Kia 2007 Annual Report Download - page 70

070_ Kia Motors Annual Report 2007
(ii) Other Intangible Assets
Other intangible assets, which consist of industrial property rights and facility usage rights, are stated at cost less accumulated amortization and impairment
losses. Such intangible assets are amortized using the straight-line method over a reasonable period, generally five or ten years, based on the nature of the
asset.
When the recoverable amount of the intangible assets is substantially below the carrying amount of the assets due to obsolescence or sharp decline in their
value, the Company reduces the carrying amount to the recoverable amount and the amount impaired is recognized as impairment loss.
(m) Discount (Premium) on Debentures
Discount (premium) on debentures issued, which represents the difference between the face value and issuance price of debentures, is amortized (accreted) using
the effective interest method over the life of the debentures. The amount amortized (accreted) is included in interest expense.
(n) Retirement and Severance Benefits
Employees who have been with the Company for more than one year are entitled to lump-sum payments based on salary rates and length of service at the time
they leave the Company. The Company's estimated liability under the plan which would be payable if all employees left on the balance sheet date is accrued in the
accompanying non-consolidated balance sheets. A portion of the liability is covered by an employees’ severance benefits trust where the employees have a vested
interest in the deposit with the insurance company in trust. The deposit for severance benefits held in trust is, therefore, reflected in the accompanying non-
consolidated balance sheets as a reduction of the liability for retirement and severance benefits.
Through March 1999, under the National Pension Scheme of Korea, the Company transferred a certain portion of retirement allowances for employees to the
National Pension Fund. The amount transferred will reduce the retirement and severance benefit amount to be payable to the employees when they leave the
Company and is accordingly reflected in the accompanying non-consolidated balance sheets as a reduction of the retirement and severance benefits liability.
However, due to the new regulation effective April 1999, such transfers to the National Pension Fund are no longer required.
(o) Valuation of Receivables and Payables at Present Value
Receivables and payables arising from long-term cash loans/borrowings and other similar transactions are stated at present value. The difference between the
nominal value and the present value of such receivables or payables is amortized using the effective interest method as noted below. The amount amortized is
included in interest expense or interest income.
(p) Foreign Currency Translation
Monetary assets and liabilities denominated in foreign currencies are translated into Korean Won at the rates of exchange on the balance sheet date, with the
resulting gains or losses recognized in the income statement. Monetary assets and liabilities denominated in foreign currencies are translated into Korean Won at
the rate of exchange on December 31, 2007 as announced by Seoul Money Brokerage Service Ltd. [Non-monetary assets and liabilities denominated in foreign
currencies, which are stated at historical cost, are translated into Korean Won at the foreign exchange rate prevailing on the date of the transaction.
(q) Derivatives
The Company holds derivative financial instruments to hedge its foreign currency and interest rate risk exposures.
Derivatives are initially recognized at fair value on the date on which a derivative contract is entered into and are subsequently remeasured at their fair value.
Attributable transaction costs are recognized in profit or loss when incurred.
December 31, 2007 and 2006
Notes to Non-Consolidated Financial Statements
Period
Long-term accounts receivable - trade*
Long-term accounts receivable - other
from one to five years
from one to six years
Interest rate(%)Account
8.25~10.00
4.15
*Current portion of long-term accounts receivable is included in current accounts and notes receivable - trade at present value.