HTC 2013 Annual Report Download - page 139

FINANCIAL INFORMATION FINANCIAL INFORMATION
274 275
a trade receivable, the Company considered any
change in the credit quality of the trade receivable
since the date credit was initially granted to the
end of the reporting period. For customers with
low credit risk, the Company has recognized an
allowance for doubtful debts of 1-5% against
receivables past due beyond 31-90 days and of
5-100% against receivables past due beyond
91 days. For customers with high credit risk,
the Company has recognized an allowance for
doubtful debts of 10-100% against receivables past
due more than 31 days.
Before accepting any new customer, the
Company's Department of Financial and
Accounting evaluates the potential customer's
credit quality and defines credit limits and scorings
by customer. The factor of overdue attributed
to customers are reviewed once a week and the
Company evaluates the financial performance
periodically for the adjustment of credit limits.
The concentration of credit risk is limited due to
the fact that the customer base is diverse.
As of the reporting date, the Company had no
receivables that are past due but not impaired.
Age of impaired trade receivables
December 31,
2013
December 31,
2012
January 1,
2012
1-90 days
91-180 days
Over 181 days
$3,714,226
1,468,049
803,422
$7,700,143
1,092,164
5,651
$15,528,464
1,994,283
74,014
$5,985,697 $8,797,958 $17,596,761
The above was shown after deducting the
allowance for doubtful debts and analyzed on the
basis of the past due date.
15. PREPAYMENTS
December 31,
2013
December 31,
2012
January 1,
2012
Royalty $12,007,756 $9,936,609 $12,521,985
Prepayments to
suppliers
2,492,197 2,976,231 3,256,082
Net input VAT 1,918,462 434,521 320,544
Molding
expenses
304,411 96,859 188,242
Prepaid
equipment
194,200 232,011 207,061
Software and
hardware
maintenance
139,958 716,695 311,416
Land use right 138,376 134,074 139,707
Service 113,661 171,440 55,192
Others 234,123 144,126 162,413
$17,543,144 $14,842,566 $17,162,642
Current $5,803,744 $4,965,814 $6,507,516
Non-current 11,739,400 9,876,752 10,655,126
$17,543,144 $14,842,566 $17,162,642
Prepayments for royalty were primarily for getting
royalty right and were classified as current or
non-current in accordance with their nature. For
details of content of contracts, please refer to
Note 38.
Prepayments to suppliers were primarily for
discount purposes and were classified as current
or non-current in accordance with their nature.
16. INVESTMENTS ACCOUNTED
FOR USING EQUITY METHOD
December 31,
2013
December 31,
2012
January 1,
2012
Investment in
subsidiaries
$- $5,650,859 $71,732
Investment
in jointly
controlled
entity
227,504 241,309 -
$227,504 $5,892,168 $71,732
Movement in the allowances for doubtful debts
For the Year Ended
December 31
2013 2012
Balance, beginning of the year $2,086,085 $1,555,008
Impairment losses recognized
on receivables
1,010,405 531,364
Amounts written off during the
year
(13,943) (401)
Disposal of subsidiary (32,453) -
Translation adjustment 813 114
Balance, end of the year $3,050,907 $2,086,085
Other Receivables
Loan receivables - fluctuation rate is the short-
term loan to Beats Electronics, LLC. For more
details, please refer to Note 33.
Receivable from disposal of investments is the
amount of sale of shares of Saffron Media Group
Ltd. For more details, please refer to Note 30.
Others were primarily prepayments on behalf of
vendors or customers, grants from suppliers and
withholding income tax of employees' bonuses.
14. INVENTORIES
December 31,
2013
December 31,
2012
January 1,
2012
Finished goods $3,487,921 $2,275,082 $1,471,690
Work-in-
process
521,423 1,902,733 4,320,763
Semi-finished
goods
8,244,216 4,960,060 4,382,760
Raw materials 11,074,773 14,374,714 18,134,048
Inventory in
transit
271,225 296,788 121,329
$23,599,558 $23,809,377 $28,430,590
The losses on inventories decline amounting to
NT$417,166 thousand and NT$2,154,419 thousand
were recognized as cost of revenues for the years
ended December 31, 2013 and 2012, respectively.
Investments in Subsidiaries
December 31,
2013
December 31,
2012
January 1,
2012
Unlisted equity
investments
Beats
Electronics, LLC
$- $5,650,859 $-
SYNCTV
Corporation
- - 71,732
$- $5,650,859 $71,732
The percentage of ownership and voting rights
held by the Company at the end of reporting
period were as follows:
December 31,
2013
December 31,
2012
January 1,
2012
Beats
Electronics, LLC
100.00% 100.00% 100.00%
Ownership - 25.14% 50.14%
Voting right - 25.57% 51.00%
SYNCTV
Corporation
20.00% 20.00% 20.00%
In September 2011, the Company acquired
20% equity interest in SYNCTV Corporation
for US$2,500 thousand and accounted for this
investment by the equity method. In December
2012, the Company determined that the
recoverable amount of this investment was less
than its carrying amount and thus recognized an
impairment loss of NT$56,687 thousand.
In October 2011, the Company acquired 50.14%
equity interest in Beats Electronics, LLC for
US$300,000 thousand. In July 2012, the Company
sold back 25% of Beats Electronics, LLC shares
to the founding members of Beats Electronics,
LLC for US$150,000 thousand. For details of
transaction, please refer to Note 30. In October,
2013, the Company sold back its remaining interest
in Beats Electronics, LLC to Beats Electronics,
LLC for US$265,000 thousand. This transaction
resulted in the recognition of a gain in profit or
loss, calculated as follows: