Nonmonetary items measured at fair value that are denominated in foreign currencies are retranslated at the
rates prevailing on the date when the fair value is determined. Exchange differences arising on the retranslation
of nonmonetary items are included in profit or loss for the period except for exchange differences arising
from the retranslation of nonmonetary items in respect of which gains and losses are recognized directly in
other comprehensive income, in which case, the exchange differences are also recognized directly in other
comprehensive income.
Nonmonetary items that are measured at historical cost in a foreign currency are not retranslated.
The assets and liabilities of the Corporation’s foreign operations (including the operations of the associates and
joint ventures in other countries as well as the currencies used that are different from those of the Corporation)
are translated into New Taiwan dollars, using exchange rates prevailing at the end of each reporting period.
Income and expense items are translated at the average exchange rates for the period. Exchange differences are
recognized in other comprehensive income.
Inventories
Inventories include raw materials, finished goods, work in process, semifinished goods, merchandise, construction
in progress, and merchandise in transit - fuel oil. Inventories are stated at the lower of cost or net realizable value.
Inventory write-downs are made by item, except where it may be appropriate to group similar or related items.
Net realizable value is the estimated selling price of inventories less all estimated costs of completion and costs
necessary to make the sale. Inventories are recorded at weighted-average cost on the balance sheet date.
Investment in Associates and Jointly Controlled Entities
The Corporation accounted for its investments in associates and joint controlled entities by the equity method.
An associate is an entity over which the Corporation has significant influence and that is neither a subsidiary nor an
interest in a joint venture. Joint venture arrangements that involve the establishment of a separate entity in which
venturers have joint control over the economic activity of the entity are referred to as jointly controlled entities.
The results and assets and liabilities of associates and jointly controlled entities are incorporated in these financial
statements using the equity method of accounting. Under the equity method, an investment in an associate and
jointly controlled entity is initially recognized at cost and adjusted thereafter to recognize the Corporation’s share of
the profit or loss and other comprehensive income of the associate and jointly controlled entity. The Corporation
also recognizes the changes in the Corporation’s share of equity of associates and jointly controlled entity.
Any acquisition cost in excess of the Corporation’s share of the net fair value of the identifiable assets and
liabilities of an associate and jointly controlled entity recognized at the date of acquisition is recognized as
goodwill, which is included in the carrying amount of the investment and is not amortized. Any Corporation share
of the net fair value of the identifiable assets and liabilities in excess of the cost of acquisition, after reassessment,
is recognized immediately in profit or loss.
The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by
comparing its recoverable amount with its carrying amount. Any impairment loss recognized forms part of the
carrying amount of the investment. Any reversal of that impairment loss is recognized to the extent that the
recoverable amount of the investment subsequently increases.
When the Corporation transacts with its associate and jointly controlled entity, profits and losses resulting from
the transactions with the associate are recognized in the Corporation’ financial statements only to the extent of
interests in the associate and the jointly controlled entity that are not related to the Corporation.
│
45
│
Financial Statements
