Kia 2015 Annual Report Download - page 79

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In addition, employees of KMA are eligible to participate, upon meeting certain service requirement, in the profit sharing retirement plan and
defined benefit pension plan under the Internal Revenue Code 401(k) in the United States. KMA and employees of KMA paid each contributions
during the period in which the employees render the related service.
(s) Provisions
Provisions are recognized when the Company has a present legal or constructive obligation as a result of a past event, it is probable that an
outflow of resources embodying economic benefits will be required to settle the obligation and a reliable estimate can be made of the amount
of the obligation.
The risks and uncertainties that inevitably surround many events and circumstances are taken into account in reaching the best estimate of a
provision. Where the effect of the time value of money is material, provisions are determined at the present value of the expected future cash
flows.
Where some or all of the expenditures required to settle a provision are expected to be reimbursed by another party, the reimbursement shall be
recognized when, and only when, it is virtually certain that reimbursement will be received if the entity settles the obligation. The reimbursement
is treated as a separate asset.
Provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimates. If it is no longer probable that an
outflow of resources embodying economic benefits will be required to settle the obligation, the provision is reversed.
A provision for warranties is recognized when the underlying products or services are sold. The provision is based on historical warranty data and
a weighting of all possible outcomes against their associated probabilities.
A provision shall be used only for expenditures for which the provision was originally recognized.
(t) Emission Rights
The Company accounts for greenhouse gases emission right and the relevant liability as below pursuant to the Act on Allocation and Trading of
Greenhouse Gas Emission which became effective in 2015.
① Greenhouse Gases Emission Right
Greenhouse Gases Emission Right consists of emission allowances which are allocated from the government free of charge or purchased from the
market. The cost includes any cost directly attributable to bringing the asset and condition necessary for it to be capable of operating in the manner
intended by management.
Emission Rights held for the purpose of performing the obligation is classified as intangible asset. The intangible asset is initially measured at cost and
after initial recognition, are carried at cost less accumulated impairment losses.
The Company derecognizes an emission right asset when the emission allowance is unusable, disposed or submitted to government in which the
future economic benefits are no longer expected to be probable.
② Emission liability
Emission liability is a present obligation of submitting emission rights to the government with regard to emission of greenhouse gas. Emission liability is
recognized when it is probable that outflows of resources will be required to settle the obligation and the costs required to perform the obligation are
reliably estimable. Emission liability is an amount of estimated obligations for emission rights to be submitted to the government for the performing
period. The emission liability is measured based on the expected quantity of emission for the performing period in excess of emission allowance in
possession and the unit price for such emission rights in the market at the end of the reporting period.
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ANNUAL REPORT 2015 |