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Accounting Estimates
Under the above guidelines, law and principles, certain estimates and assumptions have been used
for the allowance for doubtful accounts, allowance for loss on inventories, depreciation of properties,
impairment of properties and idle assets, amortization and impairment of oil and gas interests, income
tax, pension cost, loss on pending litigations, etc. Actual results may differ from these estimates.
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Current and Noncurrent Assets and Liabilities
Current assets include cash, and those assets held primarily for trading purposes or to be realized, sold or
consumed within one year from the balance sheet date. All other assets such as properties and intangible
assets are classified as noncurrent. Current liabilities are obligations incurred for trading purposes or to
be settled within one year from the balance sheet date. All other liabilities are classified as noncurrent.
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Financial Assets and Liabilities at Fair Value through Profit or Loss
Financial instruments classified as financial assets or financial liabilities at fair value through profit or
loss (FVTPL) include financial assets or financial liabilities held for trading and those designated as
at FVTPL on initial recognition. The Corporation recognizes a financial asset or a financial liability on
its balance sheet when the Corporation becomes a party to the contractual provisions of the financial
instrument. A financial asset is derecognized when the Corporation has lost control of its contractual
rights over the financial asset. A financial liability is derecognized when the obligation specified in the
relevant contract is discharged, cancelled or expired.
Financial instruments at FVTPL are initially measured at fair value. Transaction costs directly attributable
to the acquisition of financial assets or financial liabilities at FVTPL are recognized immediately in profit or
loss. At each balance sheet date subsequent to initial recognition, financial assets or financial liabilities
at FVTPL are remeasured at fair value, with changes in fair value recognized directly in profit or loss
in the year in which they arise. Cash dividends received subsequently (including those received in the
year of investment) are recognized as income for the year. On derecognition of a financial asset or a
financial liability, the difference between its carrying amount and the sum of the consideration received and
receivable or consideration paid and payable is recognized in profit or loss. All regular way purchases or
sales of financial assets are recognized and derecognized on a trade date basis.
A derivative that does not meet the criteria for hedge accounting is classified as a financial asset or a
financial liability held for trading. If the fair value of the derivative is positive, the derivative is recognized
as a financial asset; otherwise, the derivative is recognized as a financial liability.
Fair values of financial assets and financial liabilities at the balance sheet date are determined as
follows: publicly traded stocks - at closing prices; open-end mutual funds - at net asset values; bonds
- at prices quoted by the Taiwan GreTai Securities Market; and financial assets and financial liabilities
without quoted prices in an active market - at values determined using valuation techniques.
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Available-for-sale Financial Assets
Available-for-sale financial assets are initially measured at fair value plus transaction costs that are
directly attributable to the acquisition. At each balance sheet date after initial recognition, available-
for-sale financial assets are remeasured at fair value, with changes in fair value recognized in equity.
When the financial assets are disposed of, the cumulative gain or loss previously recognized in equity is
included in profit or loss for the year. All regular purchases or sales of financial assets are recognized
and derecognized on a trade date basis.
The recognition, derecognition and the fair value bases of available-for-sale financial assets are the
same as those of financial assets at FVTPL.
Cash dividends are recognized on the ex-dividend date, except for dividends distributed from the
pre-acquisition profit, which are treated as a reduction of investment cost. Stock dividends are not
recognized as investment income but are recorded as an increase in the number of shares. The total
number of shares after the increase is used for the recalculation of cost per share. The difference
between the initial cost of a debt instrument and its maturity amount is amortized using the effective
interest method, with the amortized interest recognized in profit or loss.
