Crucial 2012 Annual Report Download - page 252

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7
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
(m) Share-based payments
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:
(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.
(i) 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.
(ii) 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.
(n) Deferred charges
Power line installation costs are deferred and amortized over the estimated useful lives or the
agreement terms.
(o) Revenue recognition
Revenue is generally recognized when it is realized or realizable and earned when all of the following criteria
are met:
(i) persuasive evidence of an arrangement exists,
(ii) shipment has occurred or services have been rendered,
(iii) the seller's price to the buyer is fixed or determinable, and
(iv) collectibility is reasonably assured.
Rental income is recognized when services are provided.