22 - Samsung Annual Report

8/3/2019 22 - Samsung Annual Report

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2010 Samsung Annual Report

Professor Jim Grandorf


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2010 Samsung Annual Report

Summary of Significant AccountingPolicies (Footnote #2)


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Basis of Financial Statement

Preparation

The Company first adopted the InternationalFinancial Reporting Standards as adopted by

Republic of Korea (Korean IFRS) fromJanuary 1, 2010 (the date of transition:January 1, 2009).

These standards have been consistentlyapplied to 2009 comparative financialinformation presented.


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Basis of Presentation There are a number of standards,

amendments and interpretations, whichhave been issued but not yet come intoeffect. The Company does not expect that

(their) adoption will have a material impacton the financial condition and results of

operations.


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Samsung IFRS Past business combinations not restated

Certain land assets at fair value (not cost)

Cumulative translation differences reset to zero Employee and director termination benefits based

on present value of expected future benefits (notcurrent amount payable)

Certain R&D costs to be capitalized Goodwill not amortized, but evaluated annually for

possible impairment


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Principles of Consolidation The financial statements include the accounts

of Samsung and its controlled subsidiaries.

Control over a subsidiary is presumed to existwhen the Company has the power to governthe financial and operating policies of an entity.

Control is presumed when the Company has

more than one-half of the voting rights.


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Principles of Consolidation Investments in companies in which the

Company does not have the ability to directlyor indirectly control the financial and operating

decisions, but does possess the ability toexercise significant influence, are accountedfor using the equity method.

G

enerally, it is presumed th

at if at least 20% ofthe voting stock and potential voting rights isowned, significant influence exists.


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Principles of Consolidation All significant intercompany transactions and

balances have been eliminated duringconsolidation. Unrealized profits included in

inventories, property, plant and equipment,and other assets as a result of intercompanytransactions are eliminated.

Unrealized profit wit

hassociates and jointventures is eliminated to the extent of the

Companys ownership interest.


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T

ranslation of Foreign Operations Accounts of foreign subsidiaries are

maintained in the currencies of the countriesin which they operate.

Income and expenses are translated at theaverage rate during the year.

Assets and liabilities are translated at the

rate prevailing on the balance sheet date. Exchange gains/losses are recorded as

income/loss.


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United States Dollar Amounts The company operates primarily in Korean won and

its official accounting records are maintained inKorean won.

The U.S. Dollar amounts, provided herein,represent supplementary information solely for theconvenience of the reader.

All won amounts are expressed in

U.S. dollars atthe rate of 1,139 to US$ 1, the exchange rate in

effect on December 31, 2010.


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Fair Value

Level 1

Quoted market prices in active market

Level 2

Inputs other than quoted prices that areobservable market data (over-the-counterderivatives, third-party transactions)

Level 3 Inputs that are not based on observable

market data (models)


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Critical Estimates and

Judgments Preparation of the financial statements requires

management to exercise significant judgment

and assumptions based on historical experienceand other factors, including expectations offuture events that are believed to be reasonableunder the circumstances.

The resulting accounting estimates will seldomequal the actual results.


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Critical Estimates & Assumptions

Preparation of the financial statements requiresmanagement to exercise significant judgment andassumptions based on historical experience and other

factors, including expectations of future events that arebelieved to be reasonable under the circumstances.

Break out exercise

What line items on the FinancialStatements might be estimated?

Documents

22 - Samsung Annual Report