Crucial 2012 Annual Report Download - page 251

6
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
(k) Employee retirement plan
The Company has established an employee noncontributory defined benefit retirement plan (the “Plan”)
covering full-time employees in the Republic of China. In accordance with the Plan, employees are eligible
for retirement or are required to retire after meeting certain age or service requirements. Payments of retirement
benefits are based on years of service and the average salary for the last six months before the employee's
retirement. Each employee gets 2 months' salary for each service year for the first 15 years, and 1 month's
salary for each service year thereafter. A lump-sum retirement benefit is paid through the retirement fund.
Starting from July 1, 2005, the enforcement of the newly enacted Labor Pension Act (the “New Act”) stipulates
those employees covered by the defined contribution plan as follows:
(i) Employees who were covered by the Plan and opt to be subject to the pension mechanism under the New
Act;
(ii) Employees who are employed after the enforcement date of the New Act.
In accordance with the New Act, the rate of contribution by an employer to an individual labor pension fund
account per month shall not be less than 6% of the worker's monthly wages. The Plan has not been modified
to conform to the New Act. For those provisions of the New Act not currently included in the Plan, the Company
follows the New Act. The Company contributes monthly to the individual labor pension fund at the rate of
6% of paid salaries and wages. This fund is deposited with Bureau of Labor Insurance.
The Company applies the guidance in Statement of Financial Accounting Standards (SFAS) No. 18
“Accounting for Pensions” for its defined benefit retirement plan. SFAS No. 18 requires an actuarial calculation
of the Company's pension obligation at the end of each year. Based on the actuarial calculation, the Company
recognizes a minimum pension liability and net periodic pension costs. The Company provides monthly
contributions to the retirement fund at the rate of 2% of paid salaries and wages. This fund is deposited with
Bank of Taiwan.
(l) Bonus to employees and remuneration to directors and supervisors
Under the Interpretation Rule (96) 052 issued by the ARDF, which is effective from January 1, 2008, the
appropriations of bonuses 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.