Statements of Financial Accounting Standards In Taiwan

The consolidated accounts should include all of the parent's subsidiaries without exemption.

A subsidiary is an entity that is controlled by another entity (known as the parent). Control is presumed when an investor entity acquires more than half of the voting rights of the investee enterprise, unless there are evidences to indicate that investor entity does not has control. Even when more than one half of the voting rights is not acquired, control may be evidenced by power:

       (1) over more than half of the voting rights by virtue of an agreement with other investors; or

       (2) to govern the financial, operating, and personnel policies of the investee enterprise under a statute or an agreement; or

       (3) to appoint or remove the majority of the members of the board of directors; or

       (4) to cast the majority of votes at a meeting of the board of directors.

       (5) to govern the operations under some arrangements.

A parent is required to present consolidated financial statements in which it consolidates its investments in subsidiaries – except in one circumstance: A parent is not required to (but may) present consolidated financial statements if and only if all of the following four conditions are met:

       1. the parent is itself a wholly-owned subsidiary, or is a partially-owned subsidiary of another entity and its other owners, including those not otherwise entitled to vote, have been informed about, and do not object to, the parent not presenting consolidated financial statements;

       2. the parent's debt or equity instruments are not traded in a public market;

       3. the parent did not file, nor is it in the process of filing, its financial statements with a securities commission or other regulatory organisation for the purpose of issuing any class of instruments in a public market; and

       4. the ultimate or any intermediate parent of the parent produces consolidated financial statements available for public use that comply with this statement.

Once an investment ceases to fall within the definition of a subsidiary, it should be accounted for as an associate under FASC 5, as a joint venture under FASC 31, or as an investment under FASC 34, as appropriate.

Intragroup balances, transactions, income, and expenses should be eliminated in full.

The financial statements of the parent and its subsidiaries used in preparing the consolidated financial statements should all be prepared as of the same reporting date, unless it is impracticable to do so. If it is impracticable a particular subsidiary to prepare its financial statements as of the same date as its parent, adjustments must be made for the effects of significant transactions or events that occur between the dates of the subsidiary's and the parent's financial statements. And in no case may the difference be more than three months.

Consolidated financial statements must be prepared using uniform accounting policies for like transactions and other events in similar circumstances.

Minority interests should be presented in the consolidated balance sheet within equity, but separate from the parent's shareholders' equity. Minority interests in the profit or loss of the group should also be separately presented.

Where losses applicable to the minority exceed the minority interest in the equity of the relevant subsidiary, the excess, and any further losses attributable to the minority, are charged to the group unless the minority has a binding obligation to, and is able to, make good the losses. Where excess losses have been taken up by the group, if the subsidiary in question subsequently reports profits, all such profits are attributed to the group until the minority's share of losses previously absorbed by the group has been recovered. 

Disclosures required in consolidated financial statements:

       (1) a list of the names, nature of business and proportion of ownership interest of subsidiaries;

This most recent revised Statement becomes effective for financial statements for the fiscal year beginning on and after January 1, 2007.  Earlier adoption is allowed.

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