Crucial 2011 Annual Report Download - page 200

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49
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
Prior to January 1, 2008, the employee stock options were accounted for based on Interpretations (92) 070, 071 and 072
issued by the Accounting Research and Development Foundation, under which, the intrinsic value method is adopted to
recognize the compensation cost, which is the difference between the market price of the stock and the exercise price of the
employee stock option on the measurement date. Any compensation cost is charged to expense over the employee vesting
period and increases the stockholders’
equity accordingly. Effective from January 1, 2008, under ROC SFAS No. 39,
“Accounting for Share-based Payment,” share-
based payment transactions are measured at fair value and charged against
profit and loss.
Under U.S. GAAP a fair-value based measurement method in accounting for share-
based transactions with employees is
also used, except for equity instruments held by employee share ownership plans.
ROC SFAS No. 22 “Accounting for Income Taxes”
which was issued in June 1994, is substantially similar to U.S. GAAP.
However, under ROC GAAP, the criteria for determining whether a valuation allowance for deferred tax asset is required
are less stringent as compared to U.S. GAAP.
Under ROC GAAP, in accordance with ROC SFAS 22, there are no differences in the calculation of income tax provision
and the corporate income tax rate of 25% for the years 2009 and 2008 and 17% for the year 2010 are adopted for both
periods between annual financial statements and interim quarterly financial statements.
Companies in the ROC are subject to a 10% surtax on profits retained and earned after December 31, 1997. If the retained
profits are distributed in the following year, no 10% surtax is due. Under ROC GAAP, income tax expense is recorded in
the statement of operations in the following year if the earnings are not distributed.
(Continued)
(m)
Employee Stock Options
(n)
Income Tax