ACCOUNTING STANDARD

FOR

CONSOLIDATED FINANCIAL STATEMENTS

Accounting Standard for Consolidated Financial Statements

CONTENTS

I.	General Provisions

1.	Purpose

2.	Scope of Application

3.	Definitions

4.	Purpose of Consolidated Financial Statements

5.	Companies Included in Consolidated Financial Statements

6.	Companies to Prepare Consolidated Financial Statements

7.	Date of Consolidation

8.	Components and Formats of Consolidated Financial Statements

9.	Application of Accounting Policies

II.	Consolidation Procedures

10.	Elimination of Investments and Stockholders` Equity

11.	Issuance of Preferred Stocks in a Subsidiary

12.	Elimination of Intercompany Transactions and Unrealized Gains and Losses

13.	Minority Interests

14.	Additional Purchases of the Stocks of Subsidiaries

15.	Disposition of the Stocks of Subsidiaries

16.	Application of the Equity Method

17.	Deferred Income Tax

18.	Consolidated Statements of Changes in Stockholders` Equity

19.	Consolidated Statement of Cash Flows

20.	Other Matters

III.	Disclosure

21.	Notes to Consolidated Financial Statements

22.	Documentation of Important Data Necessary for Preparing Consolidated Financial Statements

Addenda

Enacted on April 1, 1998

Amended on March 23, 2000

CHAPTER I.

GENERAL PROVISIONS

1. Purpose

The purpose of this Standard is to prescribe the matters necessary for preparing consolidated financial statements in accordance with Article 6 of the Financial Accounting Standards for Business Enterprises (hereinafter referred to as "the FAS").

2. Scope of Application

This Standard is applied to the consolidated financial statement of an economic entity consisting of a controlling company and subsidiaries.

3. Definitions

(1) Consolidated financial statements refer to financial statements which the controlling companies prepare in order to provide users with financial information such as financial position, performance and cash flows of an economic entity (hereinafter referred to as a consolidated entity) consisting of a controlling company and subsidiaries.

(2) Control (for the purpose of this Standard) is the power to govern the financial and operating policies of an enterprise so as to obtain benefits from its activities.

(3) A controlling company or a parent is a company (including a not-for-profit organization) controlling one or more subsidiaries.

(4) A subsidiary is a company controlled by a controlling company.

(5) Controlling interest is the part of net operation results and net assets of a subsidiary, which a controlling company possesses directly or indirectly through other subsidiaries.

(6) Minority interest is the part of net operation results and net assets of a subsidiary other than controlling interest.

4. Purpose of Consolidated Financial Statements

The purpose of consolidated financial statements is to provide users of the financial statements with useful and appropriate information regarding the financial position, result of operations and cash flows for their rational decision-making.

5. Companies Included in Consolidated Financial Statements

Domestic and foreign companies which have parent-subsidiary relationships pursuant to [Article1-3] of the Act on External Audit of Corporations are included in consolidated financial statements.

6. Companies to Prepare Consolidated Financial Statements

(1) A controlling company should prepare consolidated financial statements.

(2) The top controlling company should, in the case of a multiple-tier relationship of a parent and subsidiaries, prepare consolidated financial statements. However, if the top controlling company is a foreign corporation, the top domestic company should prepare consolidated financial statements.

(3) A listed company, a registered company or a financial institution which is a subsidiary of a company and simultaneously a parent of other companies should prepare consolidated financial statements for itself and its subsidiaries.

(4) In the case that the relationships of a parent and subsidiaries are in a circular form, a corporation which is the largest in terms of total assets at the end of the preceding fiscal year should prepare consolidated financial statements.

(6-1) Pursuant to the 6(2)p of this standard, if the top domestic company prepares the consolidated financial statements, the top foreign company is exempted from preparing the consolidated financial statements.

(6-2) A listed corporation refers to a company whose stocks are listed on the KSE, a registered corporation refers to a company whose stocks are listed on the KOSDAQ respectively in accordance with the Securities and Exchange Act, and a financial institution refers to a company which is operating business in financial and insurance industries following the standard classifications established and announced by the Commissioner of the National Statistical Office in accordance with [Article 17 paragraph (1)] of the Statistics Law.

(6-3) In the above (4), an example of a circular relationship of parent and subsidiaries is the situation that company B, a subsidiary of company A, is a parent of company C which is in turn a parent of company A.

7. Date of Consolidation

(1) The date of consolidation should be the closing date of fiscal year of a controlling company.

(2) In case the subsidiary company`s fiscal-year end is different from the date of consolidation, consolidated financial statements should be prepared as of the consolidation date.

(3) Notwithstanding the above (2), if the interval between the fiscal-year end of a subsidiary company and the date of consolidation is three months or shorter, financial statements of a subsidiary company at its fiscal-year end can be used for consolidation. In this case, important transactions or events which occurred during such interval should be reflected in the consolidated financial statements, and their contents and adjustments on the consolidated statements should be disclosed in the notes.

8. Components and Formats of Consolidated Financial Statements

(1) Consolidated financial statements consist of a consolidated balance sheet, a consolidated income statement, a consolidated statement of changes in equity, and a consolidated statement of cash flows.

(2) Consolidated financial statements should be prepared in a form which compares those of the current fiscal year with those of the preceding fiscal year.

(3) Consolidated balance sheet should be prepared in the report form or the account form as illustrated in annexed Forms 1 through 4.

(4) Consolidated income statement should be prepared in the report form as is illustrated in annexed Form 5 or 6.

(5) Consolidated statement of changes in equity should be prepared in the form as illustrated in annexed Form 7.

(6) Consolidated statement of cash flows should be prepared in the form as illustrated in annexed Forms 8 and 9.

(7) Notwithstanding the above (3) to (6), in case a controlling company prepares its individual financial statements in a form specified under Accounting Standards for Specialized Industries pursuant to [Article 90] of the FAS, consolidated financial statements can also be prepared accordingly.

9. Application of Accounting Policies

(1) Consolidated financial statements should be prepared on the basis of each individual set of financial statements of parent company, subsidiary companies which have been prepared in accordance with the FAS. When the individual financial statements prepared by a parent or subsidiary are inconsistent with the FAS, consolidated financial statements should be based on the amended individual financial statements following the FAS and disclose the content of such amendments in the footnotes.

(2) If the financial statements of overseas subsidiaries prepared in accordance with the local financial accounting standards have significant differences from those prepared in accordance with the FAS, those financial statements should be restated in accordance with the FAS in preparing for consolidated financial statements. However, if the differences are not material, those financial statements do not have to be restated.

(3) Foreign-currency-denoted financial statements of overseas subsidiaries and companies subject to the equity method should be translated into won in accordance with the provision [Article 69] of the FAS.

(4) Shares of a controlling company possessed by a subsidiary company are accounted for as treasury stocks in the capital adjustment pursuant to the provisions [Article 31] and [Article 33] of the FAS.

(5) The accounting methods adopted by a controlling company and subsidiary companies for similar transactions and circumstances should be the same. However, if the differences are not significant from applying different accounting methods, those methods may be allowed.

(6) In case the relationship of a parent and subsidiaries is multi-tiered, the consolidation procedures should start from a company at the lowest level of controlling relationship to those at higher levels in sequence.

(9-1) In case the fiscal-year ends between a controlling company and overseas subsidiaries differ, financial statements of the overseas subsidiaries should be translated into won using the exchange rate as of the controlling company's balance sheet date and the average exchange rate for the fiscal year of the controlling company.

CHAPTER II.

CONSOLIDATION PROCEDURES

10. Elimination of Investments and Stockholders` Equity

(1) Consolidated financial statements provide information on an economic entity consisting of a controlling company and subsidiary companies. Thus, the investment account of a controlling company should be eliminated against the corresponding stockholders` equity accounts of subsidiaries.

1)	Minority interest in the stockholders` equity of subsidiaries in eliminating investments and stockholders` equity should be presented in a separate equity account.

2)	Elimination should be done as of the date the parent company obtained control over the subsidiary (hereinafter referred to as the control acquisition date).

3)	The investment account and the corresponding stockholders` equity between subsidiaries should be eliminated in accordance with the above 2). However, purchased investments between subsidiaries after the date of control acquisition should be eliminated as of the date of purchase. In this case, the difference between the investment account and the corresponding stockholder`s equity account should be presented as a consolidated capital surplus.

(2) In eliminating the investment of a controlling company and the stockholders` equity of a subsidiary, the choice of the purchase method or the uniting of interests method should be made in consideration of the substance of transactions.

(3) In the purchase method, the difference between the investment cost and the fair value of a parent's portion of assets acquired less liabilities assumed of a subsidiary (hereinafter referring to investment elimination difference) should be accounted for as goodwill or negative goodwill.

(4) The provisions of the Standards for Business Combination should be applied to distinction between purchase and uniting of interests, accounting for the purchase method and the uniting of interests method, and accounting for goodwill and negative goodwill in the purchase method.

(5) Minority interest is the fair value of a minorities' portion of assets less liabilities of a subsidiary in the purchase method.

(6) In the uniting of interests method, the assets and liabilities of a subsidiary should be recognized in their carrying amount. Minority interest should be the carrying amount of a minorities' portion of assets less liabilities of a subsidiary.

(7) In the uniting of interests method, the difference in amount between the capital stock, par for shares issued and the capital stock, par of a subsidiary should be accounted for with capital surplus and retained earnings in this order.

(10-1) In the above (1).2), when a controlling company acquires subsidiary stocks during a fiscal year, the stockholders` equity accounts of the subsidiary cannot be determined unless the subsidiary closes its books on the acquisition date. In this case, the acquisition may be recorded as of the nearest financial statement date(including semi-annual or quarterly financial statement date if prepared).

(10-2) In the above (2), the purchase method is applied for a business combination in which one of the enterprises, the acquirer, obtains control over the net assets and operations of another enterprise, the acquiree, in exchange for the transfer of assets, incurrence of a liability or issue of equity. the uniting of interests method is applied for a business combination in which the shareholders of the combining enterprises combine control over their assets and operations to achieve a continuing mutual sharing in the risks and benefits attaching to the combined entity such that neither party can be identified as the acquirer.

(10-3) Goodwill or negative goodwill of minority interest should not be recognized in the purchase method.

(10-4) In accounting for a uniting of interests, retained earnings and capital adjustments of the subsidiary should be transferred using its book values. When the par amount recorded as share capital issued exceeds the capital stock account of the subsidiary, the difference should be adjusted first against capital surplus and then against retained earnings of the consolidated entity. When the par amount recorded as share capital issued is less than the capital stock account of the subsidiary, the difference should be added to capital surplus of the consolidated entity.

(10-5) In the case that a company in the consolidated entity holds stocks or bonds of another company in the consolidated entity through a special money-in-trust, invested stocks are eliminated against the stockholders' equity accounts of the investee and bonds are eliminated against the liabilities of the issuer in an intercompany transaction.

11. Issuance of Preferred Stocks in a Subsidiary

In the case that a subsidiary has preferred stocks outstanding, the accounts are recorded as follows:

(1) The stockholders' equity accounts of the subsidiary are first allocated between the common and preferred stockholders before applying consolidation procedures.

(2) An acquisition of the subsidiary's preferred stocks by the controlling company would be accounted for as if the subsidiary retired preferred stocks. An elimination of investments and stockholders` equity for preferred stocks are accounted for as follows:

1)	When the price paid is less than the preferred equity retired, the difference is added to capital surplus of the consolidated entity.

2)	When the price paid exceeds the preferred equity retired, the difference is offset against capital surplus of the consolidated entity applicable to the preferred stocks. If not enough of capital surplus applicable to the preferred stocks exists, the remainder is taken from retained earnings of the consolidated entity.

(3) In applying the above (2), the non-controlling interest of the difference between fair values and book values of the subsidiary's assets and liabilities arising from the elimination of investments and stockholders` equity is recorded in the minority interests.

(4) The allocation of the stockholders' equity and net income of the subsidiary to the common and preferred stockholder interests is accomplished by the following procedure. The preferred stockholder interests are the amount as a result of deducting the common stockholder interests from the stockholders' equity and net income of the subsidiary.

1)	Issuance of cumulative and participating preferred stocks in a subsidiary

When dividends are in arrears, the common stockholder interests are the portion of common stocks in the stockholders' equity of the subsidiary in excess of dividends in arrears. Dividends in arrears may be deducted up to the amount of unrestricted retained earnings. When no dividends are in arrears, the common stockholder interests are the portion of common stocks in the total stockholders' equity of the subsidiary. The common stockholder interest in net income of the subsidiary is the sum of the common dividends and the portion of common stocks in the amount of net income after the common and preferred dividends deducted regardless of the declaration of dividends.

2)	Issuance of cumulative and non-participating preferred stocks in a subsidiary. When dividends are in arrears, the common stockholder interests are the sum of i) the portion of common stocks in the stockholders' equity of the subsidiary in excess of retained earnings and ii) retained earnings of the subsidiary in excess of dividends in arrears. Dividends in arrears may be deducted up to the amount of unrestricted retained earnings. When no dividends are in arrears, the common stockholder interests are the sum of the amount described in i) and the subsidiary's retained earnings. The common stockholder interest in net income of the subsidiary is the amount of net income after the preferred dividends deducted regardless of the declaration of dividends.

3)	Issuance of non-cumulative and participating preferred stocks in a subsidiary

The common stockholder interests are the portion of common stocks in the total stockholders' equity of the subsidiary. When no preferred dividends are declared, the common stockholder interest in net income of the subsidiary is the portion of common stocks in the subsidiary's net income. When preferred dividends are declared, the common stockholder interest in net income of the subsidiary is the sum of the common dividends and the portion of common stocks in the amount of net income after the common and preferred dividends deducted.

4)	Issuance of non-cumulative and non-participating preferred stocks in a subsidiary

The common stockholder interests are the sum of i) the portion of common stocks in the stockholders' equity of the subsidiary in excess of retained earnings and ii) retained earnings of the subsidiary. When no preferred dividends are declared, the common stockholder interest in net income of the subsidiary is the subsidiary's total net income. When preferred dividends are declared, the common stockholder interest in net income of the subsidiary is the subsidiary's net income after the preferred dividends deducted.

(11-1) The stockholders' equity of the subsidiary is accounted for depending on the residual claim of the preferred stocks. When the preferred and common stocks have identical residual claims, the stockholders' equity of the subsidiary is the amount of the stockholders' equity reflecting the fair values of the subsidiary's assets and liabilities. When the preferred stocks do not have residual claims identical to the common stocks, the stockholders' equity of the subsidiary is the book value of the stockholders' equity of the subsidiary. The difference between the fair values and book values of the subsidiary's assets and liabilities is recorded to the common stockholders interests.

(11-2) "The portion of common stocks" refers to the par value of the common stocks to the total par values of the preferred and common stocks.

(11-3) The common stockholder interest in net income of the subsidiary for cumulative preferred stocks is determined based on the amount of net income after the preferred dividends deducted regardless of the declaration of dividends because the arrearage for prior periods must be met first in the subsequent periods.

(11-4) When the subsidiary has non-cumulative preferred stocks outstanding, the arrearage is ignored in determining the common stockholders' equity of the subsidiary.

(11-5) When the amount of preferred dividends to be declared is uncertain as of the balance sheet date because it is linked to the common dividends, the amount of preferred dividends in the immediately preceding year may be used in the consolidation procedure.

(11-6) The allocation of unrealized gains and losses, arising from intercompany transactions within the consolidated entity, to the preferred and common stockholder interests is proceeded in a same manner which determines the allocation of the subsidiary's net income according to the characteristics of the preferred stocks.

12. Elimination of Intercompany Transactions and Unrealized Gains and Losses

Intercompany receivables and payable, revenues and expenses, and unrealized gains and losses arising from transactions between a controlling company and a subsidiary or among subsidiaries (hereinafter referred to as intercompany), should be eliminated against each other. Unrealized gains and losses arising from sales by a controlling company to its subsidiary should be eliminated entirely and charged (credited) to controlling interest, and unrealized gains and losses arising from sales by a subsidiary to its controlling company or from transactions among subsidiaries should be eliminated entirely and allocated to controlling interest and minority interest.

(1) Receivables and payables subject to elimination should include accrued receivables and payables, and prepaid expenses and unearned income as well as determined receivables and payables such as account receivables and account payables, loans and borrowings, other receivables, and other accounts payable.

1)	When intercompany transactions take place through the third parties, they are regarded as intercompany transactions if they are in substance transactions among consolidated companies.

2)	Unrealized gains and losses arising from transactions between consolidated companies before they are consolidated should not be eliminated in the purchase method.

(2) Account receivables and account payables, sales and cost of sales and unrealized gains and losses arising from inventory transactions should be eliminated.

1)	When a company sells notes payable issued from another company to be consolidated together at a discount to financial institutions or the third parties, the notes payable are accounted for as borrowing. The same applies to notes payable issued from transactions not involving inventory.

2)	Valuation provisions such as allowance for bad debts and provisions for warranties arising from intercompany transactions should be recovered by reversing them.

(3) Gains and losses on disposition of marketable securities and investment securities between consolidated companies are unrealized in effect, and thus should be eliminated.

(4) Receivables and payables, revenues and expenses, and unrealized gains and losses arising from transactions involving tangible assets between consolidated companies should be eliminated.

(5) When bonds of a consolidated company are purchased by another consolidated company, those transactions are considered to be a redemption of bonds, and receivables and payables and revenues and expenses should be eliminated and estimated gains and losses on redemption of bonds, if it exists, should be recognized. When the issuer is a controlling company, the estimated gains and losses on redemption of bonds should be entirely credited (charged) to controlling interest, and when the issuer is a subsidiary company, the estimated gains and losses on redemption of bonds should be entirely recognized and allocated to controlling interest and minority interest.

(6) When an operating lease contract is made between consolidated companies, lease payables and operating lease expense of the lessee are eliminated against lease receivables and operating lease revenues of the lessor. Operating lease assets and related accumulated depreciation are reclassified to tangible assets and accumulated depreciation.

(7) When a finance lease contract is made between consolidated companies, lease obligations and lease interest expense of the lessee are eliminated against finance lease receivables and lease interest revenues of the lessor. Finance lease assets and related accumulated depreciation are reclassified to tangible assets and accumulated depreciation.

(12-1) In the case of a multiple-tier relationship of a parent and subsidiaries, unrealized gains and losses arising from sales by a subsidiary(Company C) to its top controlling company(Company A) without an involvement of the immediate parent(Company B) should be eliminated entirely and allocated to controlling interest and minority interest. In this case, the controlling interest is the product of the Company A's interest in Company B and Company B's interest in Company C.

(12-2) Since the amount of the eliminated receivables and payables must be identical, the amounts recorded on the consolidated companies' books should be adjusted first, if different as of the consolidated financial statement date, before elimination.

(12-3) If inventories purchased in an intercompany transaction between consolidated companies are unsold as of the consolidated financial statement date, unrealized gains and losses reflected in inventories should be eliminated.

(12-4) Unrealized gains and losses arising from an intercompany inventory transaction should be eliminated based on the gross profit. If the gross profit in the specific transaction cannot be reliably calculated, the annual average of industry gross profit for the selling company may be used if not materially different.

(12-5) The eliminated amount of the unrealized gains and losses arising from an intercompany tangible asset transaction is realized when the asset is sold to the third party outside of the consolidated entity or through depreciation. Thus, depreciation expense of the consolidated income statement is decreased(increased) by the amount of the overstatement(understatement) of the depreciation due to such intercompany transaction.

(12-6) Bonds receivable, interest revenues, and interest receivables of the investing company arising from an intercompany bond transaction are eliminated against bonds payable, interest expense, and interest payables of the issuing company. When the price paid by the investing company differs from the book value of bonds payable in the issuing company, the difference is recorded to the estimated gains and losses on redemption of bonds. In this case, the difference between interest revenues and expenses for the consolidated companies is adjusted throughout the maturity of bonds.

13. Minority Interests

(1) When the stockholder`s equity of the subsidiary after the date of acquisition of control over a subsidiary is changed due to a reduction in capital stock, increase in capital stock etc., the minority interest should be calculated on the basis of the changed stockholders` equity of the subsidiary.

(2) When net loss attributable to minority shareholders exceeds the minority interest, the excess should be charged to the equity of the controlling company. In this case, when the subsidiary subsequently generates income, that income should be added to the equity of the controlling company until the minority interest net loss charged to the controlling company has been fully recovered.

(3) The losses in excess of minority interest which were charged to controlling interest in accordance with 13(2) should be presented as losses in excess of minority interest in the consolidated retained earnings, and included in the calculation of consolidated retained earnings at the end of year in the consolidated statements of changes in equity, and its details should be disclosed in the notes.

(4) Minority interest in the total net income(net loss) of the consolidated entity is separately disclosed under the minority interest income(minority interest loss). Consolidated net income(consolidated net loss) is arrived after either deducting minority interest income or adding minority interest loss.

(13-1) In case a subsidiary company follows accounting policies that are different from those of its controlling company, that difference should be adjusted for the calculation of minority interest.

14. Additional Purchases of the Stocks of Subsidiaries

(1) When a controlling company acquires additional interests in a subsidiary after obtaining control over the subsidiary, the difference between incremental price paid by the controlling company and the amount of incremental interest in the stockholders' equity of the subsidiary is reflected in the consolidated capital surplus.

(2) When a subsidiary company issues stocks for considerations, pays stock dividends, or increases capital stock without considerations (hereinafter referred to as capital increase), the difference between the increase in the controlling company's share in the equity of the subsidiary and acquisition cost of new stocks (in the case of stock dividends and capital stock increases without considerations) due to such capital increase should be accounted for as consolidated capital surplus. In case the difference is debited and consolidated capital surplus is not sufficient enough to absorb the debit difference, consolidated retained earnings should be reduced.

(3) In the case investment securities of subsidiaries purchased before the date of control acquisition have been valued at fair value, investment elimination difference

(4) When an invested company accounted for under the equity method becomes a subsidiary company as a result of the acquisition of the additional stocks by the controlling company, the investment elimination difference should be calculated by adding the additional acquisition cost of the stocks to the investment amount under the equity method in preparing consolidated financial statements.

(5) The acquisition of the additional shares of a subsidiary by the controlling company from other subsidiary companies is an intercompany transaction. Thus, receivables and payables, revenues and expenses, and unrealized gains and losses corresponding to that intercompany transaction should be eliminated.

(6) When consolidated companies are merged together during a fiscal year, consolidated financial statements would reflect this transaction as if the controlling company acquired additional interest rather than a merger took place. The net income or loss for the acquiree as of the merger date should be reflected in the consolidated income statement.

(14-1) Since the consolidated financial statements view all the consolidated companies as a single economic entity, the stockholders of all the subsidiary are the stockholders of the consolidated entity. Thus, exchanges of subsidiary stocks after obtaining control over the subsidiary are viewed as a capital transaction among stockholders and gains or losses on the exchange should not be recognized.

(14-2) When consolidated companies are merged together during a fiscal year, the economic entity does not change at the consolidated entity's stand point. However, the net income or loss for the acquiree as of the merger date is reflected in the acquirer's retained earnings but not in the acquirer's income statement. As a result, consolidated net income or loss after the merger may not coincide with consolidated net income or loss without the merger. In order to mitigate this inconsistency, the consolidated financial statements would reflect this transaction as if the controlling company acquired additional interest rather than a merger took place. In addition, the net income or loss for the acquiree as of the merger date should be reflected in the consolidated income statement.

15. Disposition of the Stocks of Subsidiaries

(1) In case a subsidiary still belongs to a consolidated economic entity after a controlling company disposes a portion of the stocks of subsidiaries that it owns to outside, the disposal gain or loss on a subsidiary`s stocks should be accounted for as consolidated capital surplus.

(2) When the equity method should be used following the partial disposition of the stocks of a subsidiary and the exclusion of a subsidiary from consolidation for other reasons, the amount of the investment in securities to be reported on the consolidated balance sheet should be a parent's portion of the carrying amount of the subsidiary's net assets adjusted for unamortized goodwill or negative goodwill as of the disposition or exclusion date. If the carrying amount of the subsidiary's net assets is not identifiable at that date, the carrying amount can be used as of the end of fiscal year preceding to the year to which such disposition or exclusion belongs.

(3) When the equity method cannot be used following the partial disposition of the stocks of a subsidiary and the exclusion of a subsidiary from consolidation for other reasons, the amount of the investment in securities to be reported on the consolidated balance sheet should be a parent's portion of the carrying amount of the subsidiary's net assets adjusted for unamortized goodwill or negative goodwill as of the disposition or exclusion date. The remaining investment in securities is accounted for following the FAS and the disposal gains or losses are recognized for the portion disposed of. Gains(losses) are the difference between selling price received and the parent's portion of the carrying amount of the subsidiary's net assets adjusted for unamortized goodwill or negative goodwill on the consolidated financial statements.

(4) When a controlling company disposes the entire investment in a subsidiary, the disposal gains or losses are recognized on the consolidated financial statements. Gains(losses) are the difference between selling price received and the parent's portion of the carrying amount of the subsidiary's net assets adjusted for unamortized goodwill or negative goodwill on the consolidated financial statements.

(5) In case a subsidiary still belongs to a consolidated economic entity after a controlling company disposes a portion of the stocks of subsidiaries that it owns to consolidated companies, intercompany receivables and payable, revenues and expenses, and unrealized gains and losses arising from the transaction should be eliminated against each other.

(15-1) In the above (2) and (3), when a controlling company disposes subsidiary stocks during a fiscal year, the stockholders` equity accounts of the subsidiary cannot be determined unless the subsidiary closes its books on the disposition date. In this case, the disposition may be recorded as of the nearest financial statement date(including semi-annual or quarterly financial statement date if prepared).

16. Application of the Equity Method

When a consolidated entity exercises significant influence over a non-consolidated company, the investment in stocks of the non-consolidated company should be accounted for by the equity method.

(1) A consolidated entity is regarded as exercising significance influence over a non-consolidated company if one or more of the following relationships exists:

1)	representation on the board of directors or decision-making bodies

2)	participation in decision-making processes such as in distribution and/or retention of earnings

3)	participation in operating policy decision processes

4)	material intercompany transactions between the consolidated entity and non-consolidated company

5)	interchanges of managerial personnel

6)	communications of essential information

7)	Besides 1) through 6), significant influence is effectively exercisable and can be demonstrated.

(2) When consolidated companies in aggregate owns not less than 20 percent of the voting stocks of a non-consolidated company, it is presumed that the consolidated entity has the ability to exercise significant influence over the non-consolidated company unless there is clear evidence to the contrary.

(3) In a case that the investing company's capital adjustment is increased or decreased due to changes in the investee's capital surplus or capital adjustments in the individual financial statements, such changes should be reported as the increase or decrease in the consolidated capital surplus under the equity method in the consolidated financial statements.

17. Deferred Income Tax

Income tax effect for consolidated financial statements should be recognized in accordance with the FAS and the Interpretations on the FAS and presented in the consolidated balance sheet and the consolidated statement of income. The deferred income tax credit and charge from individual financial statements of a consolidated entity should not be netted against each other in the consolidated balance sheet.

18. Consolidated Statements of Changes in Stockholders` Equity

Consolidated statements of changes in stockholders` equity should include changes in consolidated capital stock, consolidated capital surplus, consolidated remained earnings, consolidated capital adjustments and minority interest.

(1) Consolidated capital stock

Changes in consolidated capital stock should be presented.

1)	Capital increase (or decrease) due to stock issuance or purchase with considerations

2)	Other increases or decreases in capital stock than 1) above during the current fiscal year should be disclosed in an appropriate account, if material.

(2) Consolidated capital surplus

Changes in consolidated capital surplus should be presented.

1)	Changes in consolidated capital surplus due to stock issuance or purchase with considerations

2)	Other increases or decreases in consolidated capital surplus than 1) above during the current fiscal year should be disclosed in an appropriate account, if material.

(3) Consolidated retained earnings

Changes in consolidated retained earnings should be presented.

1)	Consolidated net income (or loss)

The consolidated net income (or loss) reported in the consolidated statement of income should be presented.

2)	Losses in excess of minority interest (Recovery of losses in excess of minority interest)

Losses in excess of minority interest should be calculated by deducting the minority interest at the beginning of the year from the minority interest losses and presented as a deduction from the consolidated retained earnings, and the subsequent recovery, limited to minorities' share of income, of losses in excess of minority interest should be presented as an addition to the consolidated retained earnings.

3)	Dividends

The current year`s dividends appropriated by the controlling company should be presented.

4)	Others

Other increases or decreases in consolidated retained earnings than 1) through 3) above during the current fiscal year should be disclosed in an appropriate account, if material.

(4) Consolidated capital adjustments

Changes in consolidated capital adjustments should be presented.

1)	Acquisition of treasury stocks

The amount paid when a controlling company or subsidiaries acquire the controlling company's stocks.

2)	Other increases or decreases in consolidated capital adjustments than 1) above during the current fiscal year should be disclosed in an appropriate account, if material.

(5) Minority interest

Changes in minority interest should be presented.

(18-1) Changes not material in the consolidated statement of changes in equity may not be reported.

19. Consolidated Statement of Cash Flows

The consolidated statement of cash flows is prepared on the basis of current year`s and prior year`s consolidated balance sheet and consolidated statement of income or on the basis of consolidated companies` individual statements of cash flows after eliminating intercompany cash flows.

(1) The consolidated statement of cash flows should be prepared in accordance with the FAS.

(2) The following should be noted in applying the FAS:

1)	Amortization of goodwill, minority interest income, investment loss under the equity method, dividends in excess of investment income received under the equity method, etc. should be included in expenses not involving cash outflows.

2)	Recovery of negative goodwill, minority interest loss, investment income (in excess of dividends received) under the equity method, etc. should be included in revenues not involving cash inflows

(19-1) Increases or decreases in cash due to changes in the consolidated entity are reported as cash flows from changes in the consolidated entity.

(19-2) Increases or decreases in cash due to acquisition of additional subsidiary stocks or partial disposition of subsidiary stocks with control remained are classified under the cash flows from financing activities.

20. Other Matters

(1) Presentation of earnings per share

Ordinary income and net income per share in the consolidated statement of income should be presented parenthetically next to net income, and their computations should be disclosed in the notes.

(2) Application of the FAS

The general matters not prescribed in this Standard are governed by the FAS.

CHAPTER III.

DISCLOSURE

21. Notes to Consolidated Financial Statements

(1) General items

1)	Brief description of the controlling company; the names of, industry classifications of, stockholders' equities of, numbers of shares invested and ownership percentages on, locations of, fiscal year ends of the subsidiaries included or excluded in the consolidation; the reasons for exclusion from consolidation, etc.

2)	Names of and number of shares invested and ownership percentages on the investees accounted for by the equity method, and the reasons for applying the equity method.

3)	Names of the subsidiaries which are newly included in and/or newly excluded from the consolidation, and the reasons for inclusion and/or exclusion.

4)	Differences, if any, between the consolidation date and the subsidiary's fiscal-year end with the description and reconciliation of significant events between the two dates.

5)	Description and reconciliation of the material transactions between subsidaries consolidated and investees accounted for by the equity method.

6)	Details of foreign currency assets and liabilities, basis of foreign currency translation and resulting gain or loss

7)	Redemption schedule for bonds and long-term borrowings (redemption schedule for the next 5 years is separately disclosed)

8)	Amount and description of contingent liabilities

9)	Subsequent events after the consolidation date, which have a material effect on financial statements

10)	Other significant matters regarding consolidation policies.

(2) Accounting policies

1)	Accounting policies adopted by the controlling company and subsidiaries

2)	Changes in accounting policies and procedures, if any, with the reasons for the changes and their effects on the consolidated financial statements

3)	Description of the method applied in eliminating the controlling company□s investment against the subsidiary□s stockholders□ equity.

4)	Details of amortization of goodwill, recovery of negative goodwill, any allocations to certain identifiable assets or liabilities of the investment elimination difference, and accounting for the investment elimination difference under the equity method.

5)	Description of the valuation of investment accounts under the equity method.

6)	Description of any corrective adjustments to the individual financial statements consolidated when the individual financial statements are judged not to fairly present financial position and results of operations.

7)	Description of the prior year□s criteria and estimation procedures, if any, used for preparing the current year□s financial statements for consolidation.

(3) Major intercompany transactions among consolidated companies

1)	A description of payment guarantees and collaterals provided among the consolidated companies (including investees accounted for by the equity method).

2)	Significant intercompany receivables and payables and operating transactions among the consolidated companies (including investees accounted for by the equity method).

(4) Segmental information for consolidated companies

1)	Consolidated balance sheet by industry (financial vs. non-financial industry)

2)	Consolidated income statement by industry (financial vs. non-financial industry)

3)	Operating results by business segment

4)	Operating results by geographical segment

22. Documentation of Important Data Necessary for Preparing Consolidated Financial Statements

The consolidated companies should document the following materials used for preparing consolidated financial statements.

(1) The controlling company

1)	Details of its investment account in subsidiaries and investees accounted for under the equity method.

2)	Details of stockholders□ equity of subsidiaries and investees accounted for under the equity method as of the date of acquisition of stocks.

3)	Details of intercompany receivables and payables with subsidiaries as of the date of consolidation.

4)	Details of intercompany operating transactions with subsidiaries and investees accounted for under the equity method during the year of consolidation.

5)	Details of assets purchased from subsidiaries and investees accounted for under the equity method as of the date of consolidation.

6)	Details of stock dividends received from subsidiaries.

7)	Details of valuation of investment accounts.

8)	Details of discounted or endorsed promissory notes provided by subsidiaries.

9)	Details of consolidated capital stock, consolidated capital surplus, consolidated retained earrings, and consolidated capital adjustments.

10)	Other details necessary for consolidation.

(2) The subsidiaries

1)	Details of intercompany receivables and payables with a controlling company and/or other subsidiaries as of the date of consolidation.

2)	Details of intercompany transactions with a controlling company and/or other subsidiaries during the year of consolidation.

3)	Details of assets purchased from a controlling company and/or other subsidiaries as of the date of consolidation.

4)	Details of discounted or endorsed promissory notes provided by a controlling company and/or other subsidiaries.

5)	Details of accounting policies which differ from those of the controlling company.

6)	Other details necessary for consolidation.

Addenda

(April 1, 1998)

1. Effective Date

This Standard shall be effective on April 1, 1998.

2. Repealing of Previous Standards and Interim Measures

(1) From the effective date of this Standard, the previous Accounting Standard for consolidated financial statements pronounced by the Securities and Exchange Commission is repealed.

(2) In case the previous other standards and/or the Accounting Standard for consolidated financial statements pronounced by the Securities and Exchange Commission (hereinafter referred to as previous standards) has been followed before the enforcement of this Standard, it is deemed that this Standard has been applied thereto.

3. Interim Measures on the Acquisition Date of the Subsidiary's Stocks

The investment account of a controlling company may be eliminated against the corresponding capital accounts of the subsidiary as of an appropriate date after acquisition, if the date of acquisition or the date of obtaining control is not clearly evident or as of the date of assets revaluation if the assets of the subsidiary are revalued in accordance with the Asset Revaluation Act.

4. Relations with Other Regulations

When there exists any provision in other regulations quoting the previous standards on and after the effective date of this Standard, it should be interpreted to quote this Standard or the pertinent provisions, if any, of this Standard in place of the previous standards.

Addenda

(March 23, 2000)

1. Effective Date

This Standard shall be effective on March 23, 2000.

2. Application in General

This Standard should be followed for financial statements covering the period beginning on or after 1 January 2000, and for other filings, reports or disclosures due after the effective date.

3. For the fiscal year in which this Standard is initially adopted, the consolidated statement of cash flows needs not be prepared, and the consolidated balance sheet, the consolidated statement of income and the consolidated statement of changes in stockholders` equity may be prepared for the current year only.

4. The investment account of a controlling company may be eliminated against the corresponding capital accounts of the subsidiary as of an appropriate date after acquisition, if the date of acquisition or the date of obtaining control is not clearly evident. Amortization or recovery of investment elimination difference (goodwill or negative goodwill) should start from the real acquisition date and stockholders' equity should be translated into Korean won as of the date of its origination.

5. In application of provision 10 4), if the date of acquisition or the date of obtaining control is not so clearly evident or too long ago that the weighted average economic useful life of non-monetary assets is not identifiable, negative goodwill may be recovered over the period within 20 years using the straight-line method.