Crucial 2011 Annual Report Download - page 156
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6
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
Under the Interpretation Rule (96) 052 issued by the ARDF, which is effective from January 1, 2008, the appropriations of
bonus to employees and remuneration to directors and supervisors from current year’
s earnings are accrued under operating
expense or cost of goods sold in the year when earnings are incurred based on the estimated amounts. The differences
between the approved amount in the shareholders meeting in the following year and the accrued amount in the current year,
if any, are treated as a change in accounting estimate and are charged to profit or loss in the following year.
Share-based payments, including those under the employee stock option plans, are accounted for under SFAS No. 39 “Share-
Based Payment”,
which is effective from January 1, 2008. The Interpretation Rules (92) 070, 071, and 072 issued by the
ARDF are applied for those share-
based payments under the employee stock option plans with grant dates before January 1,
2008. Under SFAS No. 39, share-based payments are accounted for as follows:
(Continued)
(m)
Bonus to employees and remuneration to directors and supervisors
(n)
Share-based payments
(i) The share-based awards are measured at fair value on grant date. The grant-date fair value of equity-
settled awards is
expensed over the vesting period with the corresponding increase in equity. Also, the vesting period is estimated
based on the vesting conditions of the share-
based option plan that must be satisfied. These vesting conditions
include service conditions and performance conditions. In determining the grant-date fair value of equity-
settled
awards, vesting conditions other than market conditions are not taken into account.
(ii)
Fair value is measured using the Black-Scholes option pricing model, which considers management’
s best estimate of
the exercise price, expected term, underlying shares price, expected volatility, expected dividends, and risk-
free interest
rate to the model.
(iii)
The Company is not required to apply SFAS No. 39 retroactively to share-
based payment transactions that occurred
before January 1, 2008; however, the disclosure of pro forma net income and earnings per share is still required.
(o)
Deferred charges
(i) Power line installation costs are deferred and amortized over the estimated useful lives or the agreement terms.
(ii)
Bank charges related to syndicated loans are deferred and amortized over the terms of the loans. Under SFAS No. 34
“Financial Instrument”, bank charges are recognized as a net of liabilities.