Page 274 - 2017 TSMC Annual Report

Valuation of Inventory
Inventories are stated at the lower of cost or net realizable value, and the Company uses judgment and estimate to determine the net realizable value of inventory at the end of each reporting period.
Due to the rapid technological changes, the Company estimates the net realizable value of inventory for obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions of future demand within a specific time horizon.
Recognition and Measurement of Defined Benefit Plans
Net defined benefit liability and the resulting defined benefit costs under defined benefit pension plans are calculated using the Projected Unit Credit Method. Actuarial assumptions comprise the discount rate, rate of employee turnover, and future salary increase rate. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of the expense and the liability.
6. CASH AND CASH EQUIVALENTS
Cash and deposits in banks
Repurchase agreements collateralized by corporate bonds Commercial paper
December 31, 2017
$ 239,176,841 - -
$ 239,176,841
December 31, 2016
$ 245,520,074 2,361,250 1,997,239
$ 249,878,563
Deposits in banks consisted of highly liquid time deposits that were readily convertible to known amounts of cash and were subject to an insignificant risk of changes in value.
7. FINANCIAL ASSETS AND LIABILITIES AT FAIR VALUE THROUGH PROFIT OR LOSS
Financial assets
Held for trading
Forward exchange contracts Cross currency swap contracts
Financial liabilities
Held for trading
Forward exchange contracts
$
$ 151,070
December 31, 2017
$ 373,351 -
$ 373,351
$ 18,764
December 31, 2016
140,094 10,976
The Company entered into derivative contracts to manage exposures due to fluctuations of foreign exchange rates. These derivative contracts did not meet the criteria for hedge accounting. Therefore, the Company did not apply hedge accounting treatment for these derivative contracts.
- 126 -
- 126 -
$ 62,441