AU OPTRONICS CORP | CIK:0001172494 |

 

		For the year ended December 31, 2017
		Balance, Beginning of Year			Additions			Disposal or write off			Reclassification and effect of change in exchange rate			Balance, End of Year
		(in thousands)
Cost:
Land		$	8,873,981			865,956			(675,811)			(55,467)			9,008,659
Buildings			130,595,844			433,269			(3,786,388)			(3,231,856)			124,010,869
Machinery and equipment			798,046,434			1,827,188			(14,844,436)			15,135,124			800,164,310
Other equipment			32,419,736			4,140,108			(7,900,925)			700,229			29,359,148
			969,935,995			7,266,521			(27,207,560)			12,548,030			962,542,986
Accumulated depreciation and impairment loss:
Land			173,397			-			(54,186)			(119,211)			-
Buildings			36,028,301			3,216,571			(3,785,921)			(1,633,576)			33,825,375
Machinery and equipment			698,110,663			27,946,301			(14,694,674)			(4,027,879)			707,334,411
Other equipment			26,154,173			5,655,026			(7,883,150)			(208,469)			23,717,580
			760,466,534			36,817,898			(26,417,931)			(5,989,135)			764,877,366
Prepayments for purchase of land and equipment, and construction in progress			13,272,371			36,289,529			(29,206)			(22,265,225)			27,267,469
Net carrying amounts		$	222,741,832												224,933,089

  

		For the year ended December 31, 2016
		Balance, Beginning of Year			Additions			Disposal or write off			Reclassification and effect of change in exchange rate			Balance, End of Year
		(in thousands)
Cost:
Land		$	9,112,286			-			(14,455)			(223,850)			8,873,981
Buildings			122,156,354			1,086			(580,089)			9,018,493			130,595,844
Machinery and equipment			779,019,328			2,424,626			(24,033,087)			40,635,567			798,046,434
Other equipment			34,248,005			4,532,365			(6,462,949)			102,315			32,419,736
			944,535,973			6,958,077			(31,090,580)			49,532,525			969,935,995
Accumulated depreciation and impairment loss:
Land			184,889			-			(14,487)			2,995			173,397
Buildings			32,791,946			3,107,870			(132,589)			261,074			36,028,301
Machinery and equipment			694,955,031			30,329,428			(23,846,019)			(3,327,777)			698,110,663
Other equipment			30,215,702			5,130,524			(6,430,868)			(2,761,185)			26,154,173
			758,147,568			38,567,822			(30,423,963)			(5,824,893)			760,466,534
Prepayments for purchase of land and equipment, and construction in progress			22,397,204			48,931,054			(29,246)			(58,026,641)			13,272,371
Net carrying amounts		$	208,785,609												222,741,832

 

As of December 31, 2017 and 2016, a non-irrigated farmland located in LongTan plant amounted to $23,671 thousand was registered in the name of a farmer due to regulations. An agreement of pledge had been signed between the Company and the farmer clarifying the rights and obligations of each party.

 

ACTW sold its lands located in Chang Hua Coastal Industrial Park, Taiwan, during 2015. The selling price and gain on disposal amounted to $790,342 thousand and $276,769 thousand, respectively.

 

According to the resolution of board of directors’ meeting held on August 10, 2015, AUO decided to sell part of its plants and has entered into an agreement with Wistron NeWeb Corporation. This transaction was completed in December 2015, and the selling price and gain on disposal (net of costs of disposal) were $808,504 thousand and $558,206 thousand, respectively.

 

In 2017 and 2015, the Company wrote down certain machineries and equipment with low utilization resulting from the decline in the application for certain products associated with its display segment and recognized impairment losses of $895,954 thousand and $172,530 thousand, respectively. 

 

In 2017, 2016 and 2015, the Company wrote down certain long-term assets with lower capacity utilization associated with its solar segment and recognized impairment losses of $120,714 thousand, $34,047 thousand and $101,764 thousand, respectively.

 

Polysilicon in the solar industry has experienced significant downturns including sharp decline in pricing because of oversupply capacity worldwide; therefore, the management of M.Setek, the Company’s subsidiary in Japan, decided to cease the production of polysilicon which was approved by the board of directors of M.Setek on January 8, 2016. The Company performed its impairment assessment over the polysilicon CGU’s long-term assets in the fourth quarter of 2015. The recoverable amount was determined based on the relevant assets’ estimated fair value less costs of disposal. The fair value of long-term assets was determined by management with reference to the sales prices of recent transactions of similar asset in the same geographical area.

 

The fair value measurement was categorised as a Level 3 fair value based on inputs in the valuation techniques used.

 

The following table shows the valuation technique used in the determination of fair value of the polysilicon CGU’s long-term assets within Level 3, as well as the significant inputs used in the valuation model.

 

 

Based on management assessment, the carrying amount of the polysilicon CGU was determined to be higher than its estimated recoverable amount; consequently, an impairment loss of $6,755,157 thousand was recognized during the year ended December 31, 2015.

 

Impairment losses as mentioned above are recognized as other gains and losses in the consolidated statements of comprehensive income.

 

The capitalized borrowing costs were $624,235 thousand, $542,994 thousand and $186,025 thousand for the years ended December 31, 2017, 2016 and 2015, respectively. The interest rates applied for the capitalization, ranged from 1.09% to 5.24%, 1.09% to 4.66% and 1.29% to 6.73% for the years ended December 31, 2017, 2016 and 2015, respectively.

 

Certain property, plant and equipment were pledged as collateral, see note 39.