Crucial 2011 Annual Report Download - page 153

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INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
Allowance for doubtful accounts is provided according to the status of collectability of each account. The amount is
determined by considering the past collection experience, credit ratings of the customers, and aging analysis of the
outstanding receivables.
For the period up to December 31, 2008, inventories are stated at the lower of cost or market value. Cost is determined by
using the monthly weighted-
average method. Market value represents replacement cost or net realizable value. The market
value of raw materials and supplies are determined on the basis of replacement cost. The market value of finished goods and
work in process are determined on the basis of net realizable value. An allowance for supplies inventory obsolescence is
provided based on the aging analysis on supplies inventory, in which full allowance is made for inventory items aging over
six months.
Effective January 1, 2009, inventory costs include the expenditures required until the inventories are ready for sale or
production. The fixed production overheads are allocated to finished goods and work in process based on the normal
capacity of the production facilities. The variable production overheads are allocated based on actual output. Inventories are
measured at the lower of cost and net realizable value. Net realizable value is based on the estimated selling price of the
inventories in the ordinary course of business, less the estimated costs of completion and selling expenses.
Property, plant and equipment are stated at cost less accumulated depreciation. Interest costs related to the construction of
property, plant and equipment are capitalized and included in the cost of the related assets. Regular maintenance and repairs
are expensed when incurred; major addition, improvement and replacement expenditures are capitalized.
Depreciation of property, plant and equipment is provided over their estimated useful lives by using the straight-
line method.
In accordance with the Interpretation Rule (97) 340 issued by the Accounting Research and Development Foundation
(ARDF), on November 12, 2008, the estimated useful lives, depreciation method and residual value of these assets are
reviewed at least at each financial year-
end. Any change in the estimated useful lives, depreciation method and residual
value of these assets is treated as a change in an accounting estimate. The estimated economic useful lives of the assets are as
follows:
(Continued)
(g)
Allowance for doubtful accounts
(h)
Inventories
(i)
Property, plant and equipment / Depreciation
(i) Buildings: 8 to 50 years.
(ii)
Vehicles: 5 years.
(iii)
Machinery and equipment: 3 to 5 years.