Acer Recognizes NT$3.5B (US$120.1M) Intangible Asset Impairment Based on the Generally Accepted Accounting Principle

Acer - Press Releases - January 22, 2013 

Acer Recognizes NT$3.5B (US$120.1M) Intangible Asset Impairment Based on the Generally Accepted Accounting Principle

TAIPEI, TAIWAN (January 22, 2013) In accordance with the Generally Accepted Accounting Principle (GAAP) and thorough assessment, Acer Inc. recognizes the intangible asset impairment for trademark rights, for a total of NT$3.5B (US$120.1M), and the net worth per share will reduce by NT$1.3. This asset impairment evaluation has no impact on the business operation and working capital.

The asset impairment is an intangible trademark rights item, including Gateway, Packard Bell, eMachines and E-Ten’s brand value evaluation.

According to Acer’s Q3 financial structure last year, after the write-off of intangible impairment asset, the net worth per share decreased from NT$28.8 to NT$27.5, down NT$1.3. The proportion of intangible asset that account for the total asset decreased from 18.6% to 17.3%, and the proportion of intangible asset that account for the equity decreased from 55.2% to 53.1%.

In Q4 of last year, Acer’s intangible asset is valued at NT$42.6B (US$1.46B), and the impairment is about NT$3.5B (US$120.1M), accounting for 8% of the total value. After the recognized loss, Acer’s intangible asset is worth NT$39.1B (US$1.34B).

Based on the GAAP, when a corporate is worried that its assets might suffer impairment, it is necessary to perform a reassessment of the recoverable value for tangible and intangible assets, such as equipment, factories, goodwill, and trademarks, etc. If the recoverable value is lower than the book value, corporate shall write-off the losses.

This recognized intangible asset loss is caused by an accounting practice of asset impairment, and does not affect company’s business operation. The estimation is made on a rational basis, taking full account of feasibility and appropriateness.

The amount for impairment of intangible asset, net worth per share, and related figures are estimated by Acer internally, in accordance with the GAAP; hence, an auditor’s confirmation is still required. Note: the exchange rate used was US$1: NT$29.14.