Accounting Issues Description of Differences The recognition of pension gains (losses) Under ROC GAAP, pension gains (losses) are recognized based on the  corridor approach and the amounts are amortized over the average  remaining service life of active plan participants. However, under IFRSs,  pension gains (losses) resulting from defined benefit plans should be  recognized as other comprehensive income immediately and subsequent  reclassification to earnings is not permitted. The settlement of pension at the time of privatization Since the effective date of IAS 19 "Employee Benefits" in 1999 to when the  Company underwent privatization in 2005, the settlement impact upon  privatization calculated according to the actuarial report under IAS19  shall be recorded as donation capital under additional paid-in capital. The recognition of revenue from providing fixed line  connection service Prior to privatization, according to the laws and regulations applicable  to state-owned enterprises in Taiwan, the Company recorded revenue  from providing fixed line connection service at the time the service was  performed. Under IFRSs, following the revenue recognition guidance,  the above service revenue should be treated as deferred income and  recognized over the time when the service is continuously provided. Therefore, the Company shall retrospectively adjust the deferred income. The recognition of house and land revenue of the  construction corporation Under ROC GAAP, when the construction contracts meet several specific  conditions, the Company could use percentage of completion method to  recognize related revenues. Under IFRSs, when construction projects do  not meet the criteria in IFRIC15.11, IAS11 does not apply. The Company  could only recognize the revenues when the projects are completed and  sold out based on IAS 18. Since the Company may choose some exemptions in IFRS 1, some material differences showed above may not cause  significant impact at the time of transition from ROC GAAP to IFRSs. c.  The Company has prepared the above assessments in compliance with (a) the 2010 version of the IFRSs translated by the  ARDF and issued by the FSC and (b) the Guidelines Governing the Preparation of Financial Reports by Securities Issuers  amended and issued by the FSC on December 22, 2011. These assessments may be changed as the FSC may issue new  rules governing the adoption of IFRSs, and as other laws and regulations may be amended to comply with the adoption of  IFRSs. Actual results may differ from these assessments. PART III F-62