The opinion of Mei-Yen Chiang, CPA with Deloitte & Touche, is set forth briefly as below:
- I. The adjustments in accounting estimates have demonstrated compliance with the relevant requirements under Article 6 of the Regulations Governing the Preparation of Financial Reports by a Securities Issuer.
- II. The Asset Review Committee of Taiwan High Speed Rail Corporation (the "Corporation") approved the adjustments of the estimated amortization lives of certain operating concession assets under intangible assets, following their reviews of the reasons for adjusting the period of estimated amortization lives, as well as examining the relevant supporting documentation. The table below shows the assets amortization lives before and after the adjustments:
Operating concession assets subject
to adjustments in accounting estimates |
Before the adjustment |
After the adjustment |
| Items |
Estimated amortization life (years) |
Estimated amortization life (years) |
| Buildings |
i.Wayside building and building service |
50 |
10-50 |
| Machinery and equipment |
ii.Maintenance equipment and tools |
5-35 |
5-35 |
| iii.Computer and technology equipment |
2.5-35 |
2.5-35 |
| Transportation equipment |
iv.Signaling system |
5-35 |
5-35 |
| v.Rolling stock system |
7-35 |
7-35 |
- III. The reasons for the above mentioned adjustments of estimated amortization lives are described as follows:
- The estimated amortization lives of wayside building and building service under the category of buildings, Which considering that the building material is foam insulation board rather than reinforced concrete, the estimated useful lives of temporary modular buildings, have been shortened to 10 years from 50 years.
- The estimated amortization lives of the shoulder cleaning devices of the train wash plant, which are classified as maintenance equipment and tools under the category of machinery and equipment, have been shortened to 10 years from 35 years. This is after taking into account the actual usage of the equipment including, that the constant contact with chemical cleaning agents is causing corrosion and deterioration of the said equipment, and the assessment of the maintenance staff based on their experience of performing maintenance to date.
- The estimated amortization lives of MMIS Server Cabinets of the maintenance information system, classified as Computer and Technology Equipment under the category of machinery and equipment, have been adjusted from 35 years to 15 years. This is after taking the equipment’s usage status, and considering factors, such as the original manufacturer has stopped producing and stopped providing support for such a product.
- The estimated amortization lives of data acquire box and control PC for electronic interlocking device, classified as Signaling system under the category of transportation equipment, have been adjusted from 20&35 years to 15 years. This is according with their actual usage status, and should be replaced ahead of schedule; in addition, some items have been assessed to have shorter estimated amortization lives, after considering such factors as, the original manufacturer has stopped producing the said items and the aging of said items.
- The estimated amortization lives of electronic control devices, refrigeration electric control devices and on-board signaling equipment, classified as rolling stock system under the category of transportation equipment, have been adjusted from 35 years to 16 years. This is according to the equipment’s usage status, and taking into account the Employer’s Functional and Technical Requirements (EFTR) of the Corporation.
- IV. The Corporation considering as above factors, during the Asset Review Committee of the Corporation reviewed and determined that adjustments in these estimates amortization lives, as set forth in the table in Section II, became effective on January 1, 2019.
- V. No material unreasonable events were discovered in the review of the meeting minutes, as provided by the Asset Review Committee of the Corporation, or other relevant analytical data, such as useful lives assessment recommendations for various equipment, renewal procurement plans for some assets, and mid-life refurbishment and general inspection schedules for rolling stocks.
