Page 187 - TSMC 2018 Annual Report

conditions to ensure the appropriateness of fair value measurement of non-publicly traded equity investments.
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.
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
Agency bonds
December 31, 2018
$ 575,825,502 1,229,600 759,499 -
$ 577,814,601
December 31, 2017
$ 551,919,770 - 695,901 776,025
$ 553,391,696
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
Mandatorily measured at FVTPL Agency mortgage-backed securities Forward exchange contracts
Held for trading
Forward exchange contracts
Financial liabilities
Held for trading
Forward exchange contracts
$
- - -
December 31, 2018
$ 3,419,287 85,303 3,504,590
- $ 3,504,590
$ 40,825
December 31, 2017
569,751 $ 569,751
$ 26,709
- 40 -