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Update on accounting standards in Taiwan

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31 Mar 2006

In December 2005, the Accounting Research and Development Foundation (ARDF) in Taiwan revised Statement of Financial Accounting Standards No. 25 Business Combinations - Accounting Treatment under Purchase Method to adopt the IFRS 3 approach to goodwill.

Under IFRS 3, goodwill is not amortised but, instead, is tested for impairment at least annually. This revision to SFAS 25 is effective for financial years beginning on or after 1 January 2006. Earlier application is not permitted. Financial statements that had been prepared in accordance with the provisions of SFAS No.25 prior to the revision do not have to be restated retroactively.

In the fourth quarter of 2005, the ARDF also revised SFAS No.1 Conceptual Framework for Financial Accounting and Preparation of Financial Statements; SFAS No.5 Long-Term Investments in Equity Securities; SFAS No.7 Consolidated Financial Statements; and SFAS No. 35 Accounting for Asset Impairment. The revisions, which were made for purposes of harmonising those standards with SFAS No. 25, should be applied to accounting periods beginning on or after 1 January 2006. Earlier application is not permitted.

The ARDF is now framing SFAS No.37 Accounting for Intangible Assets. This standard, which is in line with IAS No. 38 Intangible Assets, will specify standards for recognising, measuring, and disclosing information about intangibles. Furthermore, SFAS No. 34 Accounting for Financial Instruments, and SFAS No. 36 Presentation and Disclosure of Financial Instruments have been adopted effective 1 January 2006.

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