Kia 2003 Annual Report Download - page 56

Download and view the complete annual report

Please find page 56 of the 2003 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.

Page out of 90

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90

NOTES TO NON-CONSOLIDATED FINANCIAL STATEMENTS
▶DECEMBER 31, 2003 AND 2002
56 Kia Motors Corporation
For comparative purposes, certain accounts in the 2002 financial statements were reclassified. These reclassifications do not affect the net assets
and net income of the Company.
The significant accounting policies followed by the Company in the preparation of its non-consolidated financial statements are summarized
below.
Revenue Recognition
Sales, including long-term instalment sales, are recognized at the time of shipment of motor vehicles and parts, which is when the significant
risks and rewards of ownership of the goods have been transferred to the buyer. The interest income arising from long-term instalment sales
contracts is recognized using the level yielding method.
The Company applied SKAS No. 4 -“Revenue Recognition” from January 1, 2003. In conformity with SKAS No. 4, the Company changed the
accounting method for revenue recognition of sales to vendors to be repurchased under the outsourcing contracts from a gross basis to net
basis. For comparative purposes, the statement of income for the year ended December 31, 2002 was revised in conformity with SKAS No. 4.
This application of SKAS No.4 does not affect the net asset and net income of the Company ; however, the sales and cost of sales decreased as
follows :
Accrued Warranties
The Company generally provides a warranty to the ultimate consumer for each product sold and accrues warranty expense at the time of sale
based on actual claims history. In addition, the Company recognizes accrued liabilities of the provision for the projected costs for dismantling
and recycling vehicles that the Company sold in the European Union region to comply with a European Parliament directive regarding End-of-
Life Vehicles (ELV), in which either the manufactures or sellers are financially responsible for a portion of the cost of the dismantling and
recycling of vehicles placed in service, except for the vehicles sold in the countries where overseas sales subsidiaries are contracted with the
Company to respond to such obligation (See Note 13).
Allow ance for Doubtful Accounts
The Company provides an allowance for doubtful accounts based on management’s estimate of the collectibility 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 identification method.
Investments in Securities other than those Accounted for Using the Equity M ethod
▶Classification of Securities
At acquisition, the Company classifies securities into one of the three categories : trading, held-to-maturity securities or available-for-sale.
Trading securities are those that were acquired principally to generate profit from short-term fluctuations in prices. Held-to-maturity securities
are those with fixed or determinable payments and fixed maturity that an enterprise has the positive intent and ability to hold to maturity.
2003 2002 2003 2002
Korean won (in millions) U.S. dollars (Note 2) (in thousands)
Decrease in sales
Decrease in cost of sales
Net effect
2,298,508
2,298,508
-
1,898,338
1,898,338
-
1,918,941
1,918,941
-
1,584,854
1,584,854
-
￦
￦
￦
￦
＄
＄
＄
＄