 $ 108,073
Details of the loss carryforwards were as follows:
2009 2010
Loss Year Validity Period NT$ NT$ US$(Note 3)
2006 2007-2016 $ 49,635 $ - $ -
2007 2008-2017 48,885 - -
2008 2009-2018 102,497 - -
2009 2010-2019 16,519 - -
$ 217,536 $ - $ -
The loss carryforwards of HTC BRASIL that gave rise to deferred tax assets in the Federative Republic of Brazil were NT$1,523
thousand (US$52 thousand). Taxation could be made on its net income after deduction of losses incurred in the preceding years, but
the deduction cannot exceed 30% of the taxable income in current year.
Before January 1, 2010, the investment and research and development tax credits can be carried forward for four years based on the
related regulations of Income Tax Act in the ROC. The total credits used in each year cannot exceed half of the estimated income tax
provision.
Under Article 10 of the Statute for Industrial Innovation (SII) passed by the Legislative Yuan in April 2010, a profit-seeking enterprise
may deduct up to 15% of its research and development expenditures from its income tax payable for the fiscal year in which these
expenditures are incurred, but this deduction should not exceed 30% of the income tax payable for that fiscal year. This incentive took
eect from January 1, 2010 and is eective till December 31, 2019.
Valuation allowance is based on management's evaluation of the amount of tax credits that can be carried forward for four years.
The income taxes in 2009 and 2010 were as follows:
2009 2010
NT$ NT$ US$(Note 3)
Current income tax $ 3,383,532 $ 6,890,038 $ 236,527
Increase in deferred income tax assets ( 506,522) ( 1,537,739) ( 52,789)
(Overestimation) underestimation of prior year's income tax ( 95,011) 97,245 3,339
Income tax $ 2,781,999 $ 5,449,544 $ 187,077
The integrated income tax information is as follows:
2009 2010
NT$ NT$ US$(Note 3)
Balance of imputation credit account (ICA) $ 1,702,246 $ 3,098,652 $ 106,373
Unappropriated earnings generated from 1998 38,364,099 52,876,892 1,815,204
Actual/estimated creditable ratio (including income tax payable) 13.85% 18.00% 18.00%
(Actual ratio) (Estimated ratio) (Estimated ratio)