Kia 2013 Annual Report Download - page 42

The depreciable amount of a leased asset is allocated to each accounting period during the period of expected use on a systematic
basis consistent with the depreciation policy the lessee adopts for depreciable assets that are owned. If there is no reasonable
certainty that the lessee will obtain ownership by the end of the lease term, the asset is fully depreciated over the shorter of the lease
term and its useful life. The Company reviews to determine whether the leased asset may be impaired.
(p) Government grants
Government grants are not recognized unless there is reasonable assurance that the Company will comply with the grant’s conditions
and that the grant will be received. Government grants whose primary condition is that the Company purchase, construct or otherwise
acquire long-term assets are deducted in calculating the carrying amount of the asset. The grant is recognized in profit or loss over the
life of a depreciable asset as a reduction to depreciation expense.
Other government grants which are intended to compensate the Company for expenses incurred are deducted from related costs over
the periods in which the Company recognizes the related costs as expenses. Government grants which are intended to give immediate
financial support to the Company with no future related costs are recognized as government grant income in profit or loss.
(q) Employee benefits
SHORT-TERM EMPLOYEE BENEFITS Short-term employee benefits are employee benefits that are due to be settled within 12
months after the end of the period in which the employees render the related service. When an employee has rendered service to the
Company during an accounting period, the Company recognizes the undiscounted amount of short-term employee benefits expected
to be paid in exchange for that service.
OTHER LONG-TERM EMPLOYEE BENEFITS Other long-term employee benefits include employee benefits that are settled beyond
12 months after the end of the period in which the employees render the related service, and are calculated at the present value of the
amount of future benefit that employees have earned in return for their service in the current and prior periods, less the fair value of any
related assets. The present value is determined by discounting the expected future cash flows using the interest rate of high-quality
corporate bonds that have maturity dates approximating the terms of the Company’s obligations and that are denominated in the same
currency in which the benefits are expected to be paid. Any actuarial gains and losses are recognized in profit or loss in the period in
which they arise.
RETIREMENT BENEFITS: DEFINED BENEFIT PLANS The Company’s net obligation in respect of defined benefit plans is calculated
separately for each plan by estimating the amount of future benefit that employees have earned in the current and prior periods,
discounting that amount and deducting the fair value of any plan assets.
The calculation of defined benefit obligations is performed annually by a qualified actuary using the projected unit credit method. When
the calculation results in a potential asset for the Company, the recognized asset is limited to the present value of economic benefits
available in the form of any future refunds from the plan or reductions in future contributions to the plan. To calculate the present value
of economic benefits, consideration is given to any applicable minimum funding requirements.
Remeasurements of the net defined benefit liability, which comprise actuarial gains and losses, the return on plan assets (excluding
interest) and the effect of the asset ceiling (if any, excluding interest), are recognized immediately in OCI. The Company determines the
net interest expense (income) on the net defined benefit liability (asset) for the period by applying the discount rate used to measure
the defined benefit obligation at the beginning of the annual period to the then-net defined benefit liability (asset), taking into account
any changes in the net defined benefit liability (asset) during the period as a result of contributions and benefit payments. Net interest
expense and other expenses related to defined benefit plans are recognized in profit or loss.
When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the
gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of
a defined benefit plan when the settlement occurs.
RESEARCH AND DEVELOPMENT Expenditures on research activities, undertaken with the prospect of gaining new scientific or
technical knowledge and understanding, is recognized in profit or loss as incurred. Development expenditures are capitalized only if
development costs can be measured reliably, the product or process is technically and commercially feasible, future economic benefits
are probable, and the Company intends to and has sufficient resources to complete development and to use or sell the asset. Other
development expenditures are recognized in profit or loss as incurred.
SUBSEQUENT EXPENDITURES Subsequent expenditures are capitalized only when they increase the future economic benefits
embodied in the specific asset to which it relates. All other expenditures, including expenditures on internally generated goodwill and
brands, are recognized in profit or loss as incurred.
(m) Investment property
Property held for the purpose of earning rentals or benefiting from capital appreciation is classified as investment property. Investment
property is measured initially at its cost. Transaction costs are included in the initial measurement. Subsequently, investment property is
carried at depreciated cost less any accumulated impairment losses.
(n) Impairment of non-financial assets
The carrying amounts of the Company’s non-financial assets, other than assets arising from employee benefits, inventories and
deferred tax assets, are reviewed at the end of the reporting period to determine whether there is any indication of impairment. If any
such indication exists, then the asset’s recoverable amount is estimated. Goodwill and intangible assets that have indefinite useful lives
or that are not yet available for use, irrespective of whether there is any indication of impairment, are tested for impairment annually by
comparing their recoverable amount to their carrying amount.
The Company estimates the recoverable amount of an individual asset. If it is impossible to measure the individual recoverable amount
of an asset, then the Company estimates the recoverable amount of cash-generating unit (“CGU”). The recoverable amount of an asset
or a CGU is the greater of its value in use and its fair value less costs to sell. The value in use is estimated by applying an pre-tax
discount rate that reflect current market assessments of the time value of money and the risks specific to the asset or CGU for which
estimated future cash flows have not been adjusted, to the estimated future cash flows expected to be generated by the asset or a CGU.
An impairment loss is recognized if the carrying amount of an asset or a CGU exceeds its recoverable amount. Impairment losses are
recognized in profit or loss.
An impairment loss is reversed if there has been a change in the estimates used to determine the recoverable amount. An impairment
loss is reversed only to the extent that the asset’s carrying amount does not exceed the carrying amount that would have been
determined, net of depreciation or amortization, if no impairment loss had been recognized.
(o) Leases
The Company classifies and accounts for leases as either a finance or operating lease, depending on the terms. Leases where
the Company assumes substantially all of the risks and rewards of ownership are classified as finance leases. All other leases are
classified as operating leases. In case of financial leases, at the commencement of the lease term, the Company recognizes as
finance assets and finance liabilities in its consolidated statements of financial position, the lower amount of the fair value of the leased
property and the present value of the minimum lease payments, each determined at the inception of the lease. Any initial direct costs
are added to the amount recognized as an asset. Also, minimum lease payments are apportioned between the finance charge and the
reduction of the outstanding liability. The finance charge is allocated to each period during the lease term so as to produce a constant
periodic rate of interest on the remaining balance of the liability.
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For the years ended December 31, 2013 and 2012
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