D-Link 2005 Annual Report Download - page 32
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D-LINK CORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Continued)
Percentage of the
direct and indirect
ownership by the
Company at December 31
Name of Investee Name of Investor 2005 2004
1. OOO D-Link Russia (“DR”) DHCL 100.00 100.00
2. D-Link Hong Kong (“DHK”) DHCL 100.00 100.00
3. Netpro International Trading (Shanghai) Co.,
Ltd.
DSCL 100.00 100.00
The total assets and total revenue of each above subsidiary were less than 10% of D-Link’s
respective assets and revenues, and therefore the subsidiaries were not consolidated in the
accompanying consolidated financial statements as of and for the year ended December 31,
2004. In 2005, the revised ROC SFAS No. 5 “Long-term Investment Accounting Principles”
and No. 7 “Consolidated Financial Statements” were applied. This revised standard requires
consolidations of all subsidiaries in which the Company has a controlling interest regardless
of the size of the subsidiary in comparison to the parent company. In compliance with the
revised ROC SFAS No. 7, the 2004 consolidated financial statements were not retroactively
restated for the change in consolidated entities, and the impact on the 2004 consolidated
financial statements is not significant.
The Company invested in D-Link Japan K.K. in 2005. The subsidiary is included in the
consolidated financial statements for the first time.
Alpha Networks Inc. invested in Alpha Investment Pte. Ltd. in 2005. The subsidiary is
included in the consolidated financial statements for the first time.
(b) Accounting principles and consolidation policy
These consolidated financial statements are not intended to present the financial position of D-
Link and the related results of operations and cash flows based on accounting principles and
practices generally accepted in countries and jurisdictions other than the ROC.
The consolidated financial statements include the accounts of D-Link and subsidiaries in which
D-Link directly or indirectly owns greater than 50 percent of the subsidiary’s voting shares or is
able to exercise control over the subsidiary’s operations and financial policies. All significant
inter-company balances and transactions are eliminated in consolidation.
The difference between the net purchase price and the net equity of the acquired subsidiary is
accounted for as consolidated debit or credit (included in “other assets” or “other liabilities” on
the accompanying consolidated balance sheets) and amortized over 5 to 10 years using the
straight-line method.