The measurement of benefit obligations and net periodic cost (income) is based on estimates and assumptions  approved by the Company’s management such as compensation, age and seniority, as well as certain  assumptions, including estimates of discount rates, expected return on plan assets and rate of compensation  increases.  For employees under defined contribution pension plans, pension costs are recorded based on the actual  contributions made to employees’ individual pension accounts during their service periods.  The costs of providing services are recognized as incurred.  Employee stock options granted on or after January 1, 2008 are accounted for using the fair value method in  accordance with SFAS No. 39, “Accounting for Share-based Payment.” The adoption of SFAS No. 39 did not  have any impact on the Company.  Employee stock options granted between January 1, 2004 and December 31, 2007 were accounted for under  the interpretations issued by the Accounting Research and Development Foundation (the “ARDF”). The  Company adopted the intrinsic value method, under which compensation cost was amortized over the vesting  period.  The Company applies inter-period allocations for its income tax, whereby deferred income tax assets and  liabilities are recognized for the tax effects of temporary differences and unused tax credits. Valuation  allowances are provided to the extent, if any, that it is more likely than not that deferred income tax assets  will not be realized. A deferred tax asset or liability is classified as current or noncurrent in accordance with  the classification of its related asset or liability. However, if a deferred tax asset or liability does not relate to  an asset or liability in the financial statements, then it is classified as either current or noncurrent based on the  expected length of time before it is realized or settled.  Any tax credits arising from purchases of machinery, equipment and technology, research and development  expenditures, personnel training, and investments in important technology-based enterprises are recognized  using the flow-through method.  Adjustments of prior years’ tax liabilities are added to or deducted from the current year’s tax provision.  Income taxes (10%) on undistributed earnings are recorded in the year of stockholders approval which are the  year subsequent to the year the earnings are generated.  Foreign-currency transactions other than derivative contracts are recorded in New Taiwan dollars at the rates  of exchange in effect when the transactions occur. Exchange gains or losses derived from foreign-currency  transactions or monetary assets and liabilities denominated in foreign currencies are recognized in earnings.  At the balance sheet date, monetary assets and liabilities denominated in foreign currencies are revalued at  prevailing exchange rates with the resulting gains or losses recognized in earnings.  Foreign-currency Transactions Income Tax  Share-based Compensation Expense Recognition F-25