Page 222 - TSMC 2020 Annual Report
P. 222

investment grade and limits the amount of credit exposure to any one issuer. The Company assesses whether there has been a significant increase in credit risk in the invested securities since initial recognition by reviewing changes in external credit ratings, financial market conditions and material information of the issuers.
The Company assesses the 12-month expected credit loss and lifetime expected credit loss based on the probability of default and loss given default provided by external credit rating agencies. The current credit risk assessment policies are as follows:
Category
Performing Doubtful In default Write-off
Description
Credit rating is investment grade on valuation date
Credit rating is non-investment grade on valuation date
Credit rating is CC or below on valuation date
There is evidence indicating that the debtor is in severe financial difficulty and the Company has no realistic prospect of recovery
Basis for Recognizing Expected Credit Loss
12 months expected credit loss
Lifetime expected credit loss-not credit impaired
Lifetime expected credit loss-credit impaired
Amount is written off
Expected Credit Loss Ratio
0-0.1% -
-
-
For the years ended December 31, 2020 and 2019, the expected credit loss increases NT$1,054 thousand and NT$655 thousand, respectively. The changes are mainly due to investment portfolio adjustment and changes in credit rating of investment securities.
e. Liquidity risk management
The objective of liquidity risk management is to ensure the Company has sufficient liquidity to fund its business operations over the next 12 months. The Company manages its liquidity risk by maintaining adequate cash and cash equivalents, fixed income investments at FVTPL, financial assets at FVTOCI- current, financial assets at amortized cost-current and sufficient cost-efficient funding.
The table below summarizes the maturity profile of the Company’s financial liabilities based on contractual undiscounted payments, including principal and interest.
December 31, 2020 Non-derivative financial liabilities
Short-term loans
Accounts payable (including related
parties)
Payables to contractors and
equipment suppliers
Accrued expenses and other current
liabilities
Bonds payable Long-term bank loans
$
Less Than 1 Year
88,557,526
41,095,002
157,804,961
71,995,747 5,327,971 8,000
1-3 Years
$- - - -
27,631,589 847,389
3-5 Years
$- - - -
59,986,812 1,170,944
More Than 5 Years
$-
-
-
- 207,152,135 -
Total
$ 88,557,526
41,095,002
157,804,961
71,995,747 300,098,507 2,026,333
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