Kia 2015 Annual Report Download - page 99

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(g) Sensitivity analysis of defined obligations from changes of assumptions for the years ended December 31, 2015 and 2014 are summarized as
follows:
(In millions of won)
2015 2014
1% Up 1% Down 1% Up 1% Down
Discount rate
₩
(228,321) 272,550 (198,981) 273,812
Rate of salary growth 271,240 (231,499) 139,455 (123,965)
18. Provisions
The Company provides general 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 replacement of parts or
voluntary recalls pending as of the end of the reporting period.
Other provision are comprised of provision related to loss on lawsuits.
Changes in provisions for the years ended December 31, 2015 and 2014 are summarized as follows:
(In millions of won)
2015 2014
Provision of
warranty for sale Other provision Total
Provision of
warranty for sale Other provision Total
Balance at January 1 ₩
2,037,303 16,067 2,053,370 2,011,256 29,537 2,040,793
Provisions made (reimbursed)
during the year
1,365,271 18 1,365,289 997,232 (636) 996,596
Provisions used during the year
(1,025,118) (2,958) (1,028,076) (898,615) (19,106) (917,721)
Other increase (decrease) (*)
(10,794) 10,373 (421) (72,570) 6,272 (66,298)
Balance at December 31 ₩
2,366,662 23,500 2,390,162 2,037,303 16,067 2,053,370
Thereof current
677,559 20,933 698,492 654,950 12,704 667,654
Thereof non-current ₩
1,689,103 2,567 1,691,670 1,382,353 3,363 1,385,716
(*) Other increase (decrease) is mainly related to foreign currency translation impact
19. Commitments and Contingencies
(a) The Company provides guarantees for certain customers’ financing relating to long-term installment sales. The oustanding amount for which
the Company has provided guarantees to the respective financial institutions is W 1,552 million as of December 31, 2015. These guarantees
are covered by insurance contracts in which the Company is the beneficiary of the claim amount if the customer defaults.
(b) As of December 31, 2015, the Company has pledged one certificate deposit of W 1,454 million and 1,500 units(carrying amount: W 629
million) of equity investments in the Korea Defense Industry Association(“KDIA”), which are included in long-term available-for-sale financial
assets, as collaterals to Korea Defense Industry Association(“KDIA”).
(c) The Company provides guarantees for employees relating to borrowings to acquire shares of the Parent Company. The outstanding amount
for which the Company has provided collective guarantees to the Korea Securities Finance Corporation is W 293,444 million as of December
31, 2015. Management is of the opinion that afore mentioned guarantees will not have a material adverse effect on the Company’s credit
risk since the Company has pledged its acquired shares as collateral for the borrowings.
93
ANNUAL REPORT 2015 |