Crucial 2012 Annual Report Download - page 292

47
INOTERA MEMORIES, INC.
NOTES TO FINANCIAL STATEMENTS
(Continued)
(h) Classification of losses on impairment of long-lived assets to be held and use
Under ROC GAAP, the loss on impairment of long-lived assets is classified as non-operating expenses and
losses.
Under US GAAP, the loss on impairment of long-lived assets is classified as operating expense.
(i) Determination of impairment loss on long-lived assets to be held and use
Under ROC GAAP, an impairment loss is recognized if an asset's (CGU's) carrying amount exceeds its
recoverable amount. The recoverable amount is the greater of fair value less costs to sell and value in use,
which is based on the net present value of future cash flows. If there is evidence that impairment losses
recognized previously no longer exists, or has diminished, and the recoverable amount of the long-lived assets
increases because of an increase in the asset's estimated service potential, the amount of loss may be reversed
to the extent that the resulting carrying value should not exceed the carrying value had no impairment loss
been recognized in prior years.
Under US GAAP, an impairment loss is recognized if the asset's (asset group's) carrying amount exceeds the
undiscounted cash flows of the asset (asset group). The impairment loss is calculated based on excess of the
carrying amount over the fair value of the asset (asset group), which is based on the net present value of future
cash flows. Such impairment cannot be reversed.
(j) Employee Stock Options
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.
(k) Income Tax
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.