Hyundai 2010 Annual Report Download - page 42

Property, Plant and Equipment and Related Depreciation
Property, plant and equipment are stated at cost, except for assets revalued upward in accordance with the Asset Revaluation Law of Korea. Routine
maintenance and repairs are expensed as incurred. Expenditures that result in the increase of future economic benets such as the enhancement of the value
or extension of the useful lives of the facilities involved are treated as additions to property, plant and equipment.
Depreciation is computed using the straight-line method based on the estimated useful lives of the assets as follows:
Useful lives (years)
Buildings and structures 2 - 60
Machinery and equipment 2 - 21
Vehicles 3 - 15
Dies, molds and tools 2 - 14
Other equipment 2 - 14
The Company charges all nancing cost to current operations in accordance with SKAS No. 7 - “Capitalization of Financing Costs.” In addition, the Company
assesses any possible recognition of impairment loss when there is an indication that expected future economic benets of a tangible asset is considerably
less than its carrying amount, as a result of technological obsolescence, rapid declines in market value or other causes of impairment. When it is determined
that an asset may have been impaired and that its estimated total future cash ows from continued use or disposal is less than its carrying amount, the carrying
amount of a tangible asset is reduced to its recoverable amount and the difference is recognized as an impairment loss. If the recoverable amount of the
impaired asset exceeds its carrying amount in subsequent reporting period, the amount equal to the excess is treated as the reversal of the impairment loss;
however, it cannot exceed the carrying amount that would have been determined had no impairment loss been recognized.
Intangibles
Intangible assets are stated at cost, net of accumulated amortization. Subsequent expenditures on intangible assets after their purchases or completions,
which will probably enable the assets to generate future economic benets and can be measured and attributed to the assets reliably, are treated as additions
to intangible assets.
Amortization is computed using the straight-line method based on the estimated useful lives of the assets as follows:
Useful lives (years)
Goodwill (negative goodwill) 5 - 20
Industrial property rights 2 - 40
Development costs 3 - 10
Other 2 - 50
If the recoverable amount of an intangible asset becomes less than its carrying amount as a result of obsolescence, sharp decline in market value or other
causes of impairment, the carrying amount of an intangible asset is adjusted to its recoverable amount and the reduced amount is recognized as impairment
loss. If the recoverable amount of a previously impaired intangible asset exceeds its carrying amount in subsequent periods, an amount equal to the excess
is recorded as reversal of impairment loss; however, it cannot exceed the carrying amount that would have been determined had no impairment loss been
recognized in prior years.
Investments in Securities Other Than Those Accounted for Using the Equity Method
Classication of Securities
At acquisition, the Company classies securities into one of the three categories; trading, held-to-maturity or available-for-sale. Trading securities are those that
were acquired principally to generate prots from short-term uctuations in prices. Held-to-maturity securities are those with xed or determinable payments
and xed maturity that the Company has the positive intent and ability to hold to maturity. Available-for-sale securities are those not classied as either held-
to-maturity or trading securities. Trading securities are classied as short-term investment securities, whereas available-for-sale and held-to-maturity securities
are classied as long-term investment securities, except for those whose maturity dates or whose likelihood of being disposed of are within one year from the
date of the end of the reporting period, which are classied as short-term investment securities.
Valuation of Securities
Investments in securities are initially measured at cost, which consists of the market price of the consideration given to acquire them and incidental expenses.
If the market price of the consideration given is not available, the market prices of the securities purchased are used as the basis for measurement. If neither
the market price of the consideration given nor those of the acquired securities are available, the acquisition cost is measured at the best estimates of its
fair value. After initial recognition, held-to-maturity securities are valued at amortized cost. The difference between their acquisition costs and face values
is amortized over the remaining term of the securities by applying the effective interest method and added to or subtracted from the acquisition costs and
interest income of the remaining period. Trading securities are valued at fair value, with unrealized gains or losses included in current operations. Available-for-
sales securities are also valued at fair value, with unrealized holding gains or losses recognized in accumulated other comprehensive income (loss), until the
securities are sold or if the securities are determined to be impaired and the lump-sum accumulated amount of accumulated other comprehensive income
(loss) is reected in current operations. However, available-for-sales securities that are not traded in an active market and whose fair value cannot be reliably
measured are valued at cost.
If the estimated recoverable amount of securities is less than the acquisition cost of equity securities or amortized cost of debt securities and any objective
evidence for such impairment loss exists, impairment loss is recognized in current operations in the period when it arises.
The lower of the fair value of treasury stock included in treasury stock fund and the fair value of investments in treasury stock funds is accounted for as treasury
stock in capital adjustment.
Investment Securities Accounted for Using the Equity Method
Investment securities held for investment in companies in which the Company is able to exercise signicant inuence over the operating and nancial policies
of the investees are accounted for using the equity method. The Company’s share in the net income or net loss of investees is reected in current operations.
The changes in the retained earnings, capital surplus or other capital accounts of investees are accounted for as an adjustment to retained earnings, to capital
surplus or to accumulated other comprehensive income (loss).
The difference between the cost of the investment and the investor’s share of the net fair value of the investee’s identiable assets and liabilities at the date of
acquisition is amortized over 20 years for goodwill or reversed over the remaining weighted average useful life of the identiable acquired depreciable assets
for negative goodwill, which does not exceed the fair value of non-monetary assets acquired, using the straight-line method. Negative goodwill that exceeds
the fair value of non-monetary assets acquired is credited to operations in the year of purchase.
The Company’s portion of prots and losses resulting from inter-company transactions that are recognized in assets, such as inventories and xed assets, are
eliminated and charged to equity securities accounted for using the equity method.
If an investor’s share of losses of an investee equals or exceeds its interest in the investee, the investor discontinues recognizing its share of further losses.
If the investee subsequently reports prots, the investor resumes recognizing its share of those prots only after its share of the prots equals the share of
losses not recognized. Also, if the recoverable amount of investments in investee becomes less than its carrying amount, the Company recognizes impairment
loss.
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December 31, 2010 and 2009