Crucial 2012 Annual Report Download - page 253

8
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
(p) Income tax
The Company has adopted SFAS No. 22 “Income Taxes”, under which, income taxes are accounted for using
the asset and liability method. Deferred income tax is determined based on differences between the financial
statements and tax basis of assets and liabilities using enacted tax rates in effect during the years in which the
differences are expected to reverse. The income tax effects of taxable temporary differences are recognized
as deferred income tax liabilities. The income tax effects resulting from deductible temporary differences, net
operating loss carryforwards, and income tax credits are recognized as deferred income tax assets. The
realization of the deferred income tax assets is evaluated, and if it is considered more likely than not that the
asset will not be realized, a valuation allowance is recognized accordingly.
Deferred income tax assets and liabilities are classified as current or non-current based on the classification
of the related asset or liability. If the deferred income tax asset or liability is not directly related to a specific
asset or liability, then the classification is based on the expected realization date of the asset or liability.
Any tax credits arising from purchases of machinery and equipment, research and development expenditures,
and personnel training expenditures are recognized using the flow-through method.
According to the ROC Income Tax Law, undistributed earnings calculated on tax basis, if any, is subject to an
additional 10 percent retained earnings tax. This surtax is charged to income tax expense in the following
year when the appropriation of earnings is approved by the stockholders.
(q) Loss per share
Loss per common share is computed by dividing net loss by weighted-average number of outstanding shares
during the year.
Stock options and stock bonus to employees accrued in current year's earnings and awaiting approval by the
shareholders in the following year, are potential common shares. Both basic and diluted loss per share is
disclosed if those potential common shares are dilutive, otherwise, only basic earnings (loss) per share are
disclosed. Diluted loss per share is computed by taking basic loss per share into consideration, plus the additional
common shares that would have been outstanding if the potentially dilutive shares are issued.
The number of outstanding shares is retroactively adjusted for common stock issued through the distribution
of stock dividends out of unappropriated earnings and capital surplus.