FINANCIAL ACCOUNTING STANDARDS

FOR

BUSINESS ENTERPRISES

Financial Accounting Standards for Business Enterprises

CONTENTS

I.	General Provisions

§1.	Purpose

§1-2.	Constituents of Accounting Standards

§1-3.	Setting of Accounting Standards

§2.	Objective of Financial Accounting

§3.	General Principles

§4.	Accounting Conventions

§5.	Financial Statements and Supplementary Schedules

§6.	Consolidated Financial Statements and Combined Financial Statements

§7.	Grouping and Classification of Accounts for Financial Statement Presentation

§8.	Rounding of Amounts

§9.	Definitions

II.	Balance Sheet

§10.	Balance Sheet

§11.	Preparation of Balance Sheet

§12.	Current Assets

§13.	Quick Assets

§14.	Transfer or Discount of Trade Receivables

§15.	Inventories

§16.	Non-Current Assets

§17.	Investment Assets

§18.	Tangible assets

§19.	Presentation of Accumulated Depreciation

§20.	Intangible Assets

§21.	Presentation of Intangible Assets

§22.	Presentation of Allowance for Doubtful Accounts

§23.	Current Liabilities

§24.	Long-Term Liabilities

§25.	Accounting for Treasury Bonds

§26.	Provisions for Estimated Liabilities

§27.	Provision for Severance and Retirement Benefits

§28.	Discount (Premium) on Bonds Payable

§29.	Capital Stock

§30.	Presentation of New Capital Stock Subscriptions

§31.	Capital Surplus

§32.	Retained Earnings or Accumulated Deficit

§33.	Capital Adjustments

III.	Income Statement

§34.	Income Statement

§35.	Preparation of Income Statement

§36.	Gross Profit on Sales

§37.	Sales Recognition

§38.	Sales Revenue

§39.	Cost of Goods Sold

§40.	Separate Presentation by Business Segment

§41.	Cost of Goods Manufactured

§42.	Operating Income (Loss)

§43.	Selling and Administrative Expenses

§44.	Presentation of Selling and Administrative Expenses

§45.	Classification of Capital and Revenue Expenditures

§46.	Ordinary Income (Loss)

§47.	Non-Operating Revenues and Expenses

§48.	Gain (Loss) on foreign Currency Transactions

§49.	Gain (Loss) on foreign Currency Translation

§50.	Income (Loss) Before Income Taxes

§51.	Extraordinary Items

§52.	Income Tax Expense

§53.	Net Income (Loss) for the Period

§54.	Earnings Per Share

IV.	Measurement of Assets and Liabilities

§55.	Basic Rules for Asset Measurement

§56.	Valuation of Marketable Securities

§57.	Measurement of Receivables

§58.	Measurement of Inventories

§59.	Valuation of Investment in Equity Securities

§60.	Valuation of Investments in Debt Securities (Bonds)

§61.	Stocks Acquired Due to Investee's Transfer of Capital Surplus or Retained Earnings to Paid-in Capital

§62.	Measurement of Tangible Assets

§63.	Measurement of Intangible Assets

§64.	Measurement of Liabilities

§65.	Accounting for Discount or Premium on Bonds Payable

§66.	Measurement of Receivables and Payables at Present Value

§67.	Restructuring of Receivables and Payables

§68.	Translation of Assets and Liabilities Denominated in Foreign Currencies

§69.	Translation of foreign Currency Financial Statements of Overseas Branches

§70.	Accounting for Derivatives

§71.	Accounting for Government Grants

§72.	Accounting for Capital Adjustments

§73.	Accounting Changes

§74.	Contingencies

§75.	Events Occurring after the Balance Sheet Date

V.	Statement of Appropriation of Retained Earnings

§76.	Statement of Appropriation of Retained Earnings

§77.	Contents of Statement of Appropriation of Retained Earnings

§78.	Contents of Statement of Disposition of Accumulated Deficit

§79.	Prior Period Error Corrections

VI.	Statement of Cash Flows

§80.	Statement of Cash Flows

§81.	Presentation of Statement of Cash Flows

§82.	Cash Flows from Operating Activities

§83.	Reporting of Cash Flows from Operating Activities

§84.	Cash Flows from Investing Activities

§85.	Cash Flows from Financing Activities

§86.	Preparation Methods and Note Disclosures

VII.	Notes and Supplementary Schedules

§87.	Additional Note Disclosures

§88.	Supplementary Schedules

VIII.	Supplementary Provisions

§89.	Special Provision for Small-Sized Enterprises

§90.	Industry Accounting Standards and Other Implementation Details

§91.	Accounting Standards for Companies Not Subject to External Audit

§92.	Statements of Financial Accounting Standards

Addenda

Enacted on April 1, 1998

Amended on December 11, 1998

Amended on August 25, 2000

CHAPTER I

GENERAL PROVISIONS

§1. Purpose

In accordance with Article 13 of the Act on External Audit of Corporations (hereinafter referred to as "the Act"), the purpose of these Standards is to prescribe the standards for financial accounting and reporting by business enterprises which are subject to the application of the Act, in order to ensure uniformity and objectivity in the financial reporting and external audit.

§1-2. Constituents of Accounting Standards

The accounting standards referred to in Article 13 paragraph (1) of the Act consist of these Standards, the Accounting Standard for Consolidated Financial Statements referred to in Article 6 paragraph (1), the Accounting Standard for Combined Financial Statements referred to in Article 6 paragraph (2), the industry accounting standards and the interpretations of these Standards referred to in Article 90, and the Statements of Financial Accounting Standards and the Interpretations thereof referred to in Article 92.

§1-3. Setting of Accounting Standards

The Korea Accounting Institute, authorized by the Financial Supervisory Commission pursuant to Article 13 paragraph (4) of the Act and Article 7-2 paragraph (1) of the Enforcement Decree of the Act, has the authority to establish or amend accounting standards and to perform related activities through the deliberation and resolution by the Korea Accounting Standards Board established pursuant to Article 7 paragraph (2) of the Enforcement Decree of the Act.

§2. Objective of Financial Accounting

The objective of financial accounting and reporting by business enterprises is to provide information that is useful to present and potential investors and creditors and other users in making rational economic decisions related to business enterprises.

§3. General Principles

Financial accounting and reporting by business enterprises should be based on the following general principles:

1.	Financial statements should be prepared on the basis of objective data and evidence;

2.	The format of financial statements, descriptions and accounting terms used in them should be simple and clear for easy understanding;

3.	Significant accounting policies and financial information should be sufficiently disclosed;

4.	Accounting methods and estimates should be applied consistently to provide comparability between periods, and they should not be changed without justifiable reasons;

5.	The presentation of items and amounts should be determined in a practical manner based on the materiality of the nature and amounts of the items;

6.	When in doubt regarding the choice of an accounting method, the accounting method that conservatively presents the financial position should be used.

7.	Transactions and other events should be accounted for and presented in accordance with their substance and economic reality and not merely their form.

§4. Accounting Conventions

For the matters not specifically covered herein, accounting conventions that are generally regarded as fair and appropriate in the Republic of Korea should be followed.

§5. Financial Statements and Supplementary Schedules

(1) The financial statements consist of a balance sheet, an income statement, a statement of appropriations of retained earnings (disposition of accumulated deficit), and a statement of cash flows, parenthetical notations in the body of the financial statements and notes to the financial statements.

(2) The financial statements of the immediately preceding fiscal year should be presented for comparative purposes.

(3) In principle, the financial statements should be prepared in the report form, which may be in either standard or condensed format. The balance sheet, however, may be prepared in the account form.

(4) The schedule of surplus, cost of goods manufactured and other necessary separate schedules should be prepared as supporting schedules.

(5) The financial statements should include notes or parenthetical notations in the following manner in order to provide to their users sufficient information on significant accounting policies and other pertinent financial matters:

1.	Parenthetical notations should be presented on the face of the financial statements by placing brief numerical or descriptive explanations in the parenthesis next to the related accounts in the financial statements requiring such additional information;

2.	Notes to the financial statements should be cross-referenced to the related accounts by placing appropriate reference numbers next to the account title or amount. Notes should present all essential facts clearly and succinctly outside the financial statements or on a separate page;

3.	When a note is applicable to two or more accounts, only a note on the major related account may be presented, and the other related accounts may be cross-referenced to the note;

(6) For the companies operating in industries other than merchandising and manufacturing, generally accepted accounting practices with respect to accounting terminology and formats of financial statements may be applied, except for the matters prescribed in the specialized industry accounting rules.

§6. Consolidated Financial Statements and Combined Financial Statements

(1) A parent company with controlling interests in other companies should prepare consolidated financial statements which bring together the accounts of its own and its subsidiaries.

(2) A business group should prepare combined financial statements to bring together the accounts of companies that belong to the group.

§7. Grouping and Classification of Accounts for Financial Statement Presentation

(1) Of accounts prescribed in these Standards, those which are not significant in nature or not material in amount may be combined with similar accounts for presentation in the financial statements.

(2) Accounts not prescribed in these Standards but which are material in nature or in amount should be presented separately in a manner that best represents their nature.

§8. Rounding of Amounts

Amounts presented in the financial statements may be rounded to the nearest thousand or million won or other appropriate amount, provided that the reporting entity is large enough in size and such rounding of amounts is unlikely to mislead users of its financial statements.

§9. Definitions

The following terms are used in these Standards with the meanings specified:

1.	Within one (1) year refers to within one (1) year from the balance sheet date;

2.	Related parties of an enterprise are either companies or individuals whose relationships with the said enterprise fall under one of the following categories:

a. A company which is in a parent-subsidiary relationship with the enterprise;

b. An investee company over which the enterprise is able to exercise significant influence and thus the investment in which is required to be accounted for by the equity method of accounting;

c. Individuals and their relatives who are able to exert significant influence on the enterprise by direct or indirect exercising of voting rights;

d. Key management and the directors who have authority over and hold responsibility for the enterprise's business activities, and their relatives;

e. A company whose management and operating policies could be influenced significantly by the individuals or management mentioned in Items c and d.

3.	Ordinary business transactions refer to transactions which occur in the course of ordinary business activities for the major business objectives of the company concerned;

4.	Fair value means the exchange price, which can be formed in an arm's-length transaction between independent parties with rational judgment and intention of transaction.

CHAPTER II

BALANCE SHEET

§10. Balance Sheet

(1) The balance sheet should present fairly all the assets, liabilities, and stockholders' equity of a business enterprise as of the balance sheet date in order to report clearly the financial position of the enterprise.

2) Sample balance sheet formats are included in annexed Forms 1 through 4.

§11. Preparation of Balance Sheet

(1) The balance sheet should be prepared in accordance with the following provisions:

1.	The balance sheet should be classified into assets, liabilities and stockholders' equity. Assets should be then divided into current assets, and non-current assets. Liabilities should be divided into current liabilities and long-term liabilities. Stockholder's equity should be further classified into capital stock, capital surplus, retained earnings, and capital adjustments;

2.	Assets, liabilities, and stockholders' equity should be presented in gross	amounts, and offsetting asset items against those of liabilities or stockholders' equity is not allowed;

3.	Based on one-year rule, assets and liabilities should be classified as current assets and non-current assets, and current liabilities and long-term liabilities;

4.	Assets and liabilities should be presented in the order of their liquidity;

5.	Capital surplus, which arises from capital transactions, should be presented separately from retained earnings (accumulated deficit), and they should not be combined with each other;

6.	Temporary accounts, such as suspense payments or suspense receipts, should be replaced with relevant account headings that accurately describe their nature. In addition, memorandum accounts should not be presented as assets or liabilities in the balance sheet.

(2) When preparing a balance sheet in accordance with Form 3 or 4, allowance for doubtful accounts, accumulated depreciation and other valuation accounts may be directly deducted from or added to the related accounts, and only the net amounts may be presented.

(3) In the case that only the net amounts of accounts are presented pursuant to paragraph (2), the contents should be presented in the accompanying notes.

§12. Current Assets

Current assets should be further divided into quick assets and inventories.

§13. Quick Assets

Quick assets include the following items:

1.	Cash and cash equivalents

Include currency, checks issued by others, other currency equivalents, checking accounts, passbook deposits and cash equivalents. Cash equivalents are securities and other short-term financial instruments that are readily convertible into cash with immaterial transaction costs, and so near their maturity that they present insignificant risk of changes in interest rates. Only investments with maturities (or redemption dates) of three months or less from the date of acquisition qualify as cash equivalents.

2.	Short-term financial instruments

Include time deposits, installment savings deposits, restricted bank deposits and other standardized financial instruments that are handled by financial institutions, which are held for short-term cash management purposes or mature within a year. Compensating balances and other restricted bank deposits should be described in the accompanying notes.

3.	Marketable securities

Include investments in debt and equity securities (limited to marketable equity securities) which are held for short-term cash managements purposes. However, marketable securities should not include equity securities issued by related parties and investment securities to be disposed within one year.

4.	Trade receivables

Include accounts receivable and notes receivable acquired from ordinary business transactions.

5.	Short-term loans receivables

Include loans receivable maturing within one year.

6.	Other receivables

Include all other receivables arising from other than ordinary business transactions.

7.	Accrued revenues

Include revenues earned in the current fiscal period but not yet received.

8.	Advance payments

Include prepaid amounts for the purchase of merchandise, raw materials and others.

9.	Prepaid expenses

Include payments made in advance for expenditures which are expected to be charged to expenses within one year.

10.	Other quick assets

Include all other quick assets which do not belong to any of Items 1 through 9.

§14. Transfer or Discount of Trade Receivables

(1) When trade receivables are transferred or discounted to another party having the rights to and obligations on the receivables being isolated from the transfer or (discounter) and transferred to the transferee (discounted) in substance, the transferred or discounted amount should be deducted from the trade receivable balance. Otherwise the transaction should be treated as a borrowing of money providing trade receivables as collateral.

(2) In application of paragraph (1), contents of transfers or discounts of trade receivables should be disclosed in the accompanying notes.

§15. Inventories

Inventories include the following items:

1.	Merchandise

Include goods purchased for resale, goods in transit and goods on consignment. For enterprises operating in the real estate trading business, merchandise inventory includes land, buildings, and other similar properties held for resale.

2.	Finished goods

Include completed products and by-products produced for sale by manufacturing companies.

3.	Semi-finished goods

Include intermediate products or parts produced by an enterprise.

4.	Work in process

Includes goods which are still in the process of production for semi finished or finished goods.

5.	Raw materials

Include direct materials, indirect materials, purchased parts, and raw materials in transit to be used in manufacturing.

6.	Supplies

Include expendable goods, tools, furniture and equipment, repair parts, and other supplies.

7.	Other inventories

Include all other inventories which do not belong to any of Items 1 through 6.

§16. Non-Current Assets

Non-current assets should be further classified into investment assets, tangible assets and intangible assets.

§17. Investment Assets

Investment assets include the following items:

1.	Long-term financial instruments

Include financial instruments which do not belong to current assets. Compensated balances and other restricted bank deposits should be disclosed in the accompanying notes.

2.	Investment securities

Include securities held for investment which are not included in current assets.

3.	Ling-term loans receivable

Include loans receivable not included in current assets.

4.	Long-term trade receivables

Include long-term accounts receivable and notes receivable acquired from ordinary business transactions that are not included in current assets.

5.	Investment properties

Include land, buildings and other real estate held for investment or non-operating purposes. The content and descriptions of the investment properties should be disclosed in the accompanying notes.

6.	Guarantee deposits

Include leasehold rights, telephone and telegraph subscription rights, leasehold deposits, operation guarantee deposits and other similar deposits.

7.	Deferred income tax debit

Includes the excess of current income taxes to be paid based on the relevant laws such as the Corporate Income Tax Act over income tax expenses for financial reporting purposes resulting from temporary differences. In addition, it should include income tax effects from accumulated deficits.

8.	Other investments

Include all other investments which do not belong to any of Items 1 through 7.

§18. Tangible Assets

Tangible assets include the following items:

1.	Land

Includes building sites, forests, agricultural land, and land used for other purposes.

2.	Buildings

Include buildings and auxiliary facilities to buildings, such as heating and cooling systems, lighting systems, and ventilation systems.

3.	Structures

Include docks, bridges, quays, pontoon, railroads, reservoirs, tunnels, chimneys, gardens, and other civil engineering works or structures.

4.	Machinery and equipment

Include machinery and equipment transportation facilities such as conveyors, hoists and cranes, and other auxiliary facilities.

5.	Ships

Include ships and other marine transportation equipment.

6.	Vehicles and transportation equipment

Include trains, automobiles, and other land transportation equipment.

7.	Construction in progress

Includes materials, labor, and overhead costs incurred in the self-construction of tangible assets to be used by the enterprise. Construction in progress also includes payments from the construction contract price or machinery acquired for the construction.

8.	Other tangible assets

Include all other tangible assets which do not belong to any of Items 1 through 7.

§19. Presentation of Accumulated Depreciation.

(1) Accumulated depreciation on buildings, structures, machinery and equipment, ships, vehicles and transportation equipment, and other tangible assets should be presented as a deduction from the corresponding asset account, or if desired, the total accumulated depreciation may be presented, in aggregate, as a deduction from total tangible assets.

(2) In the case that accumulated depreciation is presented in aggregate, the details should be disclosed in the notes to the financial statements.

§20. Intangible Assets

Intangible assets include the following items:

1.	Goodwill

Includes only the value of purchased goodwill recognized in connection with the mergers and acquisition of entire businesses, and the acquisition of leasehold rights.

2.	Intellectual proprietary rights

Include rights to the exclusive use for a specified period of patents, utility model patents, design rights, and trademarks.

3.	Mining rights

Include exclusive rights to extract and obtain a mineral registered under the Mining Act or other minerals in the same mining area.

4.	Fishing rights (including a right of entry into a fishing ground)

Include exclusive rights to conduct fishing in certain waters.

5.	Leaseholds (including surface rights)

Include rights to use and earn revenues from land owned by others, upon payment of rental.

6.	Organization costs

Include costs incurred in organizing a business, such as promoters compensation, underwriting fees, registration fees, costs of issuing stock and costs incurred during the pre-operating period to obtain business permits.

7.	Development costs

Include expenditures incurred in conjunction with development of new products or technologies, etc. (including expenditures for developing software), which can be identified and of which future economic benefits are definitely expected.

8.	Other intangible assets

Include all other intangible assets giving the holder exclusive rights, which do not belong to any of Items 1 through 7.

§21. Presentation of Intangible Assets

Intangible assets should be presented net of accumulated amortization.

§22. Presentation of Allowance for Doubtful Accounts

(1) Allowance for doubtful accounts established for estimated bad debt losses on receivables may be presented as a deduction from each related receivable account, or the allowance amount in total may be deducted from current assets and investment assets, respectively.

(2) In the case that allowance for doubtful account is presented in total, the details should be disclosed in the notes to the financial statements.

§23. Current Liabilities

Current liabilities include the following items:

1.	Trade payables

Include accounts payable and notes payable arising from ordinary business transactions.

2.	Short-term borrowings

Include overdrafts from financial institutions and borrowings to be repaid within one year.

3.	Other accounts payable

Include amounts payable incurred from other than ordinary business transactions (except accrued expenses).

4.	Advance from customers

Include amounts received in advance from customers.

5.	Withholdings

Include various temporary withholdings arising from other than ordinary business transactions.

6.	Accrued expenses

Include expenses incurred but not paid in cash.

7.	Income taxes payable

Include the unpaid income taxes.

8.	Dividends payable

Include cash dividends proposed to be paid in the statement of appropriations of retained earnings.

9.	Current portion of long-term debt

Includes the portion of long-term debt which matures within one year.

10.	Unearned revenues

Include revenues received in the current period, but attributable to subsequent periods.

11.	Provisions for estimated short-term liabilities

Include estimated liabilities to be paid within one year. They should be presented in captions descriptive of their purposes.

12.	Other current liabilities

Include all other current liabilities which do not belong to any of Items 1 through 11.

§24. Long-Term Liabilities

Long-term liabilities include the following items:

1.	Bonds payable

Include amounts of issued and unpaid bonds which are maturing after one year. Bonds payable should be classified by type and details should be disclosed in the accompanying notes.

2.	Long-term borrowings

Include borrowings which are payable after one year. Note disclosures should include a schedule of borrowings by the lender, borrowing purposes, interest rates, and repayment methods.

3.	Long-term trade payables

Include long-term accounts payable and notes payable arising from ordinary business transactions, which are not included in current liabilities.

4.	Provisions for estimated ling-term liabilities

Include estimated long-term liabilities to be dispensed after one year. They should be presented in captions descriptive of their purposes.

5.	Deferred income tax credit

Includes the excess amount of income tax expense over the tax liability determined pursuant to relevant laws such as the Corporate Income Tax Act resulting from temporary differences.

6.	Other long-term liabilities

Include all other long-term liabilities which do not belong to any of Items 1 through 5.

§25. Accounting for Treasury Bonds

(1) When bonds payable are re-acquired by the issuing company, the face value of the treasury bonds and any unamortized discount or premium applicable to them should be subtracted directly from the respective accounts. The reason for acquisition of treasury bonds should be disclosed in the notes to the financial statements.

(2) In application of paragraph (1), the difference between the net carrying amount of the treasury bonds and the reacquisition price should be recognized in current earnings as a gain or loss on redemption of bonds.

§26. Provisions for Estimated Liabilities

(1) Financial obligations arising from current operations should be estimated in amount and recognized as provisions for estimated liabilities, when payments are to be made in future and it is reasonable to match the obligations as expenses against the revenues of the current period.

(2) Provisions for estimated liabilities should include provision for severance and retirement benefits, provision for major repairs, and provision for product warranties.

(3) When an estimated liability is expected to be payable over several years or when the timing of all or a portion of the estimated liability cannot be reasonably predicted, the whole amount may be classified as a long-term liability.

§27. Provision for Severance and Retirement Benefits

(1) The estimated liability to be recognized as provision for severance and retirement benefits should be an amount equivalent to severance and retirement benefits a company would be liable to pay if all officers and employees were to terminate their employment as of the balance sheet date.

(2) Notes to the financial statements should disclose the amount of estimated liability for severance and retirement benefits, the book balance of the provision as of the balance sheet date, actual payment made during the current period for severance and retirement benefits, and accounting method for officers' severance and retirement benefits.

§28. Discount (Premium) on Bonds Payable

The difference between the issuance price (after deducting bond issuance costs such as fees and commissions and other costs directly related to the bond issuance) and the face value of bonds payable should be recorded as discount or premium on bonds payable. Discount or premium on bonds payable should be reported as a direct deduction from or an addition to the face amount of the bond.

§29. Capital Stock

(1) Capital stock should be classified as common stock or preferred stock, depending on the features of the stock.

(2) The par value and number of shares authorized, issued and outstanding should be disclosed in the notes to the financial statements. Note disclosures should also provide details when changes in the capital stock have occurred during the accounting period due to new issuance or retirement of stock, stock dividends or other reasons.

§30. Presentation of New Capital Stock Subscriptions

(1) Of the advance payments received on capital stock subscriptions, the amount which will become a part of the full subscription price for the new capital stock to be issued should be presented next to capital stock in the balance sheet using an account explaining its nature.

(2) For capital stock subscriptions, the number of new shares to be issued, the due date for full payment of the subscription price, and the amount to be credited to capital surplus should be disclosed in the accompanying notes.

§31. Capital Surplus

Capital surplus should be further classified as follows:

1.	Paid-in capital in excess of pay value

Includes the excess amount over par value paid in by stockholders in return for the shares issued to them. (In case shares are issued for a capital increase, commissions and other expenditures directly incurred to issue additional stock are deducted from the proceeds to determine the amount.)

2.	Gain on capital reduction

Includes the excess of the par value of capital stock reduced, over the cost of acquiring the stock to be reduced plus the amount of a deficit offset upon reduction and extinguishment of stock. However, when the costs of stock extinguishment and the costs of acquiring the stock to be reduced exceed the par value of the reduced capital stock, the excess should be deducted from gain on capital reduction.

3.	Other capital surplus

Includes gains on sale of treasury stock (net amount after deducting losses on sale of treasury stock) and other capital surplus.

§32. Retained Earnings or Accumulated Deficit

Retained earnings or accumulated deficit should be classified as follows, and should be presented, after reflecting the appropriations (disposition) proposed in the current period's statement of appropriations of retained earnings (disposition of accumulated deficit). However, when the appropriations of retained earnings (disposition of accumulated deficit) have been finalized differently from the proposed amounts at the stockholders' meeting, the amounts should be adjusted:

1.	Legal reserves

Should be appropriations from retained earnings required under the provisions of COCO.

2.	Other statutory reserves

Include appropriations from retained earnings pursuant to regulations other than COCO.

3.	Voluntary reserves

Include various reserves appropriated in accordance with the provisions of the AI or by a resolution made at the stockholders' meeting. Such reserves may be for business expansion, sinking funds, stable dividend policy, deficit reduction, and other reserves made to obtain benefits of deferring taxes.

4.	Unappropriated retained earnings (indisposed accumulated deficit) carried over to the subsequent period.

Include the unappropriated retained earnings (indisposed accumulated deficit) carried over to the subsequent period as reflected in the statement of appropriations of retained earnings (disposition of accumulated deficit) for the current period. Current period's net income or loss should be presented parenthetically.

§33. Capital adjustments

Capital adjustments include the following items:

1.	Discount on stock issuance

Includes the discounts resulting from the issuance of capital stock at less than par value.

2.	Pre-operation dividends

Include dividends paid to stockholders during certain pre-operating periods.

3.	Treasury stock

Includes the acquisition cost when a company's own stock is re-acquired from stockholders and held in the name of the company. The reason for the acquisition and the management's future plans for treasury stock should be disclosed in the accompanying notes.

4.	Stock dividends distributable

Include the stock dividends proposed to be distributed, and presented in the statement of appropriations of retained earnings.

5.	Gain (Loss) on valuation of investment securities

Include the unrealized gains (losses) on investment in equity securities or investment in debt securities (bonds) recognized pursuant to [Article 59 paragraph (2) paragraph (3) & Article 60 paragraph (3)].

6.	Overseas operations translation credit (debit)

Include gains (losses) from foreign currency translation of overseas branches arising from application of Article 69 paragraph (2).

CHAPTER III

INCOME STATEMENT

§34. Income Statement

(1) In order to present fairly the results of business operations, the income statement should present all revenues earned in the current accounting period, and all matching expenses incurred in generating the revenues.

(2) A sample format of the income statement is presented in annexed Forms 5 and 6.

§35. Preparation of Income Statement

The income statement should be prepared in accordance with the following provisions:

1.	Revenues and expenses should be reported properly in a period in which revenues are earned and expenses are incurred. However, revenue should be recognized at the time of its realization, and unrealized revenues should not be included in determination of current earnings.

2.	Revenues and expenses should be classified according to their sources. For each revenue item, related expense item should be matched against the recognized revenue for presentation.

3.	Revenues and expenses should be presented in gross amounts. It is not allowed to exclude all or a portion of revenue or expense from the income statement by directly offsetting expense against revenue.

4.	The income statement should be prepared to show the following categories of income: gross profit (loss) on sales, operation income (loss), ordinary income (loss), income (loss) before income taxes, and net income (loss) for the period. For the enterprises operating in industries other than manufacturing, merchandising, or construction industry, however, the category of gross profit (loss) on sales may be omitted in the income statement.

§36. Gross Profit on Sales

Gross profit (loss) on sales should be presented by deducting cost of goods sold from sales revenue.

§37. Sales Recognition

(1) Revenue from selling merchandise and finished goods should be recognized at the time when the goods are sold and delivered.

(2) In application of paragraph (1), the revenue from selling consigned goods should be recognized at the time when the consignee have sold goods, and the revenue from selling goods on approval should be recognized at the time when the buyer holding the goods has notified his intention of purchase.

(3) Service sales and contract sales should be recognized according to the percentage-of-completion method. In application of the percentage-of-completion method, however, when reasonable estimates cannot be made of the revenue, cost or percentage-of-completion in conjunction with a contract for construction, manufacturing and rendering of service, or when collection of revenue is not certain, the estimated recoverable amount, which should not be more than costs incurred, should be recognized as revenues and the total amount of costs incurred should be charged to expenses.

(4) For long-term installment sales of merchandise or finished goods, a portion of cash receipts attributable to interest should be recognized as interest revenue as time passes over the duration of the installment period. In this case, the amount of interest revenue should be calculated pursuant to Article 66.

§38. Sales Revenue

(1) Revenue from selling merchandise or finished goods should be presented at net sales after subtracting sales allowances, sales returns, and sales discounts from gross sales. Trade discounts granted to customers based on the volume of goods sold should be included in sales allowances.

(2) Revenue from selling semi-finished goods and by-products and scraps, if material, should be described in the accompanying notes to the financial statements. In addition, note disclosures should be made on material revenue from exporting good and long-term installment sales.

§39. Cost of Goods Sold

(1) For merchandising companies, the cost of goods sold should be presented in the income statement by subtracting the ending inventory from the sum of the beginning inventory and the cost of goods purchased during the current period.

(2) The cost of goods purchased during the current period mentioned in paragraph (1) should be determined by subtracting purchase returns, purchase allowances and purchase discounts from the gross purchases. In this case, trade discounts received based on the volume of goods purchased should be included in purchase allowances.

(3) Expenditures incurred directly from the purchase of merchandise should be included in purchases.

(4) For manufacturing companies, the cost of goods sold should be presented by deducting the ending finished goods inventory from the sum of the beginning finished goods inventory and the cost of goods manufactured during the current period.

(5) A separate presentation should be provided when there has been an increase or decrease in finished goods or merchandise resulting from a cause other than purchases, production or sales. In addition, a separate presentation should also be made for refund of customs duties and similar items which are to be added to or deducted from the cost of goods sold.

(6) When sales are presented in the accompanying notes pursuant to Article 38 paragraph (2), cost of goods sold relating to the sales should also be disclosed in the notes.

§40. Separate Presentation by Business Segment

Sales and cost of goods sold may be presented by business segment.

§41. Cost of Goods Manufactured

Cost of goods manufactured should be determined based on the Cost Accounting Procedure.

§42. Operating Income (Loss)

Operating income (loss) should be presented by deducting selling and administrative expenses from gross profit (loss) on sales.

§43. Selling and Administrative Expenses

Selling and administrative expenses should be the operating expenses other than cost of goods sold that are incurred in selling goods and services or running a business. Selling and administrative expenses should include salaries (including officers' salaries, salaries, wages and various allowances), retirement allowances, other employee benefits, rent expense, promotion expense, depreciation expense, amortization expense, taxes and dues, advertising expense, research expense, ordinary development expense, and bad debt expense.

§44. Presentation of Selling and Administrative Expenses

Selling and administrative expenses should be classified into appropriate items that represent the operating expenses of a company depending upon its size and business characteristics.

§45. Classification of Capital and Revenue Expenditures

Expenditures that extend the useful life or increase the value of tangible assets should be recorded as capitalized costs of tangible assets. Expenditures that maintain the efficiency of tangible assets or restore the assets to their original condition should be treated as ordinary operating expenses.

§46. Ordinary Income (Loss)

Ordinary income (loss) should be presented by adding non-operating revenues to, and deducting non-operating expenses from operating income (loss).

§47. Non-Operating Revenues and Expenses

(1) Non-operating revenues and gains include the following:

- Interest revenue;

- Dividend revenue (excluding stock dividends);

- Rental revenue;

- Gain on disposition of marketable securities;

- Gain on valuation of marketable securities;

- Gain on foreign currency transactions;

- Gain on foreign currency translation;

- Gain on valuation of investments using the equity method of accounting;

- Restoration of investment securities impairment loss;

- Gain on disposition of investment assets;

- Gain on disposition of tangible assets;

- Gain on redemption of bonds;

- Refund of income taxes, etc.

(2) Non-operating expenses and losses include the following:

- Interest expense;

- Other bad debt expense;

- Loss on disposition of marketable securities;

- Loss on valuation of marketable securities;

- Loss on valuation of inventories (including loss from inventory obsolescence that is not considered to be part of manufacturing costs);

- Loss on foreign currency transactions;

- Loss on foreign currency translation;

- Donations;

- Loss on valuation of investments using the equity method of accounting;

- Investment securities impairment loss;

- Loss of disposition of investment assets;

- Loss on disposition of tangible assets;

- Loss on redemption of bonds;

- Additional payment of income taxes.

(3) The gain or loss on disposition of land or building should be recognized at whichever date comes earliest among the following: the entire purchase price is paid, the date of title transfer, or the date the property becomes available to the buyer.

(4) When the collectibility of principal and interest of receivables is uncertain, the interest revenue on the receivables should be recognized at the time of cash receipt.

§48. Gain (Loss) on Foreign Currency Transactions

Gain (loss) on foreign currency transactions should include gains or losses resulting from a change in exchange rates between won currency and the currency in which a foreign currency transaction is denominated on settlement of accounts during the period, such as collection of receivables or payment of liabilities, denominated in foreign currency.

§49. Gain (Loss) on Foreign Currency Translation

Gain or loss arising from the translation at the balance sheet date of monetary assets and liabilities denominated in foreign currency, caused by fluctuation in exchange rates, should be reported as gain or loss on foreign currency translation.

§50. Income (Loss) Before Income Taxes

Income (loss) before income taxes should be presented by adding extraordinary gains, and deducting extraordinary losses from ordinary income (loss).

§51. Extraordinary Items

(1) Extraordinary gains should include unusual and non-recurring gains, gain from assets contributed, gain on exemption of debts, and gain on insurance settlements.

(2) Extraordinary losses should include unusual and non-recurring losses and casualty losses.

§52. Income Tax Expense

(1) Income tax expense should be the amount determined as follows: the change in deferred income tax should be added to or subtracted from the total income tax and surtaxes to be paid for the current period based on the relevant laws including the Corporate Income Tax Act.

(2) The difference between the income lax expense and the amount of income tax payable for the current period should be accounted for as deferred income tax debit or credit, and should be offset against deferred income tax credit or debit occurring in subsequent periods.

(3) Details of deferred income taxes and related information should be disclosed in the accompanying notes.

§53. Net Income (Loss) for the Period

Net income (loss) for the period should be presented by deducting income tax expense from income (loss) before income taxes.

§54. Earnings Per Share

Ordinary income per share and net income per share should be presented parenthetically, and additional note disclosure should be provided for computation of earnings per share.

CHAPTER IV

MEASUREMENT OF ASSETS AND LIABILITIES

§55. Basic Rules for Asset Measurement

(1) In principle, assets should be recorded in the balance sheet on the basis of their acquisition cost.

(2) When assets are acquired by exchange, issuance of stock, donation or free of charge, the fair value of the acquired assets should be used as the acquisition cost. However, except for land and buildings, the acquisition cost to be recorded for the exchange of like-kind tangible assets may be the book value of the surrendered assets.

(3) When an enterprise is required to purchase government or municipal bonds in conjunction with the acquisition of tangible assets, the difference between the buying cost and present value of those bonds calculated in accordance with Article 66 should be added to the acquisition cost of the tangible assets.

(4) Interest costs and other similar financial costs incurred during the manufacturing, purchase or construction of inventories, investment assets, tangible assets or intangible assets should be capitalized and added to the acquisition cost of the related assets. For inventories, interest costs should be capitalized only when they require a long period of time to manufacture. The amount and the contents of the capitalized interest costs should be disclosed in the notes to the financial statements.

(5) When the book value exceeds the recoverable value of the asset due to obsolescence, physical damages or a sharp decline in the market value, the excess, if the amount is material, should be accounted for as a reduction in the asset's book value. The difference between the book value and the recoverable value should be charged to current earnings, as impairment loss of the asset. When the recoverable value of the asset in the subsequent period exceeds the restated book value, the recoveries of the previously recognized losses should be recognized as gain in the subsequent period until the recoverable value equals the amount the book value would have been if impairment losses were not recorded. This provision is applicable to all assets in the balance sheet except for those otherwise prescribed in Article 56-Article 60, Article 66 and Article 67.

(6) Recoverable value mentioned in paragraph (5) should be the greater of the net realizable value or the value in use.

(7) When the book value of the asset is reduced or increased in accordance with paragraph (5), the amount and related information should be disclosed in the notes.

(8) Acquisition costs of assets should be allocated as expense to subsequent accounting periods based on cost allocation methods appropriate to the nature of the assets.

§56. Valuation of Marketable Securities

(1) For stocks and bonds classified as marketable securities, acquisition cost should be determined by adding incidental costs to the purchase price, and applying the weighted average method or moving average method. These securities should be reported at fair value in the balance sheet.

(2) In determining the unit cost of marketable securities, the weighted average method or moving average method should be applied to each class of securities.

(3) In application of paragraphs (1) and (2), when market value is used as fair value, it should be the closing price as of the balance sheet date. In the case that no closing price exists at the balance sheet date, the most recent closing price before the balance sheet date should be used.

(4) The carring value of marketable stocks and bond should be disclosed in the accompanying notes.

§57. Measurement of Receivables

(1) Allowance for bad debts should be established for estimated losses from doubtful receivables estimated on a reasonable and objective basis. However, when future cash flows from the receivables are expected to occur for a long period of time, estimated bad debt losses should be computed in accordance with Article 67.

(2) Bad debt expense should be the amount obtained by subtracting the balance of the allowance for doubtful accounts from the estimated bad debt losses mentioned in paragraph (1). Bad debt expense on trade receivables acquired from ordinary business transactions should be included in selling and administrative expenses, and any other bad debt expense should be included in non-operating expenses.

(3) Uncollectible receivables should first be offset against the allowance for doubtful accounts and, if the balance of the allowance account is not sufficient to absorb the uncollectible receivables, the amount in excess of the allowance should be accounted for as bas debt expense.

§58. Measurement of Inventories

(1) Inventories should be reported in the balance sheet at acquisition cost. Inventory cost is determined by adding incidental expenditures to the purchase price or the production costs, and adopting one of the following inventory valuation methods: specific identification method, FIFO (first-in, first-out) method, LIFO (last-in, first-out) method, moving-average method, weighted-average method, and retail method. The retail method, however, may be adopted only when it is regarded as the most reasonable method to use, considering the company's business and the nature of its inventories.

(2) When net realizable value of inventory declines below acquisition cost, inventory should be reported at net realizable value in the balance sheet. However, marketable securities held as merchandise inventory should be measured in accordance with Article 56.

(3) Net realizable value mentioned in paragraph (2) should be the estimated selling price less costs that are normally expected to be incurred up to disposal,

(4) The loss on valuation, resulting from valuing inventories at lower of cost or market, should be directly subtracted from inventory's carrying value.

(5) When the LIFO method is employed in accordance with paragraph (1), the difference between balance sheet amount and net realizable value and related details should be disclosed in a note to the financial statements.

§59. Valuation of Investment in Equity Securities

(1) The acquisition cost of investment in equity securities should be determined by adding incidental purchase expenditures to the purchase price, and applying the weighted-average method or moving-average method.

(2) Investment in marketable equity securities should be reported at fair value in the balance sheet. In this case, the difference between the carrying amount before adjustment and the restated balance sheet amount should be shown as gain or loss on valuation of investment in equity securities, and reported as a component of the capital adjustments section on the balance sheet.

(3) Notwithstanding paragraph (2), for the investment in equity securities which gives the investor company the ability to exercise significant influence over the investee company, the investment amount evaluated under the equity method should be used as the balance sheet amount. The difference between the carrying value and the restated balance sheet amount should be accounted for as follows. The difference due to the investee's net income or loss should be recognized as gain or loss on valuation using the equity method of accounting in the income statement. The difference due to changes in the investee's retained earnings should be reported as the increase or decrease in the investor's retained earnings. When the difference results from changes in the investee's capital surplus or capital adjustments, it should be reported as the increase or decrease in the investor's capital adjustments. Investments of 20/100 or more in total outstanding voting stock of the investee company are considered to give the investor company the ability to exert significant influence on the investee company, unless there is a special reason to believe otherwise.

(4) In application of paragraph (2), if the fair value of investment in equity securities (excluding equity securities accounted for by the equity method) has declined and the decline is not restorable, the difference between the previous book value and the fair value should be reported as investment securities impairment loss in the income statement. Any valuation gain or loss recognized previously should be deducted from or added to the investment securities impairment loss. In subsequent accounting periods, measurement of the investment should be done as specified in paragraph (2).

(5) Investment in non-marketable equity securities (excluding equity securities accounted for by the equity method) should be reported at acquisition cost. However, when the net asset value of the equity securities declines, and the decline is judged to be permanent, the carrying amount should be adjusted to the net asset value. The difference between the original acquisition cost and the restated amount should be reported as investment securities impairment loss in the income statement. When the net asset value of the investment securities, on which an impairment loss was recorded, is restored in a subsequent period, restored amount should be recognized as restoration of investment securities impairment loss in the income statement, with limitation of previously recognized impairment loss.

(6) When the market value of investment securities is used as the fair value in application of paragraph (2) and (4), the market value should be determined as provided in Article 56 paragraph (3). The net asset value should be determined based on the net assets shown on the balance sheet of the investee company.

(7) When marketable equity securities are reclassified to investment securities, the reclassified securities should be reported at the fair value, which is the closing price as of the balance sheet date. The difference between the previous carrying value and the restated balance sheet amount should be reported as gain or loss on marketable securities in the income statement.

(8) The measurement of investment in partnerships, joint-capital, private limited companies should be made pursuant to paragraph (1) to (5)

(9) In determining the unit cost of investment equity securities, the weighted average method or the moving average method should be applied by each class of securities.

(10) As for the valuation gain or loss mentioned in paragraph (2), the net gain or loss should be computed and presented on the balance sheet shown as gain or loss on valuation of investment securities. Should additional valuation gain or loss occur in a subsequent period, the net valuation gain or loss should be updated to reflect additional changes in valuation of investment securities. The details of the valuation gain or loss should be disclosed in a note to the financial statements.

(11) Gain or loss on valuation of investment securities mentioned in paragraph (2), except when it is accounted for as a part of the investment securities impairment loss, should be deducted from or added to the gain or loss on disposition of investment securities when the related investment stocks are sold.

(12) For investment in equity securities (including capital contributions mentioned in paragraph (8)), a note disclosure should provide the following: the name of each investee company, number of stocks owned, holding ratio, acquisition cost, market value or net asset value, and book value.

§60. Valuation of Investment in Debt Securities (Bonds)

(1) For investment in bonds, the acquisition cost should be determined by applying the weighted average method or the moving average method after adding incidental expenditures to the purchase price.

(2) For investment in bonds whose face value differs from acquisition cost, the effective interest method should be applied to amortize the difference over the remaining term of the bonds. Amortized amount of premium or discount on bonds should be added to or deducted from the acquisition cost of bonds and interest revenue.

(3) When the carrying value of investment in bonds including the amortized cost adjusted in accordance with paragraph (2) differs from fair value, investment in bonds should be reported at fair value in the balance sheet. The difference between the previous carrying amount and fair value should be reported as gain or loss on valuation of investment securities in the capital adjustments section.

(4) For investment in bonds that an enterprise purchases with the positive intent and ability to hold to maturity (held-to-maturity bonds), the investment in bonds should be reported at acquisition cost notwithstanding paragraph (3). However, when acquisition cost is different from face value, the difference should be amortized over the remaining term of the bonds applying the effective interest method and the investment in bonds should be reported at amortized cost in the balance sheet.

(5) In application of paragraph (3), when the fair value of an investment in bonds declines and the decline is judged to be permanent, the difference between the carrying value and fair value should be reported as investment securities impairment loss in the income statement. Any valuation gain or loss recognized previously should be deducted from or added to the investment securities impairment loss. In subsequent accounting periods, measurement of the investment should be done as specified in paragraph (3).

(6) In application of paragraph (4), when the fair value of investment in bonds declines and the decline is judged to be permanent, the carrying value of the investment in bonds should be adjusted to the fair value. The difference between the carrying amount before adjustment and fair value should be reported as investment securities impairment loss in the income statement. However, when the fair value of the investment in bonds is restored in a subsequent period, the restored amount should be recognized as restoration of investment securities impairment loss in the income statement, with limitation of previously recognized impairment loss.

(7) When marketable debt securities are reclassified to investment securities, the reclassified securities should be reported at the fair value, which is the closing price as of the balance sheet date. The difference between the previous carrying amount and the restated balance sheet amount should be reported as gain or loss on marketable securities in the income statement.

(8) When held-to-maturity bonds are reclassified to other investment in bonds due to a change in the investor's objectives, the investment in bonds should be reported at fair value as of the balance sheet date. The difference between the carrying amount before reclassification and the fair value should be accounted for in accordance with paragraph (3).

(9) Valuation gain or loss recognized pursuant to paragraph (3) should be accounted for in accordance with [Article 59 paragraph (10) & paragraph (11)].

(10) Article 59 paragraph (9) should be applied in determining the unit cost of investment in bonds.

(11) The face value, the unamortized cost and the fair value of investment in bonds should be disclosed in a note to the financial statements.

§61. Stocks Acquired Due to Investee's Transfer of Capital Surplus or Retained Earnings to Paid-in Capital

When the investor acquires stocks or similar equity securities (including stock dividends) as a result of the investee company's transfer of capital surplus and retained earnings to capital stock, the acquisition should not be accounted for as an increase in the value of the investor's investments.

§62. Measurement of Tangible Assets

(1) The acquisition cost of tangible assets should be determined by adding incidental expenditures to the purchase price or production costs of the asset.

(2) Fully depreciated assets should continue to be reported at their salvage or nominal value until abandonment or disposition.

(3) For depreciation of tangible assets, a systematic and reasonable depreciation method, such as straight-line method, declining-balance method, units-of-production method should be employed.

§63. Measurement of Intangible Assets

(1) The acquisition cost of intangible assets should be determined by adding incidental costs to the purchase price or production costs of the asset.

(2) An intangible asset should be amortized using either straight-line method or unit-of-production method, whichever is more reasonable, over a reasonable period from the date the asset can be put into use. However, amortization period of intangible assets should not exceed twenty (20) years unless otherwise provided in the relevant statutes or contracts, which grant exclusive right to the holder.

§64. Measurement of Liabilities

In principle, all financial obligations that an enterprise has to pay should be reported as liabilities in the balance sheet.

§65. Accounting for Discount or Premium on Bonds Payable

The discount or premium on bonds payable should be amortized over the period of time that the bonds are outstanding using the effective interest rate method. The amortization of discount or premium should be added to or subtracted from interest expense over the life of the bond.

§66. Measurement of Receivables and payables at Present Value

(1) Receivables and payables incurred through long-term installment transactions, long-term cash loans/borrowings or similar transactions should be measured at present value if the difference between the face value and the present value is material.

(2) The present value mentioned in paragraph (1) is the total amount to be received from the receivable and total amount to be paid for the payable, discounted at the appropriate interest rate.

(3) The interest rate mentioned in paragraph (2) should be the effective interest rate implicit in the transaction concerned. However, when this interest rate is not available or the difference between this rate and the market interest rate prevailing for the same or similar receivables or payables in the related market (hereinafter referred to as "market rate") is material, an appropriate interest rate based upon the market rate should be applied. In case it is difficult to determine the market rate, a weighted average of the debtor's borrowing rates may be used.

(4) The difference between the face value and the present value of the receivable or payable mentioned in paragraph (1) should be recorded as a present value discount and directly deducted from the face value of the related receivable or payable. A note disclosure should provide the discount rate used, time period, and accounting method.

(5) The present value discount mentioned in paragraph (4) should be amortized using the effective interest method, and the amortization should be recognized as interest expense or interest revenue.

§67. Restructuring of Receivables and Payables

(1) When contractual terms of the receivable or the payable, such as principal amount, interest rate and repayment period are modified unfavorably for the creditor by a court imposition such as commencement of reorganization or composition procedures, or by a mutual agreement between the creditor and the debtor, thereby making the carrying amount of the restructured receivable or the payable materially different from the present value, the receivable or the payable should be reported at the present value. The difference between the carrying amount before adjustment and the present value should be recognized as bas debt expense on the part of the creditor, and as gain on exemption of debt on the part of the debtor.

(2) When the difference between the carrying amount and the present value of the receivable is accounted for as has debt expense pursuant to paragraph (1), the difference should be first offset against an existing allowance for bad debts established for the receivable, if any, and remaining balance should be recognized as bad debt expense.

(3) The discount rate to be used to compute the present value of the receivable or the payable being restructured should be an appropriate interest rate prevailing at the transaction date of the concerned receivable or the payable in accordance with Article 66 paragraph (3).

(4) The difference between the carrying value (after deducting reduction of principal amount) and the present value should be reported as a present value discount and directly deducted from the carrying value of the related receivable or the payable. Information on the discount rate used to compute the present value, modified principal amount, interest rate, and repayment period after restructuring should be disclosed in a note to the financial statements.

(5) The present value discount mentioned in paragraph (4) should be amortized in accordance with Article 66 paragraph (5).

§68. Translation of Assets and Liabilities Denominated in Foreign Currencies

(1) Monetary assets and liabilities denominated in a foreign currency should be translated into the Korean currency at the appropriate current exchange rate as of the balance sheet date.

(2) Non-monetary assets and liabilities denominated in a foreign currency should be translated into the Korean currency at the applicable historical exchange rate prevailing at the date of the acquisition of asset or the incurrence of liability.

(3) Gain or loss on foreign currency translation arising in conjunction with the translation procedure mentioned in paragraph (1) should be reported in the income statement. Detailed information on assets and liabilities denominated in foreign currencies, foreign currency translation computations, and resulting translation gain or loss should be disclosed in a note to the financial statements.

(4) Monetary assets and liabilities denominated in foreign currencies mentioned in paragraph (1), such as cash and cash equivalents, trade receivables or trade payables, represent assets and liabilities that are to be received or paid in fixed amount of cash in accordance with underlying contracts or other basis. However, those assets and liabilities which have both monetary and non-monetary characteristics, such as marketable securities, should be classified according to the purpose of holding or the nature of the assets or liabilities.

§69. Translation of Foreign Currency Financial Statements of Overseas Branches

(1) Article 68 should be applied in translating into the Korean currency the assets and liabilities in foreign currencies of overseas business branches, divisions or subsidiaries subject to the equity method of accounting. However, for foreign entities whose operations are run independently from those of the parent company, assets and liabilities may be translated at the current exchange rate as of the balance sheet date, and the capital (stockholders' equity) may be translated by using the applicable historical exchange rate at the transaction date. In this case, revenue and expense items may be translated by using the historical rate at the transaction date or the weighted-average exchange rate for the reporting period.

(2) Translation gains or losses resulting from the translation procedures specified in the second part of paragraph (1) should be offset against each other, and the resulting net translation gain or loss should be reported in the capital adjustments, shown as overseas operation translation debit or credit. A note disclosure should provide the details on overseas operation translation debit or credit.

(3) Overseas operation translation debit or credit mentioned in paragraph (2) should be offset against subsequent overseas operation translation debit or credit, and should be reported as an extraordinary gain or loss in the accounting period in which the related foreign branch, division or subsidiary subject to the equity method of accounting is liquidated, closed or disposed.

§70. Accounting for Derivatives

(1) Contractual rights and obligations arising from a derivative financial instrument contract should be measured and reported at fair value on the balance sheet as either assets or liabilities.

(2) The gain or loss on a derivative instrument should be recognized in current earnings. However, for the gain or loss on the hedging derivative instrument held or issued to hedge a risk, a different method of accounting may be employed to reflect the risk hedging activities.

(3) For derivatives mentioned in paragraph (1), the purpose and details of transactions should be disclosed in a note to the financial statements. In addition, when the objective of derivative transactions is risk hedging, details of items being hedged, scope of risk hedging, accounting method used to reflect the risk hedging activities, and deferred gain or loss amount should be disclosed.

§71. Accounting for Government Grants

When an asset is acquired with a portion of the acquisition cost subsidized by a government grant or a customers' contribution, such grant and contribution should be presented as a deduction from the cost of the asset. The grant or contribution should be written off against depreciation expense of the related asset over the asset's useful life, reducing the depreciation expense recognized on the asset. Any remaining balance of the government grant or customer's contribution at the asset's disposal date should be added to or subtracted from the gain or loss on the asset's disposal.

§72. Accounting for Capital Adjustments

Capital adjustments should be written off as follows and the amount not written off should be reported in the balance sheet:

1.	Discount on stock issuance should be written off in equal amount over a period not exceeding three (3) years beginning from the year of the stock issuance. The write-off of discount on stock should be charged to an appropriation of retained earnings. However, if the company's retained earnings is not sufficient to absorb the write-off or the company has accumulated deficits, the write-off may be postponed to subsequent periods.

2.	Dividends paid during the pre-operating period should be written off when a company declares a dividend of 6/100 or more of par value after starting operation. The pre-operating dividends to be written off should be equal to the amount of dividend that exceeds 6/100 of par value. The write-off should be charged to an appropriation of retained earnings.

3.	Stock dividends distributable should be transferred to relevant capital accounts at the time of stock issuance.

§73. Accounting Changes

(1) Changes in accounting methods and changes in accounting estimates may be allowed when the change would result in more appropriate presentation of events or transactions in the financial statements or when the change is required due to accounting standard-setting body's adoption of a new accounting method or deletion of a previously used accounting method.

(2) The cumulative effect of changing to the new accounting method on the assets or liabilities should be reflected in the retained earnings carried over from prior period. A note disclosure should provide the following proforma information that would have been reported for the past three (3) years if the newly adopted accounting method had been applied during all periods affected: ordinary income, net income, ordinary income per share, net income per share, and materially changed accounts.

(3) Changes in accounting estimates should be reflected in the current and future periods.

(4) When changes in accounting methods or accounting estimates are reported, the description of changes, the reason for the change and the effect on the current period's financial statements should be disclosed in a note to the financial statements.

§74. Contingencies

A contingency is an existing situation involving uncertainty as to possible gain or loss that will ultimately be resolved when one or more future events occur or fail to occur. Contingencies should be accounted for as follows:

1.	When it is certain that a decrease in net assets has been incurred as of the balance sheet date and the amount of loss can be reasonably estimated, the loss should be reported in the financial statements and details should be disclosed in a note to the financial statements;

2.	When it is certain that a decrease in net assets has been incurred as of the balance sheet date but the amount of loss cannot be reasonably estimated, or when it is not certain that a decrease in net assets has been incurred, a note disclosure should be made of the following: the nature of the contingency, the estimated financial effect of the contingency when resolved, and the reason why an estimate of loss cannot be made; and

3.	Gain contingencies should not be reported in the financial statements until confirmed. However, the gain contingency should be disclosed in a note when it is certain to occur and the amount of gain can be reasonably estimated.

§75. Events Occurring after Balance Sheet Date

Significant economic events that take place after the balance sheet date, but prior to the actual issuance of the financial statements should be accounted for as follows:

1.	When the subsequent event affects the estimates used in preparing the financial statements by providing additional evidence about conditions that existed at the balance sheet date, the effect of the event should be appropriately reflected by making needed adjustments to assets and liabilities;

2.	Subsequent events which do not require adjustments to the financial statements but which can be relevant information to financial statement users should be disclosed in a note to the financial statements;

3.	For subsequent events which are not related to the conditions existed at the balance sheet date, assets and liabilities are not affected. However, unusual changes in the condition of assets and liabilities after the balance sheet date should be disclosed in a note the financial statements.

CHAPTER V

STATEMENT OF APPROPRIATION OF RETAINED EARNINGS

§76. Statement of Appropriation of Retained Earnings

(1) The statement of appropriation of retained earnings should provide all changes and adjustments to retained earnings in order to report clearly appropriations of retained earnings.

(2) The statement of disposition of accumulated deficit should provide all changes and adjustments to accumulated deficit to report clearly dispositions of deficit.

(3) Annexed forms 7 and 8 provide sample formats for the statement of appropriation of retained earnings and the statement of disposition of accumulated deficit, respectively.

§77. Contents of Statement of Appropriation of Retained Earnings

The statement of appropriation of retained earnings should include the following items:

1.	Retained earnings before appropriations

This account is presented as the net of unappropriated retained earnings (indisposed accumulated deficit) carried over from prior period, the cumulative effect of changes in accounting methods, prior period error corrections (only when the previous year's financial statements presented for comparative purposes are restated to correct for prior periods' errors), interim dividends and current year's net income (net loss).

2.	Transfers from voluntary reserves

When the previously established voluntary reserves are transferred to retained earnings before appropriations to be available for current period's appropriations, return of those reserves should be presented as an addition to retained earnings before appropriations.

3.	Appropriations of retained earnings

Appropriations of retained earnings should be presented divided into the following categories:

a. Legal reserve;

b. Other statutory reserves;

c. Write-offs charged to appropriations of retained earnings:

Include appropriations of retained earnings for write-off of discount on stock issuance, write-off of pre-operating dividends, write-off of loss on disposition of treasury stock, and redemption costs of retired shares, etc.

d. Dividends:

Current period's dividends should be presented classified into cash dividends and stock dividends. Dividend per share and dividend rate on par value by class of stock should be presented as parenthetical notations. Dividend yield, payout ratio and the computation of dividends should be presented in a note to the financial statements.

e. Voluntary reserves.

4.	Unappropriated retained earnings to be carried over to subsequent period

This account is presented by deducting the current periods' appropriations of retained earnings from the sum of the retained earnings before appropriations and the transfer from voluntary reserves.

§78. Contents of Statement of Disposition of Accumulated Deficit

The statement of disposition of accumulation deficit should contain the following accounts:

1.	Accumulated deficit before disposition

This account is presented as the net of indisposed accumulated deficit (unappropriated retained earnings) carried over from prior period, the cumulative effect of changes in accounting methods, prior period error corrections (only when previous year's financial statements presented for comparative purposes are restated to correct for the prior period's errors), interim dividends and current year's net income (loss).

2.	Disposition of accumulated deficit

Disposition of accumulated deficit should be made in the following order:

a. Transfer from voluntary reserves;

b. Transfer from other statutory reserves;

c. Transfer from legal reserve;

d. Transfer from capital surplus.

3.	Indisposed accumulated deficit carried over to subsequent period

This account is presented by deducting the current period's disposition of accumulated deficit from accumulated deficit before disposition.

§79. Prior Period Error Corrections

(1) Prior period error corrections should include material gains or losses related to correction of errors in financial statements of prior periods that are attributable to events and transactions occurred in prior periods.

(2) Accounting errors mentioned in paragraph (1) include errors in the application of accounting principles, errors in accounting estimates, errors in classification, errors in computation, and oversight or misuse of facts.

(3) Changes in accounting estimates arising from the occurrence of new event or as the result of new information or additional experience should not be treated as prior period errors.

(4) The cumulative effect of prior period error corrections on the related assets and liabilities should be reflected in the retained earnings, and the financial statements of prior periods presented for comparative purposes should be restated for the error.

(5) Prior period error corrections should be classified into gains on prior period error corrections and losses on prior period error corrections.

(6) The reason for, nature and amount of prior period error corrections should be disclosed in a note to the financial statements.

CHAPTER VI

STATEMENT OF CASH FLOWS

§80. Statement of Cash Flows

(1) The statement of cash flows should present relevant information about the cash receipts and cash payments of an enterprise during an accounting period in order to report clearly changes in its cash and cash equivalents.

(2) The cash mentioned in paragraph (1) refers to cash and cash equivalents defined in Article 13 subparagraph 1 (hereinafter referred to as "cash" in this chapter).

(3) The format of the statement of cash flows is provided in annexed Forms 9 and 10.

§81. Presentation of Statement of Cash Flows

The statement of cash flows should report cash receipts and cash payments during a period classified into three different activities: operating, investing, and financing activities. It should be prepared in a format with the total net increase (decrease) in cash reported reconciling the beginning and ending cash balances for the period.

§82. Cash Flows from Operating Activities

(1) Operating activities, in general, involve activities of producing products, sales and purchases of goods and services. Operating activities include all transactions and events that do not belong to investing activities mentioned in Article 84 or financing activities mentioned in Article 85.

(2) Cash inflows from operating activities comprise cash receipts from selling goods and providing services (including collections of trade receivables), cash receipts from interest and dividends, and cash receipts from all other transactions that are neither investing nor financing activities.

(3) Cash outflows for operating activities comprise cash payments to purchase inventories such as raw materials and merchandise (including payments on trade payables), cash payments to suppliers of other goods and services and employees, cash payments for income taxes (excluding special value added tax levied on disposal of tangible asset), cash payments for interest, and cash payments for all other transactions that are neither investing nor financing activities.

§83. Reporting of Cash Flows from Operating Activities

(1) The cash flows from operating activities should be presented using either the direct method or the indirect method.

(2) Under the direct method, the statement of cash flows reports directly total amounts of revenue and expense items on cash basis, by presenting major classes of operating cash receipts classified by source and cash disbursements classified by use. To derive total cash receipts and payments for each major category, each cash transaction involving revenue and expense items could be analyzed to determine the amounts directly. Another method to determine these amount is converting items reported in the income statement from accrual basis to cash basis by adjusting sales and cost of goods sold for non-cash items and changes in inventories, trade receivables and trade payables.

(3) Under the indirect method, the statement of cash flows reports cash flows from operating activities by adding or deducting non-cash items and changes in assets and liabilities resulting from operations to or from net income (loss) for the period:

1.	Expense involving no cash outflows

Include expenses which do not affect cash, and expense incurred from investing and financing activities.

2.	Revenues involving no cash inflows

Include revenues which do not affect cash, revenues earned in connection with investing and financing activities.

3.	Changes in operating assets and operating liabilities

Include increases or decreases in current assets and current liabilities as a result of operating activities.

§84. Cash Flows from Investing Activities

(1) Investing activities include transactions involving the making and collecting of loans and acquiring and disposing of marketable securities, investment assets, tangible assets and intangible assets.

(2) Cash inflows arising from investing activities include cash receipts from the collecting of loans and disposing of short-term financial instruments, marketable securities, investment assets, tangible assets and intangible assets.

(3) Cash outflows for investing activities include cash disbursements for the making of loans, and the purchase of short-term financial instruments, marketable securities, investment assets, tangible assets and intangible assets. The cash disbursements made for the purchase before and after the acquisition of assets are included in the cash outflows for investing activities.

§85. Cash Flows from Financing Activities

(1) Financing activities include transactions affecting the liabilities and stockholder' equity such as borrowing money from creditors and repaying the amounts borrowed, issuance of new shares and payments of dividends.

(2) Cash inflows from financing activities include cash receipts from short-term or long-term borrowings, issuance of notes and bonds, and issuance of new shares.

(3) Cash outflows for financing activities include cash disbursements for payment of dividends, reduction of capital stock, acquisition of treasury stock, repayment of borrowings, and payment for liabilities incurred on acquisition of non-inventory assets.

§86. Preparation Methods and Note Disclosures

(1) The statement of cash flows should be prepared in accordance with the following provisions:

1.	The total cash inflows and outflows should be reported without offsetting the increase or decreases in the interim period. However, for some cash receipt and disbursement items, the net increase (decrease) may be reported, when the total amount of receipts or disbursement are large with frequent transactions and short maturity periods.

2.	When cash is received through issuance of bonds or capital stock, the issuance price should be presented.

(2) The following should be disclosed in a note to the financial statement.

1.	Non-cash transactions

Significant non-cash transactions which do not affect cash, such as acquisition of tangible assets by stock issuance, purchase of tangible assets on an installment payment basis, reclassification of retained earnings to capital stock, decrease in capital without consideration, stock dividends, and conversion of convertible bonds.

2.	When the statement of cash flows is prepared using the direct method pursuant to Article 83 paragraph (2), net income (loss) and items of adjustments to net income (loss) to compute cash flow from operations.

CHAPTER VII

NOTES AND SUPPLEMENTARY SCHEDULES

§87. Additional Note Disclosures

In addition to note disclosures provided in Article 11 paragraph (3), Article 13 subparagraph 2, Article 14, Article 17 subparagraph 1 & 5, Article 19 paragraph (2), Article 22 paragraph (2), Article 24 subparagraph 1 & 2, Article 25 paragraph (1), Article 27 paragraph (2), Article 29 paragraph (2), Article 30 paragraph (2), Article 33 subparagraph 3, Article 38 paragraph (2), Article 39 paragraph (6), Article 52 paragraph (3), Article 54, Article 55 paragraph (4) paragraph (7), Article 56 paragraph (4), Article 58 paragraph (5), Article 59 paragraph (10) paragraph (12), Article 60 paragraph (9) paragraph (11), Article 66 paragraph (4), Article 67 paragraph (4), 68 paragraph (3), Article 69 paragraph (2), Article 70 paragraph (3), Article 73 paragraph (2) paragraph (4), Article 74 subparagraph 1 to Article 75 subparagraph 2 & 3, Article 77 subparagraph 3, Article 79 paragraph (6), Article 86 paragraph (2) & Article 89 paragraph (2), each of the following should be disclosed in notes to the financial statements:

1.	General information about the business enterprise and its operations, and recent changes in the business environment and business strategy;

2.	Description of all significant accounting policies adopted by the company, measurement methods for assets and liabilities, and details of significant unrealized holding gain or losses on assets and liabilities;

3.	Names of the related parties having a special relationship with the company and details of the following transactions with them:

a. Selling and buying transactions;

b. Short-term and long-term payables and receivables;

c. Number of stocks issued by the related parties, stockholding ratio, acquisition cost, market value or net asset value, and book value of stocks, and book value of debt securities issued by the related parties

d. Descriptions of collateral and guarantees of obligations provided by and provided for the company. The names of financial institutions, amount of borrowings, and the dates of borrowings and other relevant information should also be disclosed.

4.	Details of insurance policies, amount insured, and description of assets covered;

5.	The value of land estimated by the National Tax Office (including land classified as tangible assets and land classified as investment properties);

6.	Research and development costs incurred in the current period (classified as intangible assets and ordinary development expense);

7.	Description of the nature and amount of statutory restrictions on dividend payment (other than capital reserve and legal reserve);

8.	Details of shares which are restricted as to voting rights under the statutes such as crossly held stocks;

9.	The nature and possible outcome of pending litigations;

10.	Details of guarantees provided or assets pledged as collateral for the company's debts or on behalf of others. Details of assets of other parties pledged as collateral or guarantees provided by other parties on behalf of the company. Collateral and guarantees provided on behalf of the persons having a special relationship are excluded;

11.	When capital surplus or retained earning were appropriated to eliminate an accumulated deficit within two years prior to the current year, description of accounts used, appropriated amount and the date of a stockholders' meeting to adopt a resolution should be disclosed;

12.	Account titles and amounts of manufacturing costs and selling and administrative expenses which are necessary in calculating values added, such as salaries, severance and retirement benefits, other employee benefits, rent expense, depreciation expense, taxes and dues, etc.;

13.	The nature and consequence of natural disasters, significant accidents, strikes, fire, etc.;

14.	The company's environmental standards and policies, safety and accident related matters, environment-related investments, consumption of resources and energy matters related to occurrence and treatment of by-products and scraps;

15.	Costs incurred for employee welfare and contributions made to organizations in society;

16.	Recruiting expenses, expenses for training and education and depreciation of related tangible assets for the recent three years in connection with the development of expert human resources (only limited for the cases which are extraordinary and large in amount);

17.	Segmental information;

18.	Information on discontinued segments;

19.	When convertible bonds or warrant bonds are issued, details on issued securities such as issuance price, conversions terms;

20.	Significant violation of loan agreements;

21.	Other matters that have significant impact on the financial statements, or are necessary for understanding of the financial statements.

§88. Supplementary Schedules

(1) The following should be prepared as supplementary schedules to the financial statements.

1	Schedule of marketable securities (Form 11);

2.	Schedule of investment securities (Form 12;

3.	Schedule of receivable from and payables to the related parties (Form 13);

4.	Schedule of inventories (Form 14);

5.	Schedule of investment properties (Form 15);

6.	Schedule of tangible assets (Form 16);

7.	Schedule of intangible assets (Form 17);

8.	Schedule of short-term borrowings (Form 18);

9.	Schedule of long-term borrowings (Form 19);

10.	Schedule of bonds payable (Form 20);

11.	Schedule of guarantee of indebtedness (Form 21);

12.	Schedule of allowances and provisions (Form 22);

13.	Schedule of manufacturing costs (Form 23);

14.	Schedule of sales revenues (Form 24);

15.	Schedule of cost of goods sold (Form 25);

16.	Schedule of selling and administrative expenses (Form 26);

17.	Schedule of depreciation (Form 27);

18.	Schedule of capital surplus and retained earnings (Form 28).

(2) The following additional schedules may be prepared:

1.	Schedule of cash and cash equivalents;

2.	Schedule of trade receivables;

3.	Schedule of loans receivable;

4.	Schedule of other quick assets;

5.	Schedule of investment assets;

6.	Schedule of disposal of investment assets;

7.	Schedule of disposal of tangible assets;

8.	Schedule of trade payables;

9.	Schedule of repair expenses;

CHAPTER VIII

SUPPLEMENTARY PROVISIONS

§89. Special Provisions for Small-Sized Enterprises

(1) Small-sized enterprises (excluding listed corporations and corporations registered with the Financial Supervisory Commission) may present their financial statement in accordance with the provisions provided in the following paragraphs. Small-sized enterprises refer to those defined in the Basic Act on Small and Medium Enterprises:

1.	Notwithstanding Article 37, short-term service sales revenue and short-term contract sales revenue may be recognized at the date services have been rendered or products have been completed; long-term installment sales revenue and revenue from disposing land, buildings or other assets on long-term installment sales contract may be recognized at the date when payment is due;

2.	Notwithstanding Article 52, income tax expense may be measured as the amount to be paid under the Corporate Income Tax Act.

3.	Notwithstanding Article 54, ordinary income per share and net income per share may be omitted in the financial statements;

4.	Notwithstanding Article 66, receivables and payables arising from long-term installment sales and long-term borrowing may be recorded at their face amount;

5.	Article 87 subparagraph 17,18 are not applied.

(2) When paragraph (1) is applied, the contents should be disclosed in a note to the financial statements.

(3) In case small-sized companies which have applied paragraph (1) become not eligible to apply paragraph (1) because of getting listed on the stock exchange or decide not to apply it, it can be applicable to previous transactions.

§90. Industry Accounting Standards and Other Implementation Details

Industry accounting standards or other detailed guidelines necessary in implementing these Standards may be separately provided.

§91. Accounting Standards for Companies Not Subject to External Audit

These Standards may be applied in financial reporting by companies not subject to external audit under the Act.

§92. Statements of Financial Accounting Standards

(1) When accounting standards are established or amended, Statements of Financial Accounting Standards may be issued in order to improve harmonization with international standards and maintain consistency in application and interpretation of accounting standards.

(2) A Statement of Financial Accounting Standards issued in accordance with paragraph (1) above supersedes the related provisions in these Standards.

(3) Interpretations of Financial Accounting Standards may issued, in accordance with Article 90, as detailed guidelines.

(4) The formats and contents of Statements and Interpretations of Financial Accounting Standards prescribed in paragraphs (1) and (3) shall be determined by the Korea Accounting Standards Board.

Addenda

(December 12, 1998)

§1. Effective Date

These Standards shall be effective ON December 12, 1998.

§2. General Application

Initial application of these Standards shall be as of the first fiscal year beginning on or after the effective date. However, these Standards may be adopted for the fiscal year to which the effective date belongs.

§3. Interim Measure

For the items recorded in the financial statement arising from transactions occurred before the application of these Standards, the previous Standards should be consistently applied except for those items which are specified otherwise in this addendum. However, these Standards may be applied retroactively to exiting transactions. In that case, the effect of change in accounting policy on the financial statements should be accounted for pursuant to Article 73.

§4. Special Application to Asset Revaluation

When an enterprise has revalued its assets by December 31 of 2000 under the Asset Revaluation Act, those assets should continue to be recorded on the basis of the revalued amounts, notwithstanding the provisions provided in these Standards.

§5. Interim Measure on Deletion of Deferred Assets

Deferred assets and intangible assets, which were recorded in accordance with the previous Standards, should be reclassified according to the provisions in these Standards. Pre-operating costs recorded under the previous Standards should be presented as organization costs. However, when changing the amortization period of an intangible asset recorded in accordance with these Standards, it should be considered a change in accounting estimate and [A Article 3p] should not be applied.

§6. Interim Measure on Valuation of Assets and Liabilities

Of the gain or loss on valuation of assets and liabilities which are recognized by initial application of Article 56, Article 57, Article 59, Article 66, Article 67 of these Standards, the portion of gain or loss which should be allocated to the accounting periods prior to the application date of these Standards should be accounted for as an addition to or a deduction from the unappropriated retained earnings carried over from prior years or the capital adjustments depending upon its nature.

§7. Interim Measure on Capitalization of Interest Costs During Construction

Article 55 paragraph (4) may apply to the assets which are in the process of being manufactured, purchased or constructed on the application date of these Standards.

§8. Interim Measure on Deferred Foreign Exchange Transaction Debits or Credits.

Deferred foreign change transaction debits or credits reported in the balance sheet of the fiscal year preceding the initial application of these Standards should be added to or deducted from the unappropriated retained earnings carried over from prior years in the fiscal year of initial application.

§9. Interim Measure on Translation of Financial Statements of Overseas Branches

Overseas operations translation debits or credits reported in the balance sheet of the fiscal year preceding the initial application of these Standards should be amortized or reversed in the fiscal year of initial application. This provision does not apply to the overseas branches subject to Article 69 paragraph (1)p.

§10. Interim Measure on Valuation Allowance for Investment Securities

Valuation allowance for investments in non-marketable equity securities and equity securities issued by affiliated companies, reported in the balance sheet of the preceding fiscal year in accordance with A Article 6 of the previous addendum, should be reversed on the date of initial application of these Standards and the reversed valuation allowance should be added to the unappropriated retained earnings carried over from prior years.

§11. Interim Measure on Employees' Severance Liability

Any remaining deficiency in the accrued liability for employees' retirement and severance benefits, for which additional accruals were allowed pursuant to A Article 7, should be accrued all at once at the date of initial application of these Standards. In this case, the additionally accrued employee' severance liability should be deducted from the unappropriated retained earnings carried over from prior years.

§12. Interim Measure on Comparative Presentation

Notwithstanding Article 5 paragraph (2), financial statements for the fiscal year of initial application of these Standards may be prepared only for the fiscal year.

§13. Interim Measure on Accounting Procedure for Construction Industry

Notwithstanding Article 4 of the Accounting Standard for Construction Industry, the percentage-of-completion method should be used to account for short-term construction contracts and subscription sales undertaken by the contractors.

Addendum

(August 25, 2000)

§1. Effective Date

These Standards shall be effective on August 25, 2000.