Kia 2001 Annual Report Download - page 23
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Please find page 23 of the 2001 Kia annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.Financial Statements & Notes
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
42 43
Kia Motors Corporation (the "Company") was incorporated in December 1944, under the laws of the
Republic of Korea, to engage initially in the manufacture and sale of bicycles. The Company is now one
of the leading motor vehicle manufacturers in Korea producing and offering for sale a range of passen-
ger cars, recreational vehicles, and commercial vehicles both in the domestic and the export markets.
The Company owns and operates three principal automobile production plants: the Sohari plant, the
Hwasung plant, and the Kwangju plant. The shares of the Company have been listed on the Korea Stock
Exchange since 1973.
The Company was under the court receivership on April 15, 1998, as the court ruled in favor of com-
mencement of in-court reorganization procedures for the Company. Effective February 16, 2000, the
court receivership was terminated as the managerial committee of the competent court and the credi-
tors' conference have favorably decided on the completion of the Company's performance of in-court
reorganization procedures and the normalization of its finance and management.
The Company entered into a take-over contract with Hyundai Motor Company, representing the Hyundai
Motor Consortium, effective December 1, 1999. Hyundai Motor Company holds 36.3 percent of the
Company's stock as of December 31, 2001.
Beginning in 1997, Korea and other countries in the Asia Pacific region experienced a severe contrac-
tion in substantially all aspects of their economies. This situation is commonly referred to as the 1997
Asian Financial Crisis. In response to this situation, the Korean government and the private sector began
implementing structural reforms to historical business practices.
The Korean economy continues to experience difficulties, particularly in the areas of restructuring private
enterprises and reforming the banking industry. The Korean government continues to apply pressure to
Korean companies to restructure into more efficient and profitable firms. The banking industry is currently
undergoing consolidation and uncertainty exists with regard to the continued availability of financing. The
Company may be either directly or indirectly affected by the situation described above. The accompany-
ing non-consolidated financial statements reflect management's current assessment of the impact to
date of the economic situation on the financial position of the Company. Actual results may differ materi-
ally from management's current assessment.
Basis of Financial Statement Presentation
The Company maintains its official accounting records in Korean won and prepares statutory non-con-
solidated financial statements in the Korean language (Hangul) in conformity with the accounting princi-
ples generally accepted in the Republic of Korea. Certain accounting principles applied by the
Company that conform with financial accounting standards and accounting principles in the Republic of
Korea may not conform with generally accepted accounting principles in other countries. Accordingly,
these non-consolidated financial statements are intended for use by those who are informed about
Korean accounting principles and practices. The accompanying non-consolidated financial statements
have been condensed, restructured and translated into English (with certain expanded descriptions)
from the Korean language financial statements. Certain information attached to the Korean language
financial statements, but not required for a fair presentation of the Company's financial position, results of
operations or cash flows, is not presented in the accompanying non-consolidated financial statements.
The US dollar amounts presented in these non-consolidated financial statements were computed by
translating the Koran won into US dollars based on the Bank of Korea Basic Rate of 1326.10 to US
$1.00 at December 31, 2001, solely for the convenience of the reader. This convenience translation into
US dollars should not be construed as a representation that the Korean won amounts have been, could
have been, or could in the future be, converted at this or any other rate of exchange.
The significant accounting policies followed by the Company in the preparation of its non-consolidated
financial statements are summarized below.
Revenue Recognition
Revenue, including long-term installment sales, is recognized at the time of shipping motor vehicles and
parts. However, interest income arising from long-term installment sales contracts is recognized using
the level yield method.
Valuation of Marketable Securities
Marketable securities are recorded at purchase price plus incidental costs. However, if the fair value of
marketable securities differs from the book value determined by the moving average method, the securi-
ties are stated at fair value and the valuation gain or loss is recognized in current operations.
Allowance for Doubtful Accounts
The Company provides an allowance for doubtful accounts based on management's estimate of the col-
lectibility of the receivables.
Inventories
Inventories are stated at the lower of cost or net realizable value, cost being determined by the moving
average method except for materials in-transit for which cost is determined using the specific identifica-
tion method.
Investment Securities
Equity securities held for investment (excluding those accounted for using the equity method discussed
in the next paragraph) that are not actively traded (unlisted security) are stated at acquisition cost, as
determined by the moving average method. Actively quoted (listed) securities, including those traded
over-the-counter, are stated at fair value, with the resulting valuation gain or loss reported as a capital
adjustment within shareholders' equity. If the fair value of a listed equity security or the net equity value of
an unlisted security held for investment declines compared to acquisition cost and is not expected to
recover (impaired investment security), the carrying value of the equity security is adjusted to fair value
or net equity value, with the resulting valuation loss charged to current operations. If the net equity value
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 2001 AND 2000
1. THE COMPANY:
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: