Kia 2009 Annual Report Download - page 43

PROVISION FOR WARRANTIES
The Company generally provides warranty to the ultimate consumer for each product sold and accrues warranty expense at the time of sale
based on the history of actual claims. Also, the Company accrues potential expenses, which may occur due to any product liability suits or
voluntary recall campaigns pending as of the end of the reporting period. The dierence between the nominal value and present value of
these is amortized using the eective interest method.
(r) Income Taxes
Income tax on the income or loss for the year comprises current and deferred tax. Income tax is recognized in the statement of income except
to the extent that it relates to items recognized directly in equity, in which case it is recognized in equity.
Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted.
Deferred tax is provided using the asset and liability method, providing for temporary dierences between the carrying amounts of assets
and liabilities for nancial reporting purposes and the amounts used for tax purposes. The amount of deferred tax provided is based on the
expected manner of realization or settlement of the carrying amount of assets and liabilities, using tax rates enacted or substantively enacted
at the end of the reporting period.
A deferred tax asset is recognized only to the extent that it is probable that future taxable income will be available against which the unused
tax losses and credits can be utilized. Deferred tax assets are reduced to the extent that it is no longer probable that the related tax benet will
be realized.
Deferred tax assets and liabilities are classied as current or non-current based on the classication of the related asset or liability for nancial
reporting or the expected reversal date of the temporary dierence for those with no related asset or liability such as loss carryforwards and
tax credit carryforwards. The deferred tax amounts are presented as a net current asset or liability and a net non-current asset or liability.
(s) Earnings (Loss) Per Share
Earnings (loss) per share are calculated by dividing net income attributable to stockholders of the Company by the weighted-average number
of shares outstanding during the period.
Diluted earnings (loss) per share are determined by adjusting net income (loss) attributable to stockholders and the weighted-average
number of shares outstanding for the eects of all dilutive potential shares, which comprise stock options granted to employees.
(t) Use of Estimates
The preparation of non-consolidated financial statements in accordance with accounting principles generally accepted in the Republic
of Korea requires management to make estimates and assumptions that affect the amounts reported in the non-consolidated financial
statements and related notes to non-consolidated nancial statements. Actual results could dier from those estimates.
(u) Reclassication
Certain reclassications have been made to the prior year non-consolidated nancial statements to conform to the 2009 presentation.
NOTES TO NONCONSOLIDATED
FINANCIAL STATEMENTS
December 31, 2009 and 2008
3. RESTRICTED DEPOSITS
Deposits which are restricted in use as guarantee deposits for maintaining checking accounts and expenditures for certain business purposes
as of December 31, 2009 and 2008 are summarized as follows:
4. TRANSFERS OF TRADE ACCOUNTS AND NOTES RECEIVABLE
Outstanding trade accounts and notes receivable transferred to and discounted with banks, and excluded from the accompanying non-
consolidated statements of nancial position, as of December 31, 2009 and 2008 are summarized as follows:
5. INVENTORIES
Inventories as of December 31, 2009 and 2008 are summarized as follows:
In millions of Won 2009 2008
Cash and cash equivalents ￦ - 112,168
Short-term nancial instruments - 15,000
Long-term nancial instruments 32 3,932
￦ 32 131,100
In millions of Won 2009 2008
Trade accounts receivable ￦ 2,594,601 3,591,408
Trade notes receivable - 54,931
￦ 2,594,601 3,646,339
In millions of Won 2009 2008
Merchandise ￦ 3,805 16,890
Finished goods 340,868 475,549
Semi-nished goods 179,783 174,016
Work-in-process 79,186 85,546
Raw materials 94,267 171,792
Supplies 69,252 63,019
Materials-in-transit 31,980 41,024
￦ 799,141 1,027,836
REDEFINING
MOBILITY
KIA MOTORS
ANNUAL REPORT
2009
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REDEFINING
MOBILITY
KIA MOTORS
ANNUAL REPORT
2009
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