Samsung 2014 Annual Report Download - page 63

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2014 Samsung Electronics Annual Report2014 Samsung Electronics Annual Report
(A) Sales of goods
Sales of products and merchandise are recognized upon delivery when the sig-
nificant risks and rewards of ownership of goods have transferred to the buyer.
Revenue is recognized net of discounts and returns, estimated at the time of sale
based on past experience.
(B) Sales of services
Revenues from rendering services are generally recognized using the percent-
age-of-completion method based on the percentage of costs to date compared to
the total estimated costs, contractual milestones or performance.
(C) Interest income
Interest income is recognized using the effective interest method according to
the time passed. When a loan or receivable is impaired, the Group reduces the
carrying amount to its recoverable amount, to the extent of the estimated future
cash flow discounted at the original effective interest rate of the instrument, and
continues unwinding the discount as interest income. Interest income on impaired
loans and receivables is recognized using the original effective interest rate.
(D) Royalty income
Royalty income is recognized on an accrual basis in accordance with the sub-
stance of the relevant agreements.
(E) Dividend income
Dividend income is recognized when the right to receive payment is established.
2.25 Government Grants
Government grants are recognized at their fair values when there is reasonable
assurance that the grant will be received and the Group will comply with the con-
ditions attached to it. Government grants relating to costs are deferred and recog-
nized in the income statement over the period necessary to match them with the
costs that they are intended to compensate. Government grants relating to assets
are recognized in liabilities as deferred income government grants and are credit-
ed to the income statement on a straight – line basis over the expected lives of the
related assets.
2.26 Earnings per Share
Basic earnings per share is calculated by dividing net profit for the period available
to common shareholders by the weighted-average number of common shares
outstanding during the year. Diluted earnings per share is calculated using the
weighted-average number of common shares outstanding adjusted to include the
potentially dilutive effect of common equivalent shares outstanding.
2.27 Operating Segments
Operating segments are disclosed in the manner reported to the chief operating
decision-maker (Note 33). The chief operating decision-maker is responsible for
making strategic decisions on resource allocation and performance assessment
of the operating segments. The Management Committee, which makes strategic
decisions, is regarded as the chief operating decision-maker.
2.28 Convenience Translation into
United States Dollar Amounts
The Group operates primarily in Korean won and its official accounting records
are maintained in Korean won. The US dollar amounts provided in the financial
statements represent supplementary information solely for the convenience of
the reader. All Korean won amounts are expressed in US dollars at the rate of
KRW1,052.70 to US $1, the average exchange rate for the year ended December
31, 2014. Such presentation is not in accordance with generally accepted account-
ing principles, and should not be construed as a representation that the Korean
won amounts shown could be readily converted, realized or settled in US dollars
at this or at any other rate.
2.29 Approval of the Consolidated
Financial Statements
These consolidated financial statements were approved by the Board of Directors
on January 29, 2015.