In ROC, a 10% tax is imposed on unappropriated earnings (excluding earnings from foreign consolidated  subsidiaries). Under ROC GAAP, the Company records the 10% tax on unappropriated earnings in the  year of stockholders’ approval.  Under US GAAP, the 10% tax on unappropriated earnings is accrued during the period the earnings arise  and adjusted to the extent that distributions are approved by the stockholders in the following year.  According to ROC regulations and the Company’s Articles of Incorporation, a portion of the Company’s  distributable earnings should be set aside as bonuses to employees and remuneration to directors and  supervisors. Such bonuses and remuneration give rise to the following GAAP differences due to the  nature, measurement and timing of recording the transaction.  Under ROC GAAP:  Under US GAAP:  2) Measurement and recognition - such bonuses to employees and remuneration to directors and  supervisors are initially accrued based on management’s estimate pursuant to the Articles of  Incorporation of the Company. However, the Company’s stockholders ultimately decide the amount  and form of bonus (i.e., cash, stock or combination) at the stockholders’ meeting held in the following  year. Any difference between the amount initially accrued and actual amount of the bonuses approved  by the stockholders is adjusted subsequently. If all or a portion of such bonuses and remuneration are  in the form of shares, compensation expense is recognized at the fair value of the Company’s stock  price on the relevant grant date which is not until after stockholders’ approval in the following year  and subsequently remeasured at fair value until the settlement date in accordance with the share-based  payment guidance.  F-61 1) Nature - employee bonuses and remuneration of directors and supervisors are treated as compensation  expenses.  2) Measurement and recognition - such bonuses to employees and remuneration to directors and  supervisors are initially accrued based on management’s estimate pursuant to the Articles of  Incorporation of the Company. If the amounts initially accrued are significantly different from the  amounts proposed subsequently by the board of directors in the following year, the difference needs to  be retroactively adjusted. Otherwise, any difference between the amount initially accrued and actual  amount of the bonuses approved by the stockholders is adjusted subsequently. If all or a portion of  such bonuses and remuneration are in the form of shares, compensation expense remains the same  but the actual number of shares to be distributed are determined by dividing the fair value of the  Company’s stock price as of one day prior to the stockholders’ meeting held in the following year.  1) Nature - employee bonuses and remuneration of directors and supervisors are treated as an expense  rather than an appropriation of retained earnings starting in 2008. Before 2008, the bonuses were  treated as appropriations of retained earnings.  c. Employee bonuses and remuneration to directors and supervisors  b. 10% tax on unappropriated earnings 