D-Link 2001 Annual Report Download - page 54

Download and view the complete annual report

Please find page 54 of the 2001 D-Link annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 68

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68

22
D-LINK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Certain deferred income tax assets may not be realized in future years because D-Link is entitled to
certain tax holidays as mentioned in point (a) of this note. Therefore, a valuation allowance has been
provided if it is considered more likely than not that such assets will not be realized.
According to the ROC Statute for Upgrading Industries, the total amount of investment tax credits
that can be utilized per year is limited to 50 percent of the year’ s current tax expense. However, the
foregoing limit does not apply to the last year of the investment tax credit’ s expiration period. As of
December 31, 2001, D-Link and YMI’ s unused investment tax credits and related expiration dates
were as follows:
Unused investment tax credit Expiration date
$ 48,284 December 31, 2002
83,666 December 31, 2003
152,857 December 31, 2004
78,187 December 31, 2005
$ 362,994
(c) As the December 31, 2001, the ROC income tax authorities had examined and assessed the income
tax returns of D-Link for all fiscal years through December 31, 1998.
(d) According to the local Income Tax Law, losses of D-Link Europe as assessed by tax authorities can
be carried forward to set off future years’ taxable profits. As of December 31, 2001, the unused loss
carryforwards of D-Link Europe was $230,423.
(e) In 1998, an integrated income tax system was implemented in the ROC. Under the new tax system,
the income tax paid at the corporate level can be used to offset the ROC resident stockholders’
individual income tax. D-link and its subsidiaries in the ROC are required to establish an Imputation
Credit Account (“ICA”) to maintain a record of the corporate income taxes paid and imputation
credit that can be allocated to each stockholder. The credit available to the ROC resident
stockholders is calculated by multiplying the dividend by the creditable ratio. The creditable ratio is
calculated as the balance of the ICA divided by earnings retained since January 1, 1998.
Information relating to the ICA of D-Link as of December 31, 2000 and 2001, is summarized as
follows:
2000 2001
Unappropriated retained earnings:
Earned prior to January 1, 1998 $ 8,145 8,145
Earned after December 31, 1997 838,412 1,186,205
Total $ 846,557 1,194,350
ICA balance $ 2,459 47,248
Expected creditable ratio for earnings distribution to
resident stockholders
3.18%
(Actual)
11.52%
(Estimated)