AUO - Annual Report 2021 | FinancialReports.eu

Stock Code:2409

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2021 and 2020

The independent auditors’ report and the accompanying consolidated financial statements are the English translation of the Chinese version prepared and used in the Republic of China. If there is any conflict between, or any difference in the interpretation of the English and Chinese language independent auditors’ report and consolidated financial statements, the Chinese version shall prevail.

Representation Letter

The entities that are required to be included in the combined financial statements of AU Optronics Corp. as of and for the year ended December 31, 2021 under the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard No. 10, “ Consolidated Financial Statements” endorsed by the Financial Supervisory Commission of the Republic of China. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, AU Optronics Corp. and Subsidiaries do not prepare a separate set of combined financial statements.

Hereby declare

Company name: AU Optronics Corp. Chairman: Shuang-Lang (Paul) Peng Date: February 10, 2022

Independent Auditors’ Report

To the Board of Directors of AU Optronics Corp.:

Opinion

We have audited the consolidated financial statements of AU Optronics Corp. and its subsidiaries (“ the Company” ), which comprise the consolidated balance sheets as of December 31, 2021 and 2020, the consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated statements of cash flows for the years ended December 31, 2021 and 2020, and notes to the consolidated financial statements including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2021 and 2020, and its consolidated financial performance and its consolidated cash flows for each of the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

We conducted our audit in accordance with the Regulations Governing Auditing and Certification of Financial Statements by Certified Public Accountants and the auditing standards generally accepted in the Republic of China. Our responsibilities under those standards are further described in the Auditor’ s Responsibilities for the Audit of the Consolidated Financial Statements section of our report. We are independent of the Company in accordance with the Certified Public Accountants Code of Professional Ethics in Republic of China (“ the Code”), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the consolidated financial statements of the current period. These matters were addressed in the context of our audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. We have determined the matters described below to be the key audit matters to be communicated in our report.

Impairment of long-term non-financial assets (including goodwill)

Refer to Note 4(15) “ Impairment – non-financial assets” , Note 5(1) and Note 5(2) “ Critical accounting judgments and key sources of estimation and assumption uncertainty” , Note 6(10) “ Property, plant and equipment” , Note 6(11) “ Lease arrangements” and Note 6(13) “ Intangible assets” to the consolidated financial statements.

Description of key audit matter:

The Company operates in an industry with high investment costs, has goodwill through the acquisition of subsidiaries, and may experience volatility in response to changes in the external market; hence, it is important to assess the impairment of its long-term non-financial assets (including goodwill). The impairment assessment includes identifying cash-generating units, determining a valuation model, determining significant assumptions, and computing recoverable amounts. With the complexity of the impairment assessment process and the involvement of significant management judgment regarding assumptions used, this is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding and testing the Company’s controls surrounding the impairment assessment and testing process; assessing whether there are impairment indications for the identified cash-generating units of the Company and its related assets; understanding and assessing the appropriateness of the valuation model used by the management in the impairment assessment and the significant assumptions used to determine related assets’ future cash flows projection, useful lives, and weighted-average cost of capital; retrospectively reviewing the accuracy of assumptions used in prior-period estimates and performing a sensitivity analysis of key assumptions and results; in addition to the above audit procedures, appointing specialists to evaluate the appropriateness of the weighted-average cost of capital used and related assumptions; performing an inquiry of the management and identifying any event after the balance sheet date if able to affect the results of the impairment assessment; and assessing the adequacy of the Company’s disclosures of its policy on impairment of noncurrent nonfinancial assets and other related disclosures.

2. Revenue recognition

Refer to Note 4(18) “Revenue from contracts with customers” and Note 6(21) “Revenue from contracts with customers” to the consolidated financial statements.

Description of key audit matter:

Revenue is recognized when the control over a product has been transferred to the customer as specified in each individual contract with customers. The Company recognizes revenue depending on the various sales terms in each individual contract with customers to ensure the performance obligation has been satisfied by transferring control over a product to a customer. In addition, the Company operates in an industry in which revenue is considered to be complex in determining the timing of revenue recognition. Consequently, this is one of the key areas our audit focused on.

How the matter was addressed in our audit:

In relation to the key audit matter above, our principal audit procedures included understanding and testing the Company’s controls surrounding revenue recognition; assessing whether appropriate revenue recognition policies are applied through comparison with accounting standards and understanding the Company’s main revenue types, its related sales agreements, and sales terms; on a sample basis, inspecting contracts with customers or customers’ orders and assessing whether the accounting treatment of the related contracts (including sales terms) is applied appropriately; performing a test of details of sales revenue and understanding the rationale for any identified significant sales fluctuations and any significant reversals of revenue through sales discounts and sales returns which incurred within a certain period before or after the balance sheet date; and assessing the adequacy of the Company’ s disclosures of its revenue recognition policy and other related disclosures.

Other Matters

AU Optronics Corp. has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2021 and 2020, on which we have issued an unmodified audit opinion and an unmodified audit opinion with the paragraph on emphasis of matter, respectively.

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Management is responsible for the preparation and fair presentation of the consolidated financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRS, IAS, IFRIC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Company’ s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

Those charged with governance (inclusive of the Audit Committee) are responsible for overseeing the Company’s financial reporting process.

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with the auditing standards generally accepted in the Republic of China will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated financial statements.

As part of an audit in accordance with auditing standards generally accepted in the Republic of China, we exercised professional judgment and maintained professional skepticism throughout the audit. We also:

Identified and assessed the risks of material misstatement of the consolidated financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
Obtained an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control.
Evaluated the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
Concluded on the appropriateness of management’s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditors’ report to the related disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However, future events or conditions may cause the Company to cease to continue as a going concern.
Evaluated the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
Obtained sufficient and appropriate audit evidence regarding the financial information of the entities or business activities within the Company to express an opinion on the consolidated financial statements. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our audit opinion.

We communicated with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identified during our audit.

We also provided those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicated with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors’ report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.

The engagement partners on the audit resulting in this independent auditors’ report are Yu, Chi-Lung and Yu, Wan-Yuan.

KPMG

Hsinchu, Taiwan (Republic of China) February 10, 2022

Notes to Readers

The accompanying consolidated financial statements are intended only to present the consolidated financial position, financial performance and cash flows in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the IFRS, IAS, IFRIC, SIC endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China. The standards, procedures and practices to audit such consolidated financial statements are those generally accepted and applied in the Republic of China.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(Expressed in thousands of New Taiwan dollars)

Assets Current assets: 1100 Cash and cash equivalents (Note 6(1)) 1110 Financial assets at fair value through profit or loss`－`current (Note 6(2)) 1136 Financial assets at amortized cost`－`current (Note 6(4)) 1170 Notes and accounts receivable, net (Note 6(5)) 1180 Accounts receivable from related parties, net (Notes 6(5)&7) 1210 Other receivables from related parties (Note 7) 1220 Current tax assets 130X Inventories (Note 6(6)) 1460 Noncurrent assets held for sale (Note 6(10)) 1476 Other current financial assets (Notes 6(10),(21)&8) 1479 Other current assets (Note 6(14)) Noncurrent assets: 1517 Financial assets at fair value through other comprehensive income`－` noncurrent (Note 6(3)) 1550 Investments in equity-accounted investees (Notes 6(7)&7) 1600 Property, plant and equipment (Notes 6(10),7&8) 1755 Right-of-use assets (Notes 6(11)&8) 1760 Investment property (Note 6(12)) 1780 Intangible assets (Notes 6(9)&(13)) 1840 Deferred tax assets (Note 6(25)) 1900 Other noncurrent assets (Notes 6(4),(14),(18)&8) Total Assets	December 31, 2021 Amount % $ 79,944,686 19 159,270 - 10,000,000 2 59,093,573 14 2,479,395 1 20,699 - 60,802 - 34,489,088 8 - - 2,186,682 - 3,592,203 1 192,026,398 45 1,308,157 - 25,447,133 6 171,222,045 40 10,638,373 3 1,437,692 - 11,756,955 3 6,466,588 2 4,507,705 1 232,784,648 55 $ 424,811,046 100	December 31, 2020 Amount % 90,274,687 22 668,058 - - - 44,718,800 11 2,076,156 - 21,929 - 60,541 - 26,753,401 7 3,931 - 564,222 - 3,175,948 1 168,317,673 41 622,824 - 19,464,078 5 185,480,116 46 11,277,353 3 1,522,391 - 12,801,358 3 6,005,346 2 1,779,156 - 238,952,622 59 407,270,295 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (Note 6(15)) 2120 Financial liabilities at fair value through profit or loss`－`current (Note 6(2)) 2170 Notes and accounts payable 2180 Accounts payable to related parties (Note 7) 2213 Equipment and construction payable (Note 7) 2220 Other payables to related parties (Note 7) 2230 Current tax liabilities 2250 Provisions`－`current (Note 6(17)) 2280 Lease liabilities`－`current (Note 6(11)) 2399 Other current liabilities (Notes 6(21)&(22)) 2322 Current installments of long-term borrowings (Notes 6(16)&8) Noncurrent liabilities: 2527 Contract liabilities`－`nonccurrent (Note 6(21)) 2540 Long-term borrowings, excluding current installments (Notes 6(16)&8) 2550 Provisions`－`noncurrent (Note 6(17)) 2570 Deferred tax liabilities (Note 6(25)) 2580 Lease liabilities`－`noncurrent (Note 6(11)) 2600 Other noncurrent liabilities Total liabilities Equity(Note 6(19)): Equity attributable to shareholders of AU Optronics Corp. : 3100 Common stock 3200 Capital surplus 3300 Retained earnings 3400 Other components of equity 3500 Treasury shares Non-controlling interests 36XX Non-controlling interests Total equity Total Liabilities and Equity	December 31, 2021 Amount % $ 45,324 - 132,797 - 54,574,143 13 8,825,361 2 4,317,199 1 72,411 - 2,607,235 1 942,290 - 534,706 - 34,869,439 8 16,833,597 4 123,754,502 29 8,739,846 2 37,821,267 9 946,018 - 4,224,720 1 9,190,535 2 2,167,687 1 63,090,073 15 186,844,575 44 96,242,451 23 60,057,001 14 80,669,998 19 (4,743,182) (1) (439,228) - 231,787,040 55 6,179,431 1 237,966,471 56 $ 424,811,046 100	December 31, 2020 Amount % 200,000 - 170,956 - 47,508,933 12 7,302,792 2 3,706,652 1 22,101 - 1,325,068 - 744,654 - 553,120 - 20,032,462 5 16,771,441 4 98,338,179 24 - - 99,823,528 25 1,041,102 - 3,213,326 1 9,744,152 2 1,319,643 - 115,141,751 28 213,479,930 52 96,242,451 24 60,587,684 15 30,258,282 7 (3,270,303) (1) (1,013,423) - 182,804,691 45 10,985,674 3 193,790,365 48 407,270,295 100

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in thousands of New Taiwan dollars, except for Earnings per share)

4110 Revenue 4190 Less: sales return and discount Net revenue(Notes 6(21)&7) 5000 Cost of sales(Notes 6(6),(11),(18),(22),(23)&7) Gross profit Operating expenses(Notes 6(9),(11),(18),(20),(22),(23)&7): 6100 Selling and distribution expenses 6200 General and administrative expenses 6300 Research and development expenses Total operating expenses Profit from operations Non-operating income and expenses: 7100 Interest income (Note 6(24)) 7010 Other income (Notes 6(3),(24)&7) 7020 Other gains and losses (Notes 6(7),(10),(11),(13),(24)&7) 7050 Finance costs (Notes 6(10),(11)&(24)) 7060 Share of profit of equity-accounted investees (Note 6(7)) Total non-operating income and expenses 7900 Profit before income tax 7950 Less: income tax expense (benefit)(Note 6(25)) 8200 Profit for the year 8300 Other comprehensive income(Notes 6(7),(18),(19)&(25)): 8310 Items that will never be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations 8316 Unrealized gain on equity investments at fair value through other comprehensive income 8320 Equity-accounted investees – share of other comprehensive income 8349 Related tax 8360 Items that are or may be reclassified subsequently to profit or loss 8361 Foreign operations – foreign currency translation differences 8370 Equity-accounted investees – share of other comprehensive income 8399 Related tax 8300 Other comprehensive income (loss), net of tax 8500 Total comprehensive income for the year Profit (loss) attributable to: 8610 Shareholders of AU Optronics Corp. 8620 Non-controlling interests Total comprehensive income (loss) attributable to: 8710 Shareholders of AU Optronics Corp. 8720 Non-controlling interests Earnings per share(NT$, Note 6(26)) 9750 Basic earnings per share 9850 Diluted earnings per share	2021	% 101 1 100 76 24 1 3 3 7 17 - - - - 1 1 18 1 17 - - - - - - - - - - 17 16 1 17 16 1 17 6.44 6.26	2020 Amount 271,821,226 865,845 270,955,381 248,190,042 22,765,339 3,499,116 6,897,103 10,286,078 20,682,297 2,083,042 533,052 3,758,856 (761,143) (2,943,872) 117,736 704,629 2,787,671 (119,756) 2,907,427 140,218 2,676,706 3,686 (28,043) 2,792,567 137,051 (49,783) (16,855) 70,413 2,862,980 5,770,407 3,376,324 (468,897) 2,907,427 6,089,641 (319,234) 5,770,407	% 100 - 100 92 8 1 2 4 7 1 - 1 - (1) - - 1 - 1 - 1 - - 1 - - - - 1 2 1 - 1 2 - 2 0.36 0.35
	Amount $ 373,670,560 2,985,419 370,685,141 279,917,384 90,767,757 5,095,946 9,526,519 13,069,676 27,692,141 63,075,616 495,332 1,389,680 1,037,458 (2,217,565) 2,626,274 3,331,179 66,406,795 2,947,697 63,459,098 21,260 (33,560) 244,624 (4,577) 227,747 (1,277,481) (59,103) 345,815 (990,769) (763,022) $ 62,696,076 $ 61,330,628 2,128,470 $ 63,459,098 $ 60,644,766 2,051,310 $ 62,696,076 $ $

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

For the years ended December 31, 2021 and 2020 (Expressed in thousands of New Taiwan dollars)

		Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.
Capital Surplus 60,544,474 - - - - 1,073 42,137 - - 60,587,684 - - - - - - 449 (22,599) 825,114 - (1,333,647) - 60,057,001		Retained Earnings		Subtotal 22,903,722 - 3,376,324 113,073 3,489,397 - - - 3,865,163 30,258,282 - - (2,850,967) 61,330,628 8,223 61,338,851 - (401,507) - 25,350 (7,700,011) - 80,669,998	Other	Components of Equity Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income Subtotal 1,124,598 (2,005,384) - - - - 2,676,782 2,600,244 2,676,782 2,600,244 - - - - - - (3,865,163) (3,865,163) (63,783) (3,270,303) - - - - - - - - 219,524 (694,085) 219,524 (694,085) - - - - - - (25,350) (25,350) - (753,444) - - 130,391 (4,743,182)	Treasury Shares (1,013,423) - - - - - - - - (1,013,423) - - - - - - - - 574,195 - - - (439,228)
					Cumulative Translation Differences (3,129,982) - - (76,538) (76,538) - - - - (3,206,520) - - - - (913,609) (913,609) - - - - (753,444) - (4,873,573)	Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income 1,124,598 - - 2,676,782 2,676,782 - - - (3,865,163) (63,783) - - - - 219,524 219,524 - - - (25,350) - - 130,391
	Legal Reserve 7,691,688 - - - - - - - - 7,691,688 735,456 - - - - - - - - - - - 8,427,144	Special Reserve 847,770 1,157,614 - - - - - - - 2,005,384 - 1,264,919 - - - - - - - - - - 3,270,303	Unappropriated Earnings 14,364,264 (1,157,614) 3,376,324 113,073 3,489,397 - - - 3,865,163 20,561,210 (735,456) (1,264,919) (2,850,967) 61,330,628 8,223 61,338,851 - (401,507) - 25,350 (7,700,011) - 68,972,551

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in thousands of New Taiwan dollars)

Cash flows from operating activities: Profit before income tax Adjustments for: - depreciation - amortization - losses (gains) on financial instruments at fair value through profit or loss - interest expense - interest income - dividend income - compensation costs of share-based payments - share of profit of equity-accounted investees - gains on disposals of property, plant and equipment, net - gains on disposals of right-of-use assets - gains on disposals of investments and financial assets - impairment losses on assets - unrealized foreign currency exchange losses (gains) - others Changes in operating assets and liabilities: - notes and accounts receivable - receivables from related parties - inventories - net defined benefit assets - other operating assets - contract liabilities - notes and accounts payable - payables to related parties - provisions - other operating liabilities Cash generated from operations Interest received Dividends received Interest paid Income taxes paid Net cash provided by operating activities	2021 $ 66,406,795 33,457,081 207,519 (86,083) 2,135,444 (495,332) (8,090) 831,251 (2,626,274) (1,841,771) (8,294) (890,046) 1,046,693 413,858 203,557 (13,601,272) (401,129) (7,754,868) (16,711) (1,913,817) 11,610,060 6,265,160 1,564,223 103,273 11,690,743 106,291,970 462,503 920,439 (2,143,663) (810,013) 104,721,236	2020 2,787,671 35,130,348 267,182 41,899 2,866,787 (533,052) (261,382) - (117,736) (58,558) - (159) 396,339 (18,470) 74,020 (14,799,026) (315,630) (3,403,782) (548,058) 1,818,984 (97,242) 3,568,142 333,481 46,388 1,175,852 28,353,998 567,081 603,621 (2,829,307) (948,435) 25,746,958

(Continued)

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

For the years ended December 31, 2021 and 2020 (Expressed in thousands of New Taiwan dollars)

2021
Cash flows from investing activities:
Acquisitions of financial assets at fair value through profit or loss
-
Disposals of financial assets at fair value through profit or loss
551,841
Acquisitions of financial assets at fair value through other
comprehensive income
(962,762)
Disposals of financial assets at fair value through other comprehensive
income
-
Acquisitions of financial assets at amortized cost
(20,695,648)
Disposals of financial assets at amortized cost
10,000,000
Acquisitions of equity-accounted investees
(3,890,105)
Disposals of equity-accounted investees
66,117
Net cash inflow arising from disposal of subsidiaries
5,303
Acquisitions of property, plant and equipment
(17,037,742)
Disposals of property, plant and equipment
2,009,445
Disposals of right-of-use assets
12,752
Decrease (increase) in refundable deposits
(579,745)
Acquisitions of intangible assets
(38,000)
Decrease (increase) in other financial assets
(19,465)
Net cash inflow arising from acquisition of subsidiaries
227,701
Net cash outflow arising from acquisition of business
-
Net cash used in investing activities
(30,350,308)
Cash flows from financing activities:
Proceeds from short-term borrowings
1,568,737
Repayments of short-term borrowings
(1,723,311)
Proceeds from long-term borrowings
12,987,993
Repayments of long-term borrowings
(75,917,873)
Payment of lease liabilities
(551,367)
Guarantee deposits received (refunded)
(20,409)
Cash dividends
(2,850,967)
Treasury shares sold to employees
572,472
Acquisition of interest in subsidiary
(17,317,787)
Net change of non-controlling interests
(218,415)
Others
449
Net cash provided by (used in) financing activities
(83,470,478)
Effect of exchange rate change on cash and cash equivalents
(1,230,451)
Net increase (decrease) in cash and cash equivalents
(10,330,001)
Cash and cash equivalents at January 1
90,274,687
Cash and cash equivalents at December 31
$
79,944,686

2020
(2,428,945)
3,360,324
(659,826)
24,119
-
-
(3,453,288)
937,411
-
(15,600,564)
123,383
-
230,007
-
6,189
-
(246,956)
(17,708,146)
3,931,161
(5,475,763)
18,139,350
(13,348,277)
(597,221)
53,268
-
-
-
(1)
1,073
2,703,590
(917,487)
9,824,915
80,449,772
90,274,687

See accompanying notes to consolidated financial statements.

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

(Expressed in thousands of New Taiwan dollars, unless otherwise indicated)

1. Organization

AU Optronics Corp. (“AUO”) was founded on August 12, 1996 and is located in Hsinchu Science Park, the Republic of China (“ROC”). AUO’s main activities are the research, development, production and sale of thin film transistor liquid crystal displays (“TFT-LCDs”) and other flat panel displays used in a wide variety of applications. AUO also engages in the production and sale of solar modules and systems. AUO’s common shares have been publicly listed on the Taiwan Stock Exchange since September 2000, and its American Depositary Shares (“ADSs”) have been listed on the New York Stock Exchange (“NYSE”) since May 2002. On and from October 1, 2019, AUO’s ADSs has delisted from the NYSE and begun trading on the over-the-counter (“OTC”) market. Further on January 27, 2021, AUO’s ADSs and underlying ordinary shares was officially cancelled from the registration of the United States Securities and Exchange Commission and its reporting obligations under the U.S. Securities Exchange Act was terminated.

On September 1, 2001, October 1, 2006 and October 1, 2016, Unipac Optoelectronics Corp. (“Unipac”), Quanta Display Inc. (“ QDI” ) and Taiwan CFI Co., Ltd. (“ CFI” ) were merged with and into AUO, respectively. AUO is the surviving Company, whereas Unipac, QDI and CFI were dissolved.

In order to advance AUO’s value transformation strategy, to accelerate the extension of the value chain and enhance the overall operating performance, upon the resolution of the shareholders’ meeting held on June 17, 2020, AUO demerged and transferred the business of the General Display and the Public Information Display, including assets, liabilities and the operations, to its wholly-owned subsidiary, AUO Display Plus Corporation (“ ADP” ). ADP issued new shares to AUO as the consideration. The effective date of the demerger was set on January 1, 2021.

The consolidated financial statements comprise AUO and its subsidiaries (collectively as “the Company”).

2. The Authorization of Financial Statements

These consolidated financial statements were approved and authorized for issue by the Board of Directors of AUO on February 10, 2022.

3. Application of New and Revised Standards, Amendments and Interpretations

(1) Impact of adoption of new, revised or amended standards and interpretations endorsed by the Financial Supervisory Commission, ROC (“FSC”)

The Company has adopted the amendments to the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations (collectively, “IFRSs”) with effective date from January 1, 2021. The adoption does not have a material impact on the Company’s consolidated financial statements.

(2) Impact of the IFRSs that have been endorsed by the FSC but not yet in effect

The Company assessed that the adoption of the following new amendments, effective for annual period beginning on January 1, 2022, would not have a material impact on its consolidated financial statements.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

●Annual Improvements to IFRSs 2018–2020 Cycle
●Amendments to IFRS 3, Reference to the Conceptual Framework
－
●Amendments to IAS 16, Property, Plant and Equipment Proceeds before Intended Use
－
●Amendments to IAS 37, Onerous Contracts Cost of Fulfilling a Contract
(3) The IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed by the FSC

Standards and interpretations issued by the IASB but not yet endorsed by the FSC are listed below:

●Amendments to IFRS 10 and IAS 28, Sale or Contribution of Assets Between an Investor and its Associate or Joint Venture
●IFRS 17, Insurance Contracts and amendments to IFRS 17
●Amendments to IAS 1, Classification of Liabilities as Current or Noncurrent
●Amendments to IAS 1, Disclosure of Accounting Policies
●Amendments to IAS 8, Definition of Accounting Estimates
●Amendments to IAS 12, Deferred Tax related to Assets and Liabilities arising from a Single Transaction

As of the date that the accompanying consolidated financial statements were issued, the Company continues in assessing the impact on its financial position and results of operations as a result of the application of abovementioned standards and interpretations except for IFRS 17, Insurance Contracts and the amendments to IFRS 17 that are not relevant to the Company. The related impact will be disclosed when the assessment is complete.

4. Summary of Significant Accounting Policies

The significant accounting policies applied in the preparation of these consolidated financial statements are set out as below. The significant accounting policies have been applied consistently to all periods presented in these consolidated financial statements.

(1) Statement of compliance

The consolidated financial statements have been prepared in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers (hereinafter referred to as “the Regulations”) and the IFRSs endorsed by the FSC with effective dates (hereinafter referred to as “TIFRSs”).

(2) Basis of preparation
a. Basis of measurement

The consolidated financial statements have been prepared on the historical cost basis except for the following material items in the consolidated balance sheets:

(i) Financial instruments at fair value through profit or loss (including derivative financial instruments) (Note 6(2));

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Financial assets at fair value through other comprehensive income (Note 6(3));
(iii) Defined benefit asset (liability) is recognized as the fair value of the plan assets less the present value of the defined benefit obligation (Note 6(18)).
b. Functional and presentation currency

The functional currency of each individual consolidated entity is determined based on the primary economic environment in which the entity operates. The Company’ s consolidated financial statements are presented in New Taiwan Dollar (“ NTD” ), which is also AUO’ s functional currency. All financial information presented in NTD has been rounded to the nearest thousand, unless otherwise noted.

(3) Basis of consolidation

a. Principle of preparation of the consolidated financial statements

The Company includes in its consolidated financial statements the results of operations of all controlled entities in which the Company is exposed to, or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its power over the entity. All significant inter-company transactions, income and expenses are eliminated in the consolidated financial statements.

The financial statements of subsidiaries are included in the consolidated financial statements from the date that control commences until the date that control ceases. Total comprehensive income (loss) in a subsidiary is allocated to the shareholders of AUO and the non-controlling interests even if this results in the non-controlling interests having a deficit balance.

Subsidiaries’ financial statements are adjusted to align the accounting policies with those of the Company.

Changes in the Company’s ownership interests in a subsidiary that do not result in a loss of control are accounted for as equity transactions. The carrying amounts of the Company’ s investment and non-controlling interests are adjusted to reflect the changes in their relative interests in the subsidiary. Any difference between such adjustment and the fair value of the consideration paid or received is recognized directly in equity and attributed to shareholders of AUO.

Upon the loss of control, the Company derecognizes the carrying amounts of the assets and liabilities of the subsidiary and non-controlling interests. Any interest retained in the former subsidiary is remeasured at fair value when control is lost. The gain or loss is measured as the difference between: (i) the aggregate of the fair value of the consideration received and the fair value of any retained investment in the former subsidiary at the date when the Company loses control; and (ii) the aggregate of the carrying amount of the former subsidiary’ s assets (including goodwill), liabilities and non-controlling interests at the date when the Company loses control. The Company accounts for all amounts previously recognized in other comprehensive income in relation to that subsidiary on the same basis as would be required if the Company had directly disposed of the related assets or liabilities.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. List of subsidiaries in the consolidated financial statements was as follows:

Name of Investor	Name of Subsidiary	Main Activities and Location Holding company (Malaysia) Investment (Taiwan ROC) Investment (Taiwan ROC) Sales and leasing activities (Taiwan ROC) Construction project and related project management (Taiwan ROC) Holding company (Israel) Sales and sales support activities (Netherlands) Manufacturing and sales company (Taiwan ROC) Research and development and sales activities (Taiwan ROC) Renewable energy power generation (Taiwan ROC) Manufacturing, development and sales company (Taiwan ROC) Holding company (Cayman Islands) Intelligent health care services (Taiwan ROC) Investment (Taiwan ROC) Holding company (Cayman Islands) Manufacturing and sales company (Taiwan ROC) Leasing and service company (Taiwan ROC) Holding company (Singapore) Business management consulting (PRC) Design, sales and consulting (Taiwan ROC)	Percentage of Ownership (%)
			December 31, 2021 December 31, 2020 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00(1) 100.00 100.00(1) 100.00 100.00(1) 100.00 100.00(1) 100.00(1) - 33.51(2) - 100.00 100.00(1) 41.05(3) 41.05(3) 100.00 100.00(1) 100.00 100.00(1) 100.00 100.00(1) 100.00(1) -
AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO and Konly AUO and ADTCM AUO, Konly and Ronly Konly ADTHLD ADTSG ADTSG	AUO (L) Corp. (AUOLB, formerly AU Optronics (L) Corp. (AULB)) Konly Venture Corp. (Konly) Ronly Venture Corp. (Ronly) Space Money Inc. (S4M) AUO Envirotech Inc. (AETTW, formerly U- Fresh Technology Inc. (UTI)) ComQi Ltd. (CQIL) AUO Europe B.V. (AUONL, formerly AU Optronics Europe B.V. (AUNL)) AUO Crystal Corp. (ACTW) AUO Display Plus Corporation (ADP) Da Ping Green Energy Corporation (DPGE) AUO Health Corporation (AHTW) AUO Digitech (CAYMAN) Limited (ADTCM) AUO Care Inc. (ACTTW) Star River Energy Corp. (SREC) AUO Digitech Holding Limited (ADTHLD) Darwin Precisions Corporation (DPTW) AUO Education Service Corp. (AUES) AUO Digitech Pte. Ltd. (ADTSG) AUO Digitech (Suzhou) Co., Ltd. (ADTSZ) AUO Digitech Taiwan Inc. (ADTTW)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location Holding company (Taiwan ROC) Manufacturing and sales company (Malaysia) Manufacturing and sales company (Japan) Sales and sales support activities (United States) Sales support activities (Japan) Sales support activities (South Korea) Holding company and sales support activities (Singapore) Assembly activities (Czech Republic) Sales support activities (PRC) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing and leasing activities (PRC) Repairing activities (Slovakia Republic) Manufacturing company (Singapore) Manufacturing and sales company (PRC) Research and development and IP related business (United States) Holding company (Malaysia) Solar power generation (Taiwan ROC) Solar power generation (Taiwan ROC)	Percentage of Ownership (%)
			December 31, 2021 December 31, 2020 100.00 100.00 100.00 100.00 99.9991 99.9991 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00(7) 51.00 100.00 100.00 100.00 100.00 100.00(2) - 100.00(2) -
ACTW ACTW SDMC AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB AUOLB and DPTW SREC SREC	Sanda Materials Corporation (SDMC) AUO Crystal (Malaysia) Sdn. Bhd. (ACMK)(4) M.Setek Co., Ltd. (M.Setek) AUO Corporation America (AUOUS, formerly AU Optronics Corporation America (AUUS)) AUO Corporation Japan (AUOJP, formerly AU Optronics Corporation Japan (AUJP)) AU Optronics Korea Ltd. (AUKR) AUO Singapore Pte. Ltd. (AUOSG, formerly AU Optronics Singapore Pte. Ltd. (AUSG)) AU Optronics (Czech) s.r.o. (AUCZ)(4) AU Optronics (Shanghai) Co., Ltd. (AUSH) AU Optronics (Xiamen) Corp. (AUXM) AU Optronics (Suzhou) Corp., Ltd. (AUSZ) AU Optronics Manufacturing (Shanghai) Corp. (AUSJ) AU Optronics (Slovakia) s.r.o. (AUSK) AFPD Pte., Ltd. (AUST) AUO (Kunshan) Co., Ltd. (AUOKS, formerly AU Optronics (Kunshan) Co., Ltd. (AUOKS)) a.u. Vista Inc. (AUVI) BriView (L) Corp. (BVLB) Sungen Power Corporation (SGPC) Evergen Power Corporation (EGPC)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location Sales support activities (United States) Introduction of smart field construction and other solutions (Taiwan ROC) Holding, sales and sales support activities (Netherlands) Sales and sales support activities (PRC) Sales and sales support activities (United States) Sales and sales support activities (Japan) Manufacturing, sales and leasing activities (PRC) Intelligent health care services (PRC) Construction project and related project management (PRC) Sales of software and hardware and consulting services (PRC) Integration service of software and hardware (PRC) Development and licensing of software (PRC) Construction project and related project management (PRC) Holding company (United Kingdom) Sales support activities (United Kingdom)	Percentage of Ownership (%)
			December 31, 2021 December 31, 2020 100.00 100.00 78.43(1) - 100.00 100.00 100.00(1) - 100.00 100.00(1) 100.00 100.00(1) 100.00 100.00 100.00 100.00 100.00 100.00 100.00(1) - 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
AUOSG ADP ADP and AUOSG ADP ADPNL ADPNL AUXM AUSH AUSH ADTSZ ADTSZ and AUSH ADTSZ and AUSH AETSZ CQIL CQHLD	AUO Green Energy America Corp. (AEUS) Jector Digital Corporation (Jector) AUO Display Plus Netherlands B.V. (ADPNL, formerly AUO Green Energy Europe B.V. (AENL))(5) AUO Display Plus Technology (Suzhou) Co., Ltd. (ADPSZ) AUO Display Plus America Corp. (ADPUS) AUO Display Plus Japan Corp. (ADPJP) BriView (Xiamen) Corp. (BVXM) AUO Care Information Tech. (Suzhou) Co., Ltd. (ACTSZ) AUO Envirotech (Suzhou) Co., Ltd. (AETSZ, formerly U-Fresh Technology (Suzhou) Co., Ltd. (UFSZ)) AUO Megainsight (Xiamen) Co., Ltd. (AMIXM) Edgetech Data Technologies (Suzhou) Corp., Ltd. (ATISZ)(6) AUO MegaInsight (Suzhou) Co., Ltd. (AMISZ, formerly Mega Insight Smart Manufacturing (Suzhou) Corp., Ltd. (MIS))(6) AUO Envirotech (Shandong) Co., Ltd. (AETSD, formerly U-Fresh Environmental Technology (Shandong) Co., Ltd. (UFSD)) ComQi Holdings Ltd. (CQHLD) ComQi UK Ltd. (CQUK)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location Sales company (United States) Research and development activities (Canada) Development and sales activities (United Kingdom) Development and sales activities (United States) Holding company (Malaysia) Holding company (BVI) Holding company (Mauritius) Holding company (Mauritius) Holding company (Samoa) Holding company (Samoa) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing, sales and trading company (PRC) Manufacturing and sales company (PRC) Holding company (Hong Kong) Manufacturing and sales company (Slovakia Republic) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC)	Percentage of Ownership (%)
			December 31, 2021 December 31, 2020 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00
CQHLD CQHLD CQUS CQUS DPTW DPTW DPTW FHVI FHVI FHVI FFMI FTMI FWSA and FTMI PMSA DPLB DPLB DPHK DPHK BVLB	ComQi Inc. (CQUS) ComQi Canada Inc. (CQCA) JohnRyan Limited (JRUK) JohnRyan Inc. (JRUS) Darwin Precisions (L) Corp. (DPLB) Forhouse International Holding Ltd. (FHVI) Forefront Corporation (FFMI) Fortech International Corp. (FTMI) Forward Optronics International Corp. (FWSA) Prime Forward International Ltd. (PMSA) Forhouse Electronics (Suzhou) Co., Ltd. (FHWJ) Fortech Electronics (Suzhou) Co., Ltd. (FTWJ) Suzhou Forplax Optronics Co., Ltd. (FPWJ) Fortech Electronics (Kunshan) Co., Ltd. (FTKS)(4) Darwin Precisions (Hong Kong) Limited (DPHK) Darwin Precisions (Slovakia) s.r.o. (DPSK)(4) Darwin Precisions (Suzhou) Corp. (DPSZ) Darwin Precisions (Xiamen) Corp. (DPXM) BriView (Hefei) Co., Ltd. (BVHF)

Note 1: ADP was incorporated in May 2020. DPGE, ADTCM and ADTHLD were incorporated in August 2020. AHTW was incorporated in September 2020. ADTSG and ADPUS were incorporated in October 2020. ADPJP was incorporated in November 2020. AUES and ADTSZ were incorporated in December 2020. ACTTW and ADPSZ were incorporated in February 2021. ADTTW was incorporated in March 2021. Jector and AMIXM were incorporated in April 2021.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Note 2: The Company re-assessed the investment of SREC and considered that it has control over the main operating activities of SREC; consequently, SREC and its subsidiaries were included in the Company’s consolidated financial statements from January 2021. Refer to Note 6(8) for the relevant information.
Note 3: Although the Company did not own more than 50% of the DPTW’s ownership interests, it was considered to have de facto control over the main operating policies of DPTW. As a result, DPTW was accounted for as a subsidiary of the Company.
Note 4: As of December 31, 2021, the liquidation of ACMK, DPSK and FTKS is still in process. AUCZ completed its liquidation in July 2021.
Note 5: As part of a business restructuring, AUOSG sold all its shareholdings in ADPNL to ADP in January 2021.
Note 6: As part of a business restructuring, AUSH sold all its shareholdings in ATISZ and AMISZ to ADTSZ in January 2021.
Note 7: The Company purchased 49% equity interests of AUOKS from its joint venture partner in December 2021. Refer to Note 6(19)f. for the relevant information.
(4) Foreign currency transactions and operations
a. Transactions in foreign currencies are translated to the respective functional currencies of the individual entities of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date and the resulting exchange differences are included in profit or loss for the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date when the fair value was determined. The resulting exchange differences are included in profit or loss for the year except for those arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items in foreign currencies that are measured at historical cost are translated using the exchange rate at the date of the transaction.

Exchange differences arising from the effective portion of changes in the fair value of derivatives that are designated and qualified as cash flow hedges are recognized in other comprehensive income.

b. For the purpose of presenting consolidated financial statements, the assets and liabilities of the Company’ s foreign operations are translated into NTD using the exchange rates at each reporting date. Income and expenses of foreign operations are translated at the average exchange rates for the period unless the exchange rates fluctuate significantly during the period; in that case, the exchange rates at the dates of the transactions are used. Foreign currency differences are recognized in other comprehensive income and accumulated in equity.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(5) Classification of current and non-current assets and liabilities

An asset is classified as current when:

a. The asset expected to realize, or intends to sell or consume, in its normal operating cycle;
b. The asset primarily held for the purpose of trading;
c. The asset expected to realize within twelve months after the reporting date; or
d. Cash and cash equivalent excluding the asset restricted to be exchanged or used to settle a liability for at least twelve months after the reporting date.

All other assets are classified as non-current.

A liability is classified as current when:
a. The liability expected to settle in its normal operating cycle;
b. The liability primarily held for the purpose of trading;
c. The liability is due to be settled within twelve months after the reporting date; or
d. The Company does not have an unconditional right to defer settlement of the liability for at least twelve months after the reporting date. Terms of a liability that could, at the option of the counterparty, result in its settlement by the issue of equity instruments, do not affect its classification.

All other liabilities are classified as non-current.

(6) Cash and cash equivalents

Cash comprises cash balances and demand deposits. Cash equivalents comprise short-term highly liquid investments that are readily convertible into known amount of cash and are subject to an insignificant risk of changes in their fair value. Time deposits with short-term maturity but not for investments and other purposes and are qualified with the aforementioned criteria are classified as cash equivalent.

(7) Financial instruments
a. Financial assets
- (i) Classification of financial assets

The Company classifies financial assets into the following categories: financial assets at amortized cost, financial assets at fair value through other comprehensive income and financial assets at fair value through profit or loss. When, and only when, the Company changes its business model for managing financial assets it shall reclassify all affected financial assets.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(a) Financial assets at amortized cost

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as measured at fair value through profit or loss:

i. it is held within a business model whose objective is to hold financial assets to collect contractual cash flows; and
ii. its contractual terms give rise on specified dates to cash flows that are solely payments of principal and interest on the principal amount outstanding.

Such financial assets are initially recognized at fair value, plus any directly attributable transaction costs. Subsequently, these assets are measured at amortized cost using the effective interest method, less any impairment losses. Interest income, foreign exchange gains and losses, and recognition (reversal) of impairment losses, are recognized in profit or loss.

(b) Financial assets at fair value through other comprehensive income

On initial recognition, the Company is able to make an irrevocable election to present subsequent changes in the fair value of investments in equity instruments that is not held for trading in other comprehensive income. This election is made on an instrument-by-instrument basis.

Such financial assets are initially recognized at fair value, plus any directly attributable transaction costs. Subsequent to initial recognition, they are measured at fair value and changes therein are recognized in other comprehensive income and － accumulated in equity unrealized gains (losses) on financial assets at fair value through other comprehensive income, except for dividends deriving from equity investments which are recognized in profit or loss unless the dividend clearly represents a recovery of part of the cost of the investment. When an investment is derecognized, the cumulative gain or loss in equity will not be reclassified to profit or loss, instead, is reclassified to retained earnings.

Dividends on investments in equity instruments are recognized on the date that the Company’s right to receive the dividends is established.

All financial assets not classified as at amortized cost or at fair value through other comprehensive income as described above are measured at fair value through profit or loss. This includes all derivative financial assets.

Such financial assets are initially recognized at fair value, and attributable transaction costs are recognized in profit or loss as incurred. Subsequent to initial recognition, they are measured at fair value and changes therein are recognized in profit or loss.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Impairment of financial assets

The Company recognizes loss allowances for expected credit losses on financial assets at amortized cost, including cash and cash equivalents, receivables, refundable deposits and other financial assets, etc., and contract assets. Loss allowances for financial assets are deducted from the gross carrying amount of the assets. The recognition or reversal of the loss allowance is recognized in profit or loss.

The expected credit loss is the weighted average of credit losses with the respective risks of a default occurring on the financial instrument as the weights.

The Company measures the loss allowance for a financial instrument at an amount equal to lifetime expected credit losses, except for the financial instrument that is determined to have low credit risk at the reporting date and the credit risk thereof has not increased significantly since initial recognition, which is measured at an amount equal to the 12month expected credit losses. For trade receivables and contract assets, the Company measures their loss allowances at an amount equal to lifetime expected credit losses.

When determining whether the credit risk of a financial asset has increased significantly since initial recognition, the Company considers reasonable and supportable information that is relevant. This includes both qualitative and quantitative information and analysis, based on the Company’s historical experience and credit assessment as well as forwardlooking information.

In the circumstance that a financial asset is past due or the borrower is unlikely to pay its credit obligations to the Company in full, the Company considers the credit risk on that financial asset has significantly increased, or further, to be in default.

At each reporting date, the Company assesses whether financial assets at amortized cost are credit-impaired. A financial asset is “credit-impaired” when one or more events that have a detrimental impact on the estimated future cash flows of the financial asset have occurred.

(iii) De-recognition of financial assets

The Company derecognizes financial assets when the contractual rights to the cash flows from the asset expire, or when the Company transfers substantially all the risks and rewards of ownership of the financial assets to another entity.

b. Financial liabilities

(i) Classification of financial liabilities

The Company classifies financial liabilities into the following categories: financial liabilities at fair value through profit or loss and other financial liabilities.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(a) Financial liabilities at fair value through profit or loss

The Company designates financial liabilities as held for trading for the purpose of hedging exposure to foreign exchange risk arising from operating and financing activities. When a financial liability is not effective as a hedge, the Company accounts for it as a financial liability at fair value through profit or loss.

The Company designates financial liabilities, other than the one mentioned above, as at fair value through profit or loss at initial recognition. Attributable transaction costs are recognized in profit or loss as incurred. Financial liabilities in this category are subsequently measured at fair value and changes therein, which takes into account any interest expense, are recognized in profit or loss.

(b) Other financial liabilities

Financial liabilities not classified as held for trading, or not designated as at fair value through profit or loss (including loans and borrowings, trade and other payables), are measured at fair value, plus any directly attributable transaction cost at the time of initial recognition. Subsequent to initial recognition, they are measured at amortized cost calculated using the effective interest method, except for insignificant recognition of interest expense from short-term borrowings and payables. Interest expense not capitalized as an asset cost is recognized in profit or loss.

(ii) De-recognition of financial liabilities

The Company derecognizes financial liabilities when the contractual obligation has been discharged, cancelled or expired. The difference between the carrying amount and the consideration paid or payable, including any non-cash assets transferred or liabilities assumed is recognized in profit or loss.

c. Offsetting of financial assets and liabilities

The Company presents financial assets and liabilities on a net basis in the consolidated balance sheet when the Company has the legally enforceable rights to offset, and intends to settle such financial assets and liabilities on a net basis or to realize the assets and settle the liabilities simultaneously.

(8) Inventories

The cost of inventories includes all necessary expenditures and charges for bringing the inventory to a stable, useable and marketable condition and location. The production overhead is allocated to finished goods and work in progress based on the normal capacity of the production facilities. Subsequently, inventories are measured at the lower of cost and net realizable value. Cost is determined using the weighted-average method. Net realizable value is calculated based on the estimated selling price less all estimated costs of completion and the estimated costs necessary to make the sale.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(9) Investments in associates and joint ventures

Associates are those entities in which the Company has the power to exercise significant influence, but not control or joint control, over their financial and operating policies.

Joint venture is a joint arrangement whereby the Company and other parties agreed to share the control of the arrangement, and have rights to the net assets of the arrangement. Unanimous consent from the parties sharing control is required when making decisions for the relevant activities of the arrangement.

Investments in associates or joint ventures are accounted for using the equity method and are recognized initially at cost. The consolidated financial statements include the Company’s share of the profit or loss and other comprehensive income of associates or joint ventures, after adjustments are made to align their accounting policies with those of the Company. When an associate or a joint venture incurs changes in its equity not derived from profit or loss and other comprehensive income, the Company recognizes all the equity changes in proportion to its ownership interest in the associate or joint venture as capital surplus provided that the ownership interest in the associate or joint venture remains unchanged.

The difference between acquisition cost and fair value of associates’ or joint ventures’ identifiable assets and liabilities as of the acquisition date is accounted for as goodwill. Goodwill is included in the original investment cost of acquired associates or joint ventures and is not amortized. If the fair value of identified assets and liabilities is in excess of acquisition cost, the remaining excess over acquisition cost is recognized as a gain in profit or loss.

The Company discontinues the use of the equity method from the date when its investment ceases to be an associate or a joint venture, and then measures the retained interests at fair value at that date. The difference between the carrying amount of the investment at the date the equity method was discontinued and the fair value of the retained interests along with any proceeds from disposing of a part interest in the associate or joint venture is recognized in profit or loss. Moreover, the Company accounts for all amounts previously recognized in other comprehensive income in relation to that investment on the same basis as would be required if the investee had directly disposed of the related assets or liabilities.

When the Company subscribes for additional shares in an associate or a joint venture at a percentage different from its existing ownership percentage, the resulting carrying amount of the investment differs from the amount of the Company’s proportionate interest in the net assets of the associate or joint venture. The Company records such a difference as an adjustment to investments with the corresponding amount charged or credited to capital surplus. If the capital surplus arising from investment accounted for under the equity method in associates or joint ventures is insufficient to offset with the said corresponding amount, the differences will be charged or credited to retained earnings.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

If the Company’s ownership interest in an associate or a joint venture is reduced due to disposal of or disproportionate subscription to the shares, but the Company continues to apply the equity method, the Company shall reclassify to profit or loss the proportion of the gain or loss that had previously been recognized in other comprehensive income relating to that reduction in ownership interest on the same basis as would be required if the investee had directly disposed of the related assets or liabilities.

At the end of each reporting period, if there is any indication of impairment, the entire carrying amount of the investment including goodwill is tested for impairment as a single asset, by comparing its recoverable amount with its carrying amount. An impairment loss recognized forms part of the carrying amount of the investment in associates or joint ventures. Accordingly, any reversal of that impairment loss is recognized to the extent that the recoverable amount of the investment subsequently increases.

Profits and losses resulting from the transactions between the Company and associates or joint ventures are recognized in the Company’ s consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Company.

When the Company’ s share of losses exceeds its interest in an associate or a joint venture, the carrying amount of that interest, including any long-term investments that form part thereof, is reduced to zero, and the recognition of further losses is discontinued except to the extent that the Company has a legal or constructive obligation, or has made payments on behalf of the investee.

(10) Investment property

Investment property is the property held either to earn rental income or for capital appreciation or for both, but not for sale in the ordinary course of business, use in the production or supply of goods or services or for administrative purposes. Investment property is measured at cost on initial recognition. Subsequent to initial recognition, investment properties are measured using the cost model. Depreciation is charged and recognized in non-operating income and expenses based on the depreciable amount. Depreciation methods, useful lives and residual values are in accordance with the policy of property, plant and equipment. Cost includes expenditure that is directly attributable to the acquisition of the investment property.

An investment property is reclassified to property, plant and equipment at its carrying amount when the use of the investment property changes.

(11) Property, plant and equipment

a. Recognition and measurement

Items of property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses. Cost includes expenditure that is directly attributed to the acquisition of the asset, any cost directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management, the initial estimate of the costs of dismantling and removing the item and restoring the site on which it is located, and any borrowing cost that is eligible for capitalization. The cost of the software is capitalized as part of the equipment if the purchase of the software is necessary for the equipment to be capable of operating.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

When part of an item of property, plant and equipment with a cost that is significant in relation to the total cost of the item and the useful life or the depreciation method of the significant part is different from another significant part of that same item, it is accounted for as a separate item (significant component) of property, plant and equipment.

The gain or loss arising from the derecognition of an item of property, plant and equipment is determined as the difference between the net disposal proceeds, if any, and the carrying amount of the item, and is recognized in profit or loss.

b.

Subsequent costs

Subsequent expenditure is capitalized only when it is probable that the future economic benefits associated with the expenditure will flow to the Company and the cost of the item can be measured reliably. Ongoing repairs and maintenance expenses are recognized in profit or loss as incurred.

c.

Depreciation

Depreciation is determined by depreciable amount allocated over the estimated useful lives of the respective assets, considering significant components of an individual asset on a straightline basis. If a component has a useful life that is different from the remainder of that asset, that component is depreciated separately. Depreciation charge is recognized in profit or loss.

Leased assets are depreciated over their useful lives if it is reasonably certain that the Company will obtain ownership by the end of the lease term. Otherwise, leased assets are depreciated over the shorter of the lease term and their useful lives.

Except for land, which is not depreciated, the estimated useful lives of the assets are as follows: (i) Buildings: 20~50 years

(ii) Machinery and equipment: 3~10 years
(iii) Other equipment: 3~6 years

Depreciation methods, useful lives, and residual values are reviewed at each annual reporting date and, if necessary, adjusted as appropriate. Any changes therein are accounted for as changes in accounting estimates.

d.
Reclassification to investment property

A property is reclassified to investment property at its carrying amount when the use of the property changes from owner-occupied to investment purpose.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(12) Leases

a. Identifying a lease

A contract is, or contains, a lease when all the following conditions are satisfied:

(i) the contract involves the use of an identified asset, and the supplier does not have a substantive right to substitute the asset; and
(ii) the Company has the right to obtain substantially all of the economic benefits from use of the identified asset throughout the period of use; and
(iii) the Company has the right to direct the use of the identified asset throughout the period of use.
b. As a lessee

Payments for leases of low-value assets and short-term leases are recognized as expenses on a straight-line basis during the lease term for which the recognition exemption is applied. Except for leases described above, a right-of-use asset and a lease liability shall be recognized for all other leases at the lease commencement date.

The Company recognizes a right-of-use asset and a lease liability at the lease commencement date. The lease liability is initially measured at the present value of the lease payments (including fixed payments and variable lease payments that depend on an index or a rate), discounted using the lessee’ s incremental borrowing rate. The right-of-use asset is initially measured at cost, which comprises the initial amount of the lease liability, adjusted for any lease payments made at or before the commencement date, less any lease incentives received, plus any initial direct costs incurred and an estimate of costs to be incurred in restoring the underlying asset.

The right-of-use asset is subsequently depreciated using the straight-line method over the shorter of the useful life of the right-of-use asset or the lease term. The lease liability is subsequently measured at amortized cost using the effective interest method. It is remeasured (i) if there is a change in the lease term; (ii) if there is a change in future lease payments arising from a change in an index or a rate; (iii) if there is a change in the amounts expected to be payable under a residual value guarantee; or (iv) if the Company changes its assessment of whether it will exercise a purchase, extension or termination option. When the lease liability is remeasured in the circumstances aforementioned, a corresponding adjustment is made to the carrying amount of the right-of-use asset. However, if the carrying amount of the right-of-use asset is reduced to zero, any remaining amount of the remeasurement is recognized in profit or loss.

Moreover, the lease liability is remeasured when lease modifications occur that decrease the scope of the lease. The Company accounts for the remeasurement of the lease liability by decreasing the carrying amount of the right-of-use asset to reflect the partial or full termination of the lease, and recognizes in profit or loss any gain or loss relating to the partial or full termination of the lease.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As a practical expedient, the Company elects not to assess whether all rent concessions that meets all the following conditions are lease modifications or not:

(i) the rent concessions occurring as a direct consequence of the COVID-19 pandemic;
(ii) the change in lease payments that resulted in revised consideration for the lease that is substantially the same as, or less than, the consideration for the lease immediately preceding the change;
(iii) any reduction in lease payments that affects only those payments originally due on, or before, June 30, 2021; and
(iv) there is no substantive change in other terms and conditions of the lease.

Under the practical expedient, the effect of the change in the lease liability is reflected in profit or loss in the period in which the event or condition that triggers the rent concession occurs.

c.
As a lessor

Lease income from an operating lease is recognized in profit or loss on a straight-line basis over the lease term. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the asset leased to others and recognized as an expense on a straight-line basis over the lease term.

(13) Intangible assets
a. Goodwill

Goodwill is recognized when the purchase price exceeds the fair value of identifiable net assets acquired in a business combination. Goodwill is measured at cost less accumulated impairment losses.

Equity-method goodwill is included in the carrying amounts of the equity investments. The impairment losses for the goodwill within the equity-accounted investees are accounted for as deductions of carrying amounts of investments in equity-accounted investees.

b.
Research and development

During the research phase, activities are carried out to obtain and understand new scientific or technical knowledge. Expenditures during this phase are recognized in profit or loss as incurred.

Expenditure arising from development is capitalized as an intangible asset when the Company demonstrates all of the following:

(i) the technical feasibility of completing the intangible asset so that it will be available for use or sale;
(ii) its intention to complete the intangible asset and use or sell it;

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iii) its ability to use or sell the intangible asset;
(iv) the probability that the intangible asset will generate probable future economic benefits;
(v) the availability of adequate technical, financial and other resources to complete the development and to use or sell the intangible asset; and
(vi) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

Development expenditure which fails to meet the criteria for recognition as an intangible asset is reflected in profit or loss when incurred. Capitalized development expenditure is measured at cost less accumulated amortization and any accumulated impairment losses.

c.
Other intangible assets

Other intangible assets acquired are measured at cost less accumulated amortization and any accumulated impairment losses.

d.
Subsequent expenditure

Subsequent expenditure is capitalized only when it increases the future economic benefits embodied in the specific asset to which it relates. All other expenditure, including expenditure on internally generated goodwill and brands, is recognized in profit or loss as incurred.

Amortization

The depreciable amount of an intangible asset is the cost less its residual value. Other than goodwill and intangible assets with indefinite useful life, an intangible asset with a finite useful life is amortized over 3 to 20 years using the straight-line method from the date that the asset is made available for use. The amortization charge is recognized in profit or loss.

The residual value, amortization period, and amortization method are reviewed at least annually at each annual reporting date, and any changes therein are accounted for as changes in accounting estimates.

(14) Noncurrent assets held for sale

Noncurrent assets are classified as held for sale when their carrying amounts are expected to be recovered primarily through sale rather than through continuing use. Such noncurrent assets must be available for immediate sale in their present condition and the sale is highly probable within one year. When classified as held for sale, the assets are measured at the lower of their carrying amount and fair value less costs to sell. Impairment losses on initial classification as held for sale and subsequent gains or losses on re-measurement are recognized in profit or loss. However, subsequent gains are not recognized in excess of the cumulative impairment loss that has been recognized.

When property, plant and equipment are classified as held for sale, they are no longer depreciated.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(15) Impairment – non-financial assets

Other than inventories, deferred tax assets and noncurrent assets held for sale, the carrying amounts of the Company’ s investment property measured at cost and other long-term non-financial assets (property, plant and equipment, right-of-use assets and other intangible assets with finite useful lives), are reviewed at the reporting date to determine whether there is any indication of impairment. When there is an indication of impairment exists for the aforementioned assets, the recoverable amount of the asset is estimated. If it is not possible to estimate the recoverable amount of an individual asset, the Company estimates the recoverable amount of the cash-generating unit (“CGU”) to which the asset has been allocated to.

In performing an impairment test for other long-term non-financial assets, the estimated recoverable amount is evaluated in terms of an asset or a CGU. Any excess of the carrying amount of the asset or its related CGU over its recoverable amount is recognized as an impairment loss. The recoverable amount of an asset or a CGU is the higher of its fair value less costs of disposal and its value in use.

If there is evidence that the accumulated impairment loss of an asset other than goodwill and intangible assets with indefinite useful lives in prior years no longer exists or has decreased, the amount previously recognized as an impairment loss is reversed, and the carrying amount of the asset or CGU is increased to the revised estimate of its recoverable amount. The increased carrying amount shall not exceed the carrying amount that would have been determined (net of depreciation or amortization) had no impairment loss been recognized for the asset in prior years.

For goodwill and intangible assets with indefinite useful lives or that are not yet available for use, are required to be tested for impairment at least annually. Any excess of the carrying amount of the asset over its recoverable amount is recognized as an impairment loss.

For the purpose of impairment test, goodwill acquired in a business combination is allocated to CGUs that are expected to benefit from the synergies of the combination. If the recoverable amount of a CGU is less than its carrying amount, the difference is allocated first to reduce the carrying amount of any goodwill allocated to the unit, then the carrying amounts of the other assets in the unit on a pro rata basis. The impairment loss recognized on goodwill is not reversed in a subsequent period.

(16) Provisions

A provision is recognized when the Company has a present obligation arising from a past event, it is probable that the Company will be required to make an outflow of resources embodying economic benefits to settle the obligation, and the amount of the obligation can be estimated reliably. Provisions are determined by discounting the expected future cash flows at a pre-tax rate that reflects the current market assessments of the time value of money and the risks specific to the liability. The unwinding of the discount is recognized as interest expense.

a. Warranties

A provision for warranties is recognized when the underlying products or services are sold. The provision is weighting factors based on historical experience of warranty claims rate and other possible outcomes against their associated probabilities.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. Decommissioning obligation

The Company is subject to decommissioning obligations related to certain items of property, plant and equipment. Such decommissioning obligations are primarily attributable to clean-up costs, including deconstruction, transportation, and recover costs. The unwinding of the discount based on original discount rate is recognized in profit or loss as interest expense over the periods with corresponding increase in the carrying amounts of the accrued decommissioning costs. The carrying amount of the accruals at the end of the assets’ useful lives is the same as the estimated decommissioning costs.

c. Litigation

Management periodically assesses the obligation of all litigation and claims and relative legal costs. Provision for loss contingencies arising from claims, assessments, litigation, fines, and penalties and other sources are recognized when it is probable the present obligation as a result of a past event will result in an outflow of resources and the amount can be reasonably estimated.

Provisions recognized are the best estimates of the expenditure for settling the present obligation at each reporting date.

(17) Treasury shares

Where the Company repurchases its common stock that has been issued, the consideration paid, including all directly attributable costs is recorded as treasury share and deducted from equity. When treasury share is reissued, the excess of sales proceeds over cost is accounted for as capital surplus – treasury shares. If the sales proceeds are less than cost, the deficiency is accounted for as a reduction of capital surplus arising from similar types of treasury shares. If such capital surplus is insufficient to cover the deficiency, the remainder is recorded as a reduction of retained earnings. The carrying amount of treasury share is calculated using the weighted-average cost of different types of repurchase.

If treasury share is retired, the weighted-average cost of the retired treasury share is written off against the par value and the capital surplus premium, if any, of the stock retired on a pro rata basis. If the weighted-average cost written off exceeds the sum of the par value and the capital surplus premium, the difference is accounted for as a reduction of capital surplus – treasury shares, or a reduction of retained earnings for any deficiency where capital surplus – treasury shares is insufficient to cover the difference. If the weighted-average cost written off is less than the sum of the par value and the capital surplus premium, if any, of the stock retired, the difference is accounted for as an increase in capital surplus – treasury shares.

(18) Revenue from contracts with customers

Revenue is measured based on the consideration that the Company expects to be entitled in the transfer of goods or services to a customer. The Company recognizes revenue when it satisfies a performance obligation by transferring control over a product or service to a customer. The following is a description of the Company’s major revenues:

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

a. Sales of goods

Revenue is recognized when the control over a product has been transferred to the customer. The transfer of control refers to the product has been delivered to and accepted by the customer without remaining performance obligations from the Company. Delivery occurs when the product has been shipped to the specified location and the risk of loss over the product has been transferred to the customer, as well as when the product has been accepted by the customer according to the terms of sales contract, or when the Company has objective evidence that all criteria for acceptance have been satisfied.

For certain contracts with volume discounts offer to customers, revenue is recognized on a net basis of contract price less estimated volume discounts, and only to the extent that it is highly probable that a significant reversal will not occur. The amount of volume discounts is estimated based on the expected value with reference to the historical experience, and is recorded as refund liability (presented under other current liabilities).

Trade receivable is recognized when the Company is entitled for unconditional right to receive payment upon delivery of goods to customers. The consideration received in advance from the customer according to the sales contract but without delivery of goods is recognized as a contract liability, for which revenue is recognized when the control over the goods is transferred to the customer.

The Company provides standard warranties for goods sold and has obligation to refund payments for defective goods, in which the Company has recognized provisions for warranties to fulfill the obligation. Refer to Note 4(16) for further details.

b. Construction contracts

For construction contracts, revenue is recognized progressively based on the progress towards complete satisfaction of contract activities, and only to the extent that it is highly probable that a significant reversal in the amount of cumulative revenue recognized will not occur.

If the Company cannot reasonably measure its progress towards complete satisfaction of performance obligations in accordance with the construction contracts, revenue is recognized only to the extent of contract costs incurred that it is expected to be recoverable.

The consideration is paid by the customer according to the agreed payment terms. The excess of the amount that has been recognized as revenue over the amount that the Company has issued a bill is recognized as a contract asset. When the entitlement to the payment becomes unconditional, the contract asset is transferred to receivables.

A contract liability is recognized for an advance consideration that the Company has billed to customers arising from construction contracts. When the construction is completed and accepted by the customers, the contract liability is transferred to revenue.

If there are changes in circumstances, the estimates of revenue, cost and the progress towards complete satisfaction of contract will be amended. Any changes therein are recognized in profit or loss during the period in which the changes and amendments are made.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Company provides standard warranties for construction contracts and has recognized provisions for warranties to fulfill the obligation. Refer to Note 4(16) for further details.

c. Financing components

The Company expects that the length of time when the Company transfers the goods or services to the customer and when the customer pays for those goods or services will be less than one year. Therefore, the amount of consideration is not adjusted for the time value of money.

(19) Government grants
a. Grants for compensating the research and development expenditures

Grants that compensate the Company for research and development expenditures are recognized in profit or loss on a systematic basis in the periods in which the expenses are recognized.

b. Grants related to the purchase of assets

Grants related to the purchase of assets are set up as deferred income and are recognized in profit or loss on a systematic basis over the useful life of the assets.

c. Other grants

Other grants from government that becomes receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Company with no future related costs are recognized in profit or loss of the period in which it becomes receivable.

(20) Employee benefits
a. Defined contribution plans

Obligations for contributions to defined contribution pension plans are recognized as an employee benefit expense in profit or loss in the periods during which services are rendered by employees.

b. Defined benefit plans

The Company’ s net obligation in respect of defined benefit pension plans is calculated separately for each benefit plan by estimating the amount of future benefit that employees have earned in the current and prior periods, discounting that amount and deducting the fair value of any plan assets. Discount rate is determined by reference to the yield rate of Taiwan government bonds at the reporting date. The calculation of defined benefit obligations is performed annually by a qualified actuary using the Projected Unit Credit Cost Method.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Remeasurements of the net defined benefit liability (asset) which comprise actuarial gains and losses, the return on plan assets (excluding interest) and the effect of the asset ceiling (if any, excluding interest), are recognized in other comprehensive income in the period in which they occur, and which then are reflected in retained earnings and will not be reclassified to profit or loss.

When the benefits of a plan are changed or when a plan is curtailed, the resulting change in benefit that relates to past service or the gain or loss on curtailment is recognized immediately in profit or loss. The Company recognizes gains and losses on the settlement of a defined benefit plan when the settlement occurs.

c. Short-term employee benefits

Short-term employee benefit obligations, which are due to be settled within twelve months are measured on an undiscounted basis and are expensed as the related service is provided.

The expected cost of cash bonus or profit-sharing plans, which is anticipated to be paid within one year, are recognized as a liability when the Company has a present legal or constructive obligation to pay this amount as a result of past service provided by the employee, and the obligation can be estimated reliably.

(21) Share-based payment arrangements

The compensation cost of employee share-based payment arrangements for which subsidiaries grant to their employees is measured based on the fair value at the date on which they are granted. The compensation cost is recognized, together with a corresponding increase in equity, over the periods in which the employees become unconditionally entitled to the awards. The amount of the compensation cost recognized as an expense is adjusted to reflect the number of awards whose related service and non-market performance conditions are expected to be met, such that the amount ultimately recognized as an expense is based on the number of awards that meet the related service and non-market performance conditions at the vesting date.

For share-based payment awards with non-vesting conditions, the grant date fair value of the sharebased payment is measured to reflect such conditions, and there is no true up for differences between expected and actual outcomes.

(22) Income taxes

Income tax expense comprises current and deferred taxes.

a. Current taxes

Current taxes comprise the expected tax payable or receivable on the taxable income or losses for the year and any adjustments to tax payable or receivable in respect of previous years. It is measured using the statutory tax rate or the actual legislative tax rate at the reporting date.

In accordance with the ROC Income Tax Act, undistributed earnings from the companies located in the Republic of China, if any, is subject to an additional surtax. The surtax on unappropriated earnings is expensed in the year the shareholders approved the distributions which is the year subsequent to the year the earnings arise.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. Deferred taxes

Deferred taxes are recognized in respect of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Deferred tax liabilities are recognized for temporary difference of future taxable income. Deferred tax assets are recognized for unused tax losses, unused tax credits and deductible temporary differences to the extent that it is probable that future taxable profits will be available against which they can be utilized.

Deferred tax assets are reviewed at annual reporting date, by considering global economic environment, industry environment, statutory tax deduction years and projected future taxable income, and reduced to the extent that it is no longer probable that future taxable profits will be available to allow all or part of the deferred tax asset to be recovered. Deferred tax assets which originally not recognized is also reviewed at annual reporting date and recognized to the extent that it is probable that future taxable profits will be available to allow all or part of the deferred tax asset to be recovered.

Deferred taxes liabilities for taxable temporary differences related to investments in subsidiaries, associates and joint arrangements are recognized, unless the Company is able to control the timing of the reversal of the taxable temporary differences and it is probable that they will not reverse in the foreseeable future.

Deferred tax is measured at the tax rates that are expected to be applied to temporary differences when the reverse, using the statutory tax rate or the actual legislative tax rate on the reporting date. Deferred tax assets and liabilities are offset only if certain criteria are met.

Current taxes and deferred taxes are recognized in profit or loss except to the extent that it relates to items recognized directly in equity or other comprehensive income.

(23) Business combinations

The consideration transferred in the acquisition is measured at fair value, as are identifiable net assets acquired. Goodwill is measured as the excess of the aggregate of the fair value of consideration transferred and the amount of any non-controlling interests in the acquiree over the net identifiable assets acquired and liabilities assumed. If the fair value of the net assets acquired is in excess of the aggregate consideration transferred and the amount of any non-controlling interests in the acquiree, after reassessing all of the assets acquired and all of the liabilities assumed being properly identified, the difference is recognized in profit or loss as a gain on bargain purchase.

Acquisition-related costs are expensed as incurred, except that the costs are related to the issue of debt or equity instruments.

Non-controlling interests in an acquiree that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured, on a caseby-case basis, at either fair value or the present ownership instruments’ proportionate share in the recognized amounts of the acquiree’s net identifiable assets. All other components of non-controlling interests shall be measured at their acquisition-date fair values, unless another measurement basis is required by TIFRSs.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Any contingent consideration included in the consideration transferred is recognized at fair value at the date of acquisition. Subsequent changes to the fair value of the contingent consideration during the measurement period shall adjust to the cost of the acquisition and the resulting goodwill retrospectively. An adjustment made during the measurement period is to reflect additional information obtained by the Company about facts and circumstances that existed as of the acquisition date. The measurement period shall not exceed one year from the acquisition date. The accounting treatment for those changes to the fair value of the contingent consideration that are not measurement period adjustments is depending on the classification of the contingent consideration. If the contingent consideration is classified as equity, it is not remeasured and the subsequent settlement is accounted for within equity. Otherwise, other contingent consideration is remeasured at fair value at each reporting date and subsequent changes in the fair value are recognized in profit or loss.

(24) Earnings per share

Basic earnings per share is computed by dividing profit or loss attributable to the shareholders of AUO by the weighted-average number of common shares outstanding during the period. In computing diluted earnings per share, profit or loss attributable to the shareholders of AUO and the weighted-average number of common shares outstanding during the period are adjusted for the effects of dilutive potential common stock, assuming dilutive share equivalents had been issued. The Company’s potential dilutive common stock comprise the estimate of employee compensation.

The weighted-average outstanding shares are retroactively adjusted for the effects of stock dividends transferred from retained earnings or capital surplus to common stock.

(25) Operating segments

An operating segment is a component of an entity that engages in business activities from which it may earn revenue and incur expenses (including revenues and expenses relating to transactions with other components of the same entity). Operating results of the operating segments are reviewed regularly by the Company’s chief operating decision maker (“CODM”) to make decisions pertaining to the allocation of resources to the segment and to assess its performance. Meanwhile, discrete financial information for operating results is available.

5. Critical Accounting Judgments and Key Sources of Estimations and Assumptions Uncertainty

The preparation of the consolidated financial statements in conformity with the Regulations and TIFRSs requires management to make judgments, estimates and assumptions that affect the application of the accounting policies and the reported amount of assets, liabilities, income and expenses. Actual results may differ from these estimates.

Estimates and underlying assumptions are reviewed by management on an ongoing basis. Revisions to accounting estimates are recognized in the period in which the estimates are revised and in any future periods affected.

Information about critical judgments, estimates and assumptions in applying accounting policies that have the significant effect on the amounts recognized in the consolidated financial statements is included in the following notes:

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(1) Impairment of long-term non-financial assets, other than goodwill

In the process of evaluating the potential impairment of tangible and intangible assets other than goodwill, the Company is required to make subjective judgments in determining the independent cash flows, useful lives, expected future income and expenses related to the specific asset groups with the consideration of the usage mode of asset and the nature of industry. Any changes in these estimates based on changed economic conditions or business strategies could result in significant impairment charges or reversal in future years.

(2) Impairment of goodwill

The assessment of impairment of goodwill requires the Company to make subjective judgment to determine the identified CGUs, allocate the goodwill to relevant CGUs and estimate the recoverable amount of relevant CGUs.

(3) Recognition of deferred tax assets

Deferred tax assets are recognized to the extent that it is probable that future taxable profits will be available against which those deferred tax assets can be utilized. Assessment of the realization of the deferred tax assets requires management’ s subjective judgment and estimate, including the future revenue growth and profitability, the sources of taxable income, the amount of tax credits can be utilized and feasible tax planning strategies. Changes in the global economic environment, the industry trends and relevant laws and regulations may result in adjustments to the deferred tax assets.

(4) Valuation of inventories

As inventories are stated at the lower of cost or net realizable value, the Company estimates the net realizable value of inventories for obsolescence and unmarketable items at the end of reporting period and then writes down the cost of inventories to net realizable value. The net realizable value of the inventory is mainly determined based on assumptions of future demand within a specific time horizon. Due to the rapid industrial transformation, there may be significant changes in the net realizable value of inventories.

6. Description of Significant Accounts

(1) Cash and Cash Equivalents

Cash and Cash Equivalents
Cash on hand, demand deposits and checking accounts Time deposits	December 31, 2021 $ 48,949,652 30,995,034 $ 79,944,686	December 31, 2020
		43,921,304 46,353,383
		90,274,687

Refer to Note 6(29) for the disclosure of credit risk, currency risk and sensitivity analysis of the financial instruments of the Company.

As at December 31, 2021 and 2020, no cash and cash equivalents were pledged with banks as collaterals.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(2) Financial Assets and Liabilities at Fair Value through Profit or Loss (“FVTPL”)

Financial assets mandatorily measured at FVTPL: Foreign currency forward contracts Structured deposits Financial liabilities held for trading: Foreign currency forward contracts	December 31, 2021 $ 159,270 - $ 159,270 $ 132,797	December 31, 2020
		112,319 555,739
		668,058
		170,956

The Company entered into derivative contracts to manage the exposure to currency risk arising from operating activities. Refer to Note 6(29) for the disclosure of the Company’s credit and currency risks related to financial instruments.

As at December 31, 2021 and 2020, the Company’s outstanding foreign currency forward contracts were as follows:

	December 31, 2021
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell USD / Buy CNY Sell USD / Buy SGD Sell JPY / Buy NTD Sell CNY / Buy USD Sell EUR/ Buy JPY	Maturity date Contract amount Jan. 2022~Feb. 2022 USD 843,700 / NTD 23,496,028 Jan. 2022~Feb. 2022 USD 188,117 / JPY 21,470,200 Jan. 2022~Jul. 2022 USD 147,500 / CNY 947,875 Jan. 2022~Feb. 2022 USD 33,517 / SGD 45,430 Jan. 2022 JPY1,300,000 / NTD 316,850 Jan. 2022~Mar. 2022 CNY 1,700,000 / USD 263,122 Jan. 2022~Feb. 2022 EUR 14,000 / JPY 1,814,893

	December 31, 2020
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell USD / Buy EUR Sell USD / Buy CNY Sell USD / Buy SGD Sell CNY / Buy USD Sell EUR / Buy JPY Sell HKD / Buy USD	Maturity date Contract amount Jan. 2021~Feb. 2021 USD 522,200 / NTD 14,751,599 Jan. 2021~Mar. 2021 USD 122,935 / JPY 12,752,953 Jan. 2021 USD 2,398 / EUR 2,000 Jan. 2021~Aug. 2021 USD 131,500 / CNY 879,713 Jan. 2021~Feb. 2021 USD 28,349 / SGD 38,020 Feb. 2021~Mar. 2021 CNY 1,400,000 / USD 212,882 Jan. 2021~Feb. 2021 EUR 10,000 / JPY 1,253,050 Jan. 2021 HKD 500 / USD 64

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(3) Financial Assets at Fair Value through Other Comprehensive Income (“FVTOCI”)

Investments in equity instruments at FVTOCI: Equity securities – listed stocks Equity securities – non-listed stocks	December 31, 2021 $ 149,177 1,158,980 $ 1,308,157	December 31, 2020
		294,668 328,156
		622,824

The purpose that the Company invests in the abovementioned equity securities is for long-term strategies, but rather for trading purpose. Therefore, those equity securities are designated as financial assets at FVTOCI.

Upon the re-assessment, the Company considers that it has significant influence over Qisda Corporation (“Qisda”); consequently, at the end of December 2020 the equity investment in Qisda previously classified as financial assets at FVTOCI was reclassified as investments accounted for using the equity method. Refer to Note 6(7) for the relevant information.

If the value of these equity securities appreciates or depreciates by 10% at the reporting date, other comprehensive income would increase or decrease by $130,816 thousand and $62,282 thousand for the years ended December 31, 2021 and 2020, respectively.

Dividends recognized from the investments in equity instruments at FVTOCI held by the Company were disclosed as follows:

Investments held at the balance sheet date Investments disposed during the reporting period (4) Financial Assets at Amortized Cost	For the years ended December 31, 2021 2020 $ 8,090 2,350 - 259,032 $ 8,090 261,382	For the years ended December 31, 2021 2020 $ 8,090 2,350 - 259,032 $ 8,090 261,382
	2021 $ 8,090 - $ 8,090
		261,382

		December
		31, 2021
Domestic and foreign time deposits	$	10,706,340
Less: current		(10,000,000)
Noncurrent (recognized in other noncurrent assets)	$	706,340

The Company has assessed that these financial assets are held-to-maturity to collect contractual cash flows, which consist solely of payments of principal and interest on principal amount outstanding. Therefore, these investments were classified as financial assets at amortized cost.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As at December 31, 2021, none of the Company’s domestic and foreign time deposits was pledged as collateral.

(5) Notes and Accounts Receivable, net (Including Related and Unrelated Parties)

Notes receivable Accounts receivable Less: loss allowance Notes and accounts receivable, net Accounts receivable from related parties, net	December 31, 2021 $ 80,584 61,508,437 (16,053) $ 61,572,968 $ 59,093,573 $ 2,479,395	December 31, 2020 179,411 46,635,061 (19,516) 46,794,956 44,718,800 2,076,156

The Company measures loss allowance for notes and accounts receivable using the simplified approach under IFRS 9 with the lifetime expected credit losses. Analysis of expected credit losses which was measured based on the aforementioned method, was as follows:

December 31, 2021	December 31, 2021
Carrying amount of notes and accounts receivable $ 60,241,697 1,307,466 20,541 3,749 $ 61,573,453	Weighted- average loss rate 0.00% 0.01% 1.51% 0.00%	Loss allowance for lifetime expected credit losses
		102 72 311 -
		485

December 31, 2020	December 31, 2020
Carrying amount of notes and accounts receivable $ 45,814,603 961,549 17,189 4,176 $ 46,797,517	Weighted- average loss rate 0.00% 0.01% 0.00% 56.54%	Loss allowance for lifetime expected credit losses
		88 112 - 2,361
		2,561

In addition, there was objective evidence indicating that, under reasonable expectation, some of the notes and accounts receivable would not be recovered in total; therefore, the Company recognized a loss allowance of $15,568 thousand and $16,955 thousand as of December 31, 2021 and 2020, respectively.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The movement of the loss allowance for notes and accounts receivable was as follows:

Balance at beginning of the year Provisions charged to expense Write-offs Effect of changes in foreign currency exchange rates Balance at end of the year	For the years ended December 31, 2021 2020 $ 19,516 17,738 213 2,333 (3,628) (663) (48) 108 $ 16,053 19,516
	2021 $ 19,516 213 (3,628) (48) $ 16,053

The payment terms granted to customers are generally 25 to 60 days from the end of the month during which the invoice is issued. This term is consistent with practices in our industry, and thus, no financing components involved.

Information about the Company’s exposure to credit risk is included in Note 6(29).

(6) Inventories

Finished goods Work-in-progress Raw materials	December 31, 2021 $ 12,141,844 12,683,485 9,663,759 $ 34,489,088	December 31, 2020 8,903,882 11,259,938 6,589,581
		26,753,401

For the years ended December 31, 2021 and 2020, the amounts recognized as cost of sales in relation to inventories were $279,917,384 thousand and $248,190,042 thousand, respectively. The net of provisions (reversals) for inventories written down (increased) to net realizable value, which were also included in cost of sales, amounted to $782,060 thousand in provisions and $1,952,186 thousand in reversals for the years ended December 31, 2021 and 2020, respectively.

As at December 31, 2021 and 2020, none of the Company’s inventories was pledged as collateral.

(7) Investments in Equity-accounted Investees

Associates Joint ventures	December 31, 2021 $ 25,375,636 71,497 $ 25,447,133	December 31, 2020
		19,180,565 283,513
		19,464,078

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

a. Associates

Qisda Ennostar Inc. (“Ennostar”) ADLINK Technology Inc. (“ADLINK”) Star Shining Energy Corporation. (“SSEC”) Raydium Semiconductor Corporation (“Raydium”) Daxin Materials Corp. (“Daxin”) Lextar Electronics Corp. (“Lextar”) SREC Others	December 31, 2021 $ 12,424,480 5,358,394 2,593,701 2,353,520 1,800,034 759,245 - - 86,262 $ 25,375,636	December 31, 2020
		10,220,729 - 2,336,445 1,689,192 809,137 717,953 2,853,386 447,171 106,552
		19,180,565

None of the above associates is considered individually material to the Company. The following table summarized the amount recognized by the Company at its share of those associates.

The Company’s share of associates’: Profit Other comprehensive income (loss) Total comprehensive income (loss)	For the years ended December 31, 2021 2020 $ 2,740,512 122,248 185,521 (46,097) $ 2,926,033 76,151	For the years ended December 31, 2021 2020 $ 2,740,512 122,248 185,521 (46,097) $ 2,926,033 76,151
	2021 $ 2,740,512 185,521 $ 2,926,033
		76,151

On February 5, 2020, AUO’ s Board of Directors resolved to acquire common shares of ADLINK through tender offer. As of December 31, 2021, the Company holds a total of 49,429 thousand common shares of ADLINK for totaling of 23% equity interest in ADLINK.

Lextar, upon the resolution of its Board of Directors on June 18, 2020, carried out a joint share exchange with Epistar Corporation (“Epistar”) for a newly incorporated company, Ennostar. Such plan was also approved by Lextar’s and Epistar’s special shareholders’ meetings held on August 7, 2020. In November 2020, Lextar received a written decision on anti-monopoly examination of the business operators’ concentration from the Antitrust authority in China wherein the authority approved and decided not to prohibit the concentration. On the record date, January 6, 2021, Ennostar’ s shares have been publicly listed on the Taiwan Stock Exchange. In the meanwhile, Lextar’s and Epistar’s listing and public offering were terminated. Upon completion of the share exchange, the Company still remains significant influence over Ennostar.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

When the share exchange took place on January 6, 2021, the Company deemed the conversion of shares of Lextar as disposal. The fair value at disposal was $3,577,076 thousand and the gain on disposal was $888,925 thousand.

In consideration of the Company’ s operational strategy, the Company has increased its shareholdings in Qisda since November 2020. Upon the re-assessment, the Company considers that it has obtained the ability to exercise significant influence over Qisda; consequently, at the end of December 2020 the Company derecognized the investment in Qisda previously classified as financial assets at FVTOCI, and further recognized an investment accounted for using the equity method at fair value. The related cumulative gain of $3,863,348 thousand that was previously recognized in other comprehensive income under items never be reclassified in profit or loss was reclassified to retained earnings.

In connection with the Company’s operational strategy, the Company continually increased its shareholdings in Qisda, Ennostar, ADLINK and Raydium with total investments of $3,890,105 thousand and $3,453,288 thousand for the years ended December 31, 2021 and 2020, respectively.

b. Joint ventures

None of the joint ventures is considered individually material to the Company. The following table summarized the amount recognized by the Company at its share of those joint ventures.

The Company’s share of joint ventures’: Loss Other comprehensive income (loss) Total comprehensive income (loss)	For the years ended December 31, 2021 2020 $ (114,238) (4,512) - - $ (114,238) (4,512)	For the years ended December 31, 2021 2020 $ (114,238) (4,512) - - $ (114,238) (4,512)
	2021 $ (114,238) - $ (114,238)
		(4,512)

As at December 31, 2021 and 2020, none of the Company’ s investments in equity-accounted investees was pledged as collateral.

(8) Acquisition of subsidiaries

The Company is the sole largest shareholder of SREC with 33.51% of its voting shares. Upon the amendment to the joint venture agreement in January 2021, the Company re-assessed the investment of SREC and considered that it has control over the main operating activities of SREC. Consequently, SREC and its subsidiaries were included in the Company’ s consolidated financial statements from January 2021.

Consideration transferred: Investments in equity-accounted investees Non-controlling interests (measured by the fair value of identifiable net assets in proportion to non-controlling interests)	Amount
	$ 447,171 887,129 $ 1,334,300

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Fair value of identifiable assets acquired and liabilities assumed:

Cash and cash equivalents Property, plant and equipment Other assets Total liabilities	Fair value $ 227,701 2,107,168 222,774 (1,223,343) $ 1,334,300

(9) Acquisition of Business

In February 2020, the Company acquired the business of integration service of content management system and hardware from John Ryan International Inc., John Ryan Technology, Inc., Cutler holdings Inc. and their subsidiaries (hereinafter referred to as “John Ryan”). Through the acquisition of the business, the Company expects to extend the relevant business to the financial industry.

If the acquisition had taken place on January 1, 2020, management estimated that the Company’s consolidated revenue and consolidated net profit for the year ended December 31, 2020 would have been $270,969,044 thousand and $2,899,105 thousand, respectively. In determining these amounts, management had assumed that the fair value adjustments, determined provisionally, that arose on the acquisition date would have been the same if the acquisition had taken place on January 1, 2020. The aforementioned pro-forma information is presented for illustrative purposes only and is not necessarily an indication of consolidated revenue and results of operations of the Company that would have been achieved had the acquisition been completed on January 1, 2020, nor is it intended to be a projection of future results.

Acquisition-related costs are at approximately $4,628 thousand on legal fees and due diligence fees and were recognized in operating expenses in the consolidated statement of comprehensive income.

The following table summarized each major class of consideration transferred, the assets acquired and liabilities assumed at the acquisition date and the amount of goodwill recognized.

a. Consideration transferred (translated at the exchange rates on December 31, 2020)

Cash Contingent consideration	Amounts $ 204,416 42,540 $ 246,956

In accordance with the terms of the contingent consideration, in the event that the annual revenue and the annual recurring revenue rendered from the acquired business for the year ended December 31, 2020 are either greater than the agreed revenue targets or hit the agreed goals specified in the agreement, or in the event that John Ryan assists in acquiring specific business within the period specified in the agreement, the Company will pay additional consideration of USD 750 thousand and USD 1,492 thousand, respectively, to John Ryan. Under the arrangement of the contingent consideration, the potential undiscounted amount of the contingent payment that the Company may have to pay in the future is between USD 0 thousand and USD 2,242 thousand.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The fair value of the contingent consideration estimated using Monte Carlo simulation and expected value was $42,540 thousand. The fair value measurement was based on the significant unobservable inputs in the market and categorised as a Level 3 fair value under IFRS 13. The significant inputs in the valuation technique used are discount rate of 5.2% and revenue volatility rate of 12.8%.

Notwithstanding that the annual revenue and the annual recurring revenue rendered from the acquired business for the year ended December 31, 2020 were neither greater than the agreed revenue targets nor hit the agreed goals specified in the agreement, John Ryan assisted in acquiring specific business within the period specified in the agreement. Therefore, based on the agreement, the Company has paid USD 1,492 thousand to John Ryan from a trust account as agreed. The remeasurement of the fair value of the aforementioned contingent consideration agreement is consistent with the amount estimated and recorded.

b.

Identifiable assets acquired and liabilities assumed

The following table summarized the fair value of identifiable assets acquired and liabilities assumed recognized at the acquisition date (translated at the exchange rates on December 31, 2020):

Accounts receivable and other current assets Property, plant and equipment Intangible assets Accounts payable and other current liabilities	Fair value $ 23,600 2,126 122,273 (37,015) $ 110,984

c. Goodwill arising from the acquisition for which is attributable mainly to the synergies expected to be achieved from integrating the acquired business into the Company’s existing business has been recognized as follows (translated at the exchange rates on December 31, 2020):

Consideration transferred Less: Fair value of identifiable net assets	Amounts $ 246,956 (110,984) $ 135,972

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(10) Property, Plant and Equipment

	For theyear ended December 31, 2021	For theyear ended December 31, 2021	For theyear ended December 31, 2021	For theyear ended December 31, 2021	For theyear ended December 31, 2021
	Effect of change in consolidated entities - - 2,107,168 - 2,107,168 - - - - -		Additions - 18,313 1,397,799 4,147,285	Disposal or write off		Balance, End of Year 8,763,260 117,475,024 832,882,543 37,174,884
			5,563,397			996,295,711
	- - -		2,831,918 24,370,471 5,661,314			42,819,944 758,531,143 29,723,444
	-		32,863,703			831,074,531
	-		12,104,276			6,000,865
						171,222,045

Balance, Beginning of Year $ 8,858,648 119,697,249 841,581,837 35,834,437 1,005,972,171 39,170,748 737,292,828 27,646,410 804,109,986 4,872,358 $ 206,734,543		Additions (deductions) - (18,363) 1,352,493 4,778,970 6,113,100 2,932,678 25,696,536 6,123,266 34,752,480 6,859,277		Disposal or write off - (272) (16,215,872) (3,519,978) (19,736,122) (272) (16,158,158) (3,515,871) (19,674,301) (3,004)	Reclassification, effect of change in exchange rate and others (481) 428,586 8,137,263 1,066,449 9,631,817 (75,198) (868,809) (187,827) (1,131,834) (10,173,150)	Balance, End of Year
						8,858,167 120,107,200 834,855,721 38,159,878
						1,001,980,966
						42,027,956 745,962,397 30,065,978
						818,056,331
						1,555,481
						185,480,116

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As of December 31, 2021 and 2020, a non-irrigated farmland located in LongTan plant amounted to $23,671 thousand was registered in the name of a farmer due to regulations. An agreement of pledge had been signed between the Company and the farmer clarifying the rights and obligations of each party.

In 2021 and 2020, the Company wrote down certain long-term assets with extremely low capacity utilization associated with its display segment and recognized impairment losses of $73,195 thousand and $396,308 thousand, respectively.

In 2021 and 2020, the Company wrote down certain long-term assets with extremely low capacity utilization associated with its energy segment and recognized impairment losses of $26,809 thousand and $31 thousand, respectively.

Impairment losses as mentioned above were recognized under other gains and losses in the consolidated statements of comprehensive income.

AUO disposed of part of its plants and related appendages to Vanguard International Semiconductor Corporation pursuant to the resolution of Board of Directors’ meeting held on April 28, 2021. Both parties have completed the transaction in December 2021. The consideration of disposal (net of related transaction costs) and gain on disposal were $808,662 thousand and $787,460 thousand, respectively. The consideration aforementioned is to be received in installments. As of December 31, 2021, outstanding receivables totaled $509,524 thousand (recognized in other current financial assets), which were fully received in January 2022.

ACTW decided to dispose of part of its plants and related appendages pursuant to the resolution of its Board of Directors’ meeting held on March 16, 2021, and those assets were reclassified as noncurrent assets held for sale then. The aforementioned assets have been disposed of in October 2021. The consideration of disposal (net of related transaction costs) and gain on disposal were $486,276 thousand and $335,709 thousand, respectively. As of December 31, 2021, such consideration was fully received.

DPSZ decided to dispose of part of its right-of-use assets, plants and related appendages pursuant to the resolution of its Board of Directors’ meeting held on June 29, 2021. The aforementioned assets have been disposed of in December 2021. The consideration of disposal (net of related transaction costs) and gain on disposal were $951,543 thousand and $618,916 thousand, respectively. As of December 31, 2021, such consideration was fully received.

The following table summarized the Company’ s capitalized borrowing costs and the interest rate range applied for the capitalization:

Capitalized borrowing costs The interest rates applied for the capitalization	For the years ended December 31,	For the years ended December 31,
	2021 $ 35,662 0.75%~ 1.63%	2020
		38,171
		0.80%~ 1.77%

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Certain property, plant and equipment were pledged as collateral, see Note 8.

(11) Lease Arrangements

a. Lessee

(i) Right-of-use assets

Carrying amount of right-of-use assets Land Buildings Other equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Other equipment	December 31, 2021 December 31, 2020 $ 10,308,082 10,891,245 314,517 364,442 15,774 21,666 $ 10,638,373 11,277,353 For the years ended December 31,	December 31, 2020
		10,891,245 364,442 21,666
		11,277,353
		2020
		122,283
		548,349 187,255 38,603
		774,207

(ii) Lease liabilities

December 31, 2021	December 31, 2021
Future minimum lease payments $ 709,127 2,682,008 8,184,783 $ 11,575,918	Interests Present value of minimum lease payments 174,421 534,706 592,229 2,089,779 1,084,027 7,100,756 1,850,677 9,725,241 $ 534,706 $ 9,190,535	Present value of minimum lease payments
		534,706 2,089,779 7,100,756
		9,725,241

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

December 31, 2020	December 31, 2020
Future minimum lease payments $ 735,828 2,738,621 8,859,869 $ 12,334,318	Interests Present value of minimum lease payments 182,708 553,120 633,115 2,105,506 1,221,223 7,638,646 2,037,046 10,297,272 $ 553,120 $ 9,744,152	Present value of minimum lease payments
		553,120 2,105,506 7,638,646
		10,297,272

(iii) Significant lease agreements

AUO has entered into various land lease agreements with Hsinchu Science Park Bureau, Central Science Park Administration Bureau and Southern Taiwan Science Park Bureau, respectively, for the construction of plant for operations. All lease amounts are adjusted in accordance with the land value announced by the government from time to time. In 2021 and 2020, AUO modified some of its lease contracts due to the decrease of the scope of the lease, and therefore, the carrying amounts of the right-of-use assets were reduced by $10,131 thousand and $147,371 thousand, respectively. The difference between the remeasurement of the lease liability and the reduction of the right-of-use asset was recognized in profit or loss.

(iv) Sublease of right-of-use assets

The Company subleased part of its right-of-use assets under operating leases. In 2021 and 2020, income from sublease were $4,846 thousand and $6,136 thousand, respectively. Right-of-use assets that meet the definition of investment properties are reclassified to investment properties. Refer to Note 6(12) for further information on investment properties.

(v) Additional lease information

The Company applies the recognition exemption to account for short-term leases and leases of low-value assets, primarily for some leases of office buildings and other sporadic leasing. The amounts recognized in profit or loss during the lease term were as follows:

Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets	For the years ended December 31,	For the years ended December 31,
	2021 $ 36,641 $ 430	2020
		9,551
		533

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Variable lease payments not included in the measurement of the lease liability COVID-19-related rent concessions (recognized as deduction of rent expense)	For the years ended December 31,	For the years ended December 31,
	2021 $ 3,559 $ 738	2020
		4,694
		35,167

Total cash outflow for the Company’s leases in which it acts as a lessee for the years ended December 31, 2021 and 2020 were $774,850 thousand and $794,918 thousand, respectively.

b. Lessor

The Company leased out its investment properties and part of its land, buildings and equipment and did not transfer substantially all the risks and rewards incidental to their ownership to the lessee, therefore, those leases were recognized as operating leases. Refer to Note 6(24) for the information of rental income from operating leases. In addition, the direct costs relating to the aforementioned operating leases for the years ended December 31, 2021 and 2020 were $895 thousand and $1,739 thousand, respectively.

The maturity analysis of undiscounted operating lease receivable for the abovementioned assets are as follows:

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards Total undiscounted operating lease receivable	December 31, 2021 $ 99,506 98,860 98,800 93,434 93,354 1,635,387 $ 2,119,341	December 31, 2020 120,354 108,492 108,211 105,765 105,765 1,973,885
		2,522,472

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(12) Investment Property

For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021
Balance, Beginning of Year $ 729,163 1,440,644 29,013 $ 2,198,820 $ 672,875 3,554 $ 676,429 $ 1,522,391 $ 4,035,907	Additions - - - - 42,902 1,762 44,664	Reclassification and effect of change in exchange rate (33,734) (11,374) (229) (45,337) (5,275) (27) (5,302)	Balance, End of Year
			695,429 1,429,270 28,784
			2,153,483
			710,502 5,289
			715,791
			1,437,692
			4,119,728

For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020
Balance, Beginning of Year $ 729,639 1,418,652 28,570 $ 2,176,861 $ 619,981 1,750 $ 621,731 $ 1,555,130 $ 4,057,848	Additions - - - - 42,349 1,739 44,088	Reclassification and effect of change in exchange rate (476) 21,992 443 21,959 10,545 65 10,610	Balance, End of Year
			729,163 1,440,644 29,013
			2,198,820
			672,875 3,554
			676,429
			1,522,391
			4,035,907

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The fair value of investment property is based on a valuation performed by a qualified independent appraiser who holds a recognized and relevant professional qualification and has recent valuation experience in the location and category of the investment property being valued. The valuation is performed using income approach, sales comparison approach and land development analysis approach with reference to available market information.

The fair value measurement was categorized as a level 3 fair value based on the inputs in the valuation techniques used. Income approach determines the fair value of the investment property based on the projected cash flows from the Company’ s estimated future rentals collected and discounted using the capitalization rate of the property. Sales comparison approach is through comparison, analysis, adjustment and other means of value for comparable properties to estimate the value of the investment property. Land development analysis approach determine the fair value of investment property based on the value prior to development or construction, after deducting the direct cost, indirect cost, capital interest and profit during the development period, and also consider total sales price of properties after completion of development or construction. It also incorporates the possibility of changes in utility of land through development or improvement in accordance with legal use and density of the land.

The significant inputs used in the fair value measurement were as follows:

Overall capital interest rate Rate of return Capitalization rate	For the years ended December 31,
	2021 2020 1.91% 2.53% 15.00% 15.00% 8.00%~12.00% 8.00%~12.00%

As at December 31, 2021 and 2020, there was no investment property that was pledged as collateral.

(13) Intangible Assets

Balance, Beginning of Year Cost: Goodwill $ 12,192,574 Patent and technology fee 12,268,444 Others 272,717 24,733,735		For the year	ended December 31, 2021	ended December 31, 2021
		Additions - - 38,000 38,000	Effect of change in consolidated entities - - 78,428 78,428	Effect of change in exchange rate Balance, End of Year (2,510) 12,190,064 (1,490) 12,266,954 (3,403) 385,742 (7,403) 24,842,760

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

For the year	ended December 31, 2021	ended December 31, 2021
Additions 946,689 182,535 24,984 1,154,208	Effect of change in consolidated entities - - - -	Effect of change in exchange rate - (331) (449) (780)	Balance, End of Year
			1,122,270 11,778,742 184,793
			13,085,805
			11,756,955

For the year	ended December 31, 2020	ended December 31, 2020
Additions - - - - - 256,996 10,186 267,182	Effect of change in consolidated entities 135,972 - 122,273 258,245 - - - -	Effect of change in exchange rate 102 2,131 8 2,241 - 636 (364) 272	Balance, End of Year
			12,192,574 12,268,444 272,717
			24,733,735
			175,581 11,596,538 160,258
			11,932,377
			12,801,358

The Company acquired other intangible assets in January 2021 due to the inclusion of SREC and its subsidiaries in the Company’s consolidated financial statements. See Note 6(8) for further details.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Company acquired goodwill and other intangible assets from the acquisition of business in February 2020. See Note 6(9) for further details.

For the purpose of impairment test, the following table shows the information of the operating business that the Company’s goodwill allocating to.

Display business	December 31, 2021 $ 11,067,794	December 31, 2020
		12,016,993

The Company’ s goodwill has been tested for impairment at least once at the end of the annual reporting period. The recoverable amount was determined based on value in use of the operating business.

The key assumptions used in the estimation of the recoverable amount included discount rate and terminal growth rate. The annual discount rates for the years ended December 31, 2021 and 2020 were 10.42% and 13.63%, respectively, based on industry weighted average cost of capital. The cash flow projections were determined based on the financial budgets approved by management covering the future five-year period and extrapolated with a steady annual terminal growth rate for subsequent years, which were negative 1% for both 2021 and 2020. The key assumptions abovementioned represents the management’s forecast of the future for the related industry by considering the history information from internal and external sources.

Based on the impairment assessment in 2021, as the recoverable amount of display CGU was lower than its carrying value, the Company recognized an impairment loss of NT$946,689 thousand on goodwill of display segment.

Based on the impairment assessment in 2020, no impairment loss was recognized as the recoverable amount of display CGU was higher than its carrying value.

(14) Other Current Assets and Other Noncurrent Assets

Prepayments for purchases Refundable and overpaid tax Refundable deposits Noncurrent financial assets at amortized cost Prepayments for equipment Others Less: current Noncurrent	December 31, 2021 December 31, 2020 $ 1,181,680 145,468 1,156,780 1,051,994 980,390 432,202 706,340 - 474,636 458,707 3,600,082 2,866,733 8,099,908 4,955,104 (3,592,203) (3,175,948) $ 4,507,705 1,779,156

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(15) Short-term Borrowings

Unsecured borrowings Unused credit facilities Interest rate range	December 31, 2021 $ 45,324 $ 27,648,756 0.90%~ 1.35%	December 31, 2020
		200,000
		29,045,922
		0.97%~ 1.40%

(16) Long-term Borrowings

Bank or agent bank Syndicated loans: Bank of Taiwan and others Bank of Taiwan and others Bank of Taiwan and others Bank of Taiwan and others Bank of China and others Unsecured loans Secured loans Less: transaction costs Less: current portion Unused credit facilities Interest rate range	Durations From Feb. 2019 to Feb. 2024 From Mar. 2019 to Apr. 2023 From Oct. 2021 to Oct. 2025 From May 2017 to Apr. 2021 From Nov. 2015 to Nov. 2023 From Apr. 2017 to Dec. 2026 From Apr. 2017 to Apr. 2032	December 31, 2021 $ 12,000,000 4,600,000 9,750,000 - 8,055,653 3,604,614 17,059,917 55,070,184 (415,320) 54,654,864 (16,833,597) $ 37,821,267 $ 90,379,635 0.75%~ 5.15%	December 31, 2020
			42,000,000 23,000,000 - 6,000,000 15,988,750 11,004,462 18,915,341 116,908,553 (313,584)
			116,594,969 (16,771,441)
			99,823,528
			54,131,575
			0.75%~ 5.15%

The Company entered into the aforementioned long-term loan arrangements with banks and financial institutions to finance capital expenditures for purchase of machinery and equipment, and to fulfill working capital, as well as to repay the matured debts. A commitment fee is negotiated with the leading banks of syndicated loans and is calculated based on the committed-to-withdraw but unused balance, if any. No commitment fees were paid for the year ended December 31, 2021.

These credit facilities contain covenants that require the Company to maintain certain financial ratios, calculating based on the Company’ s annual audited consolidated financial statements prepared in accordance with IFRSs endorsed and issued into effect by the FSC, such as current ratio, leverage ratio, interest coverage ratio, tangible net worth and others as specified in the loan agreements. As of December 31, 2021 and 2020, the Company complied with all financial covenants required under each of the loan agreements.

Refer to Note 6(29) for detailed information of exposures to interest rate, currency, and liquidity risks. Refer to Note 8 for assets pledged as collateral to secure the aforementioned long-term borrowings.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(17) Provisions

Balance at January 1, 2021 Additions Usage Effect of change in consolidated entities Effect of change in exchange rate Balance at December 31, 2021 Less: current Noncurrent Balance at January 1, 2020 Additions (Reversals) Usage Effect of change in exchange rate Balance at December 31, 2020 Less: current Noncurrent	Warranties(i) $ 1,375,327 325,090 (515,602) - (301) 1,184,514 (474,509) $ 710,005 $ 1,292,246 347,491 (264,558) 148 1,375,327 (568,411) $ 806,916	Litigation, claims and others 410,429 328,774 (34,989) 8,555 (8,975) 703,794 (467,781) 236,013 469,312 (2,553) (33,992) (22,338) 410,429 (176,243) 234,186	Total 1,785,756 653,864 (550,591) 8,555 (9,276) 1,888,308 (942,290) 946,018 1,761,558 344,938 (298,550) (22,190) 1,785,756 (744,654) 1,041,102

(i) The provisions for warranties were estimated based on historical experience of warranty claims rate associated with similar products and services. The Company expects most warranty claims will be made within two years from the date of the sale of the product.

(18) Employee Benefits

a. Defined benefit plans

Pursuant to the ROC Labor Standards Act, AUO and ADP have established defined benefit pension plans covering their full-time employees in the ROC. Such plans provide for retirement benefits to retiring employees based on years of service and the average salaries and wages for the six-month period before the employee’s retirement. The funding of these retirement plans by AUO and ADP are contributed monthly based on a certain percentage of their respective employees’ total salaries and wages. The funds are deposited with Bank of Taiwan.

In 2020, AUO reached an agreement with part of its employees for terminating their defined benefit pension plans and to settle its defined benefit obligation by relevant regulations. A gain on the settlement amounting to $458,854 thousand was thereby recognized in the statement of comprehensive income. The full settlement amount was withdrawn from the pension fund, of which $1,193,962 thousand that has not been withdrawn as of December 31, 2020 was fully withdrawn in January 2021.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

M.Setek has established defined benefit pension plans providing for retirement benefits to retiring employees based on years of service, position, and certain other factors in accordance with the regulations of its country of establishment.

(i) Reconciliation of the present value of defined benefit obligation and the fair value of plan assets for AUO, ADP and M.Setek

Present value of defined benefit obligation Fair value of plan assets Net defined benefit asset (recognized in other noncurrent assets)	December 31, 2021 $ (188,699) 301,790 $ 113,091	December 31, 2020 (181,758) 256,878 75,120

(ii) Movement in net defined benefit asset (liability)

Present value of defined benefit obligation 2021 2020 $ (181,758) (3,155,988) (6,104) (3,898) (581) (27,477) - 458,854 - - (6,685) 427,479 (1,804) - (16,558) (10,652) (7,754) 68,531 - - (26,116) 57,879 - - 21,236 2,488,803 4,624 69 25,860 2,488,872 $ (188,699) (181,758)	Fair value of	Net defined benefit asset (liability) 2021 2020 75,120 (613,157) (6,104) (3,898) (581) (27,477) - 458,854 1,002 22,377 (5,683) 449,856 (1,804) - (16,558) (10,652) (7,754) 68,531 47,376 82,339 21,260 140,218 18,304 96,996 (534) 1,138 4,624 69 22,394 98,203 113,091 75,120	Net defined benefit asset (liability) 2021 2020 75,120 (613,157) (6,104) (3,898) (581) (27,477) - 458,854 1,002 22,377 (5,683) 449,856 (1,804) - (16,558) (10,652) (7,754) 68,531 47,376 82,339 21,260 140,218 18,304 96,996 (534) 1,138 4,624 69 22,394 98,203 113,091 75,120
2021 $ (181,758) (6,104) (581) - - (6,685) (1,804) (16,558) (7,754) - (26,116) - 21,236 4,624 25,860 $ (188,699)	2021 256,878 - - - 1,002 1,002 - - - 47,376 47,376 18,304 (21,770) - (3,466) 301,790	2021 75,120 (6,104) (581) - 1,002 (5,683) (1,804) (16,558) (7,754) 47,376 21,260 18,304 (534) 4,624 22,394 113,091
			(3,898) (27,477) 458,854 22,377
			449,856
			- (10,652) 68,531 82,339
			140,218
			96,996 1,138 69
			98,203
			75,120

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iii) Plan assets

Pursuant to the ROC Labor Standards Act, AUO and ADP contribute an amount based on a certain percentage of employees’ total salaries and wages paid every month to their respective pension funds (the “Funds”), which are administered by the Bureau of Labor Fund, Ministry of Labor and supervised by the employees’ pension plan committee (the “Committee”) and deposited in the Committee’s name with Bank of Taiwan. Under the ROC Regulations for Revenues, Expenditures, Safeguard and Utilization of the Labor Retirement Fund, the minimum return on the plan assets should not be lower than the average interest rate on two year time deposits published by the local banks. The government is not only responsible for the determination of the investment strategies and policies, but also for any shortfall in the event that the rate of return is less than the required rate of return.

As of December 31, 2021and 2020, the Funds deposited in the Committee’s name in the Bank of Taiwan amounted to $301,790 thousand and$1,450,840 thousand (including the un-withdrawn balance aforementioned). Information on utilization of labor pension funds, including the yield rate of funds and the component of plan assets are available at the Bureau of Labor Funds, Ministry of Labor website.

Under the defined benefit plans in Japan, M.Setek is responsible to pay to employees when they are retired.

(iv) Present value of defined benefit obligation
(a) Principal actuarial assumptions

Discount rate Rate of increase in future salary	December 31, 2021 December 31, 2020 0.50%~0.65% 0.39%~0.50% 0.77%~4.49% 0.77%~4.49%

The Company anticipates contributing $98 thousand to the defined benefit plans in the next year starting from January 1, 2022.

As at December 31, 2021, the weighted-average duration of the defined benefit obligation was between 5 years to 15 years.

(b) Sensitivity analysis

Reasonably possible changes at December 31, 2021 and 2020 to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Discount rate Rate of increase in future salary	December 31, 2021 Changes in assumptions + 0.25% -0.25% $ (6,059) 6,354 $ 6,109 (5,856)	December 31, 2020 Changes in assumptions +0.25% -0.25% (6,031) 6,328 6,128 (5,870)
	+ 0.25% $ (6,059) $ 6,109	+0.25% (6,031) 6,128

In practical, the relevant actuarial assumptions are correlated to each other. The approach to develop the sensitivity analysis as above is the same approach to recognize the net defined benefit asset (liability) in the balance sheet.

The approach to develop the sensitivity analysis and its relevant actuarial assumptions are the same as those in previous year.

b. Defined contribution plans

Commencing July 1, 2005, pursuant to the ROC Labor Pension Act (the “Act”), employees who elected to participate in the Act or joined the Company after July 1, 2005, are subject to a defined contribution plan under the Act. Under the defined contribution plan, AUO and its subsidiaries located in the ROC contribute monthly at a rate of no less than six percent of the employees’ monthly salaries and wages to the employee’s individual pension fund account at the ROC Bureau of Labor Insurance. The Company’s foreign subsidiaries have set up their retirement plans, if necessary, based on their respective local government regulations.

AUO and its subsidiaries in the ROC have set up defined contribution plans in accordance with the Act. For the years ended December 31, 2021 and 2020, these companies set aside, $972,301 thousand and $939,727 thousand, respectively, of the pension costs under the pension plan to the ROC Bureau of Labor Insurance. Except for the aforementioned companies, other foreign subsidiaries recognized pension expenses of $837,885 thousand and $569,187 thousand for the years ended December 31, 2021 and 2020, respectively, for the defined contribution plans based on their respective local government regulations.

(19) Capital and Other Components of Equity

a. Common stock

AUO’ s authorized common stock, with par value of $10 per share, both amounted to $100,000,000 thousand as at December 31, 2021 and 2020.

AUO’s issued common stock, with par value of $10 per share, both amounted to $96,242,451 thousand as at December 31, 2021 and 2020.

As of December 31, 2021, AUO has issued 24,815 thousand ADSs, which represented 248,147 thousand shares of its common stock.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. Capital surplus

The components of capital surplus were as follows:

From common stock From convertible bonds From others	December 31, 2021 $ 52,756,091 6,049,862 1,251,048 $ 60,057,001	December 31, 2020
		52,756,091 6,049,862 1,781,731
		60,587,684

According to the ROC Company Act, capital surplus, including premium from stock issuing and donations received, may be used to offset a deficit. When a company has no deficit, such capital surplus may be distributed by issuing common stock as stock dividends or by cash according to the proportion of shareholdings. Pursuant to the ROC Regulations Governing the Offering and Issuance of Securities by Securities Issuers, the total sum of capital surplus capitalized per annum shall not exceed 10 percent of the paid-in capital.

c. Retained earnings and dividend policy

In accordance with AUO’s Articles of Incorporation, distribution of earnings by way of cash dividends should be approved by AUO’ s Board of Directors and reported to AUO’ s shareholders in its meeting. After payment of income taxes and offsetting accumulated deficits, the legal reserve shall be set aside until the accumulated legal reserve equals AUO’s paid-in capital. In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside or reversed. The remaining current-year earnings together with accumulated undistributed earnings from preceding years can be distributed according to relevant laws and AUO’s Articles of Incorporation.

Legal reserve may be used to offset a deficit. When the Company incurs no loss, it may distribute its legal reserve by issuing new shares or by cash in accordance with the proportion of shareholdings for the portion in excess of 25% of the paid-in capital.

AUO’s dividend policy is to pay dividends from surplus considering factors such as AUO’s current and future investment environment, cash requirements, domestic and overseas competitive conditions and capital budget requirements, while taking into account shareholders’ interest, maintenance of balanced dividend and AUO’s long-term financial plan. If the current-year retained earnings available for distribution reach 2% of the paid-in capital of AUO, dividend to be distributed shall be no less than 20% of the current-year retained earnings available for distribution. If the current-year retained earnings available for distribution do not reach 2% of the paid-in capital of AUO, AUO may decide not to distribute dividend. The cash portion of the dividend, which may be in the form of cash and stock, shall not be less than 10% of the total dividend distributed during the year. The dividend distribution ratio aforementioned could be adjusted after taking into consideration factors such as finance, business and operations, etc.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Pursuant to relevant laws or regulations or as requested by the local authority, total net debit balance of the other components of equity shall be set aside from current earnings as special reserve, and not for distribution. Subsequent decrease pertaining to items that are accounted for as a reduction to the other components of equity shall be reclassified from special reserve to undistributed earnings.

AUO’ s annual shareholders’ meeting held on June 17, 2020 resolved to set aside a special reserve of $1,157,614 thousand and not to distribute dividends for 2019.

The aforementioned appropriation of earnings for 2019 was consistent with the resolutions of the Board of Directors’ meeting held on March 20, 2020.

AUO’s appropriation of earnings for 2020 by way of cash dividends has been approved in the Board of Directors’ meeting held on March 16, 2021. The appropriation of 2020 earnings by other ways has been approved in the annual shareholders’ meeting held on August 19, 2021. Details of distribution were as follows:

Legal reserve Special reserve Cash dividends to shareholders	Appropriation of earnings Dividends per share (NT$) $ 735,456 1,264,919 2,850,967 0.30 $ 4,851,342

The aforementioned appropriation of earnings for 2020 was consistent with the resolutions of the Board of Directors’ meeting held on March 16, 2021.

Information on the approval of Board of Directors and shareholders for AUO’s appropriations of earnings are available at the Market Observation Post System website.

d. Treasury shares

AUO repurchased 125,000 thousand shares as treasury shares transferred to employees in accordance with Securities and Exchange Act requirements. The related information on treasury share transactions was as follows (shares in thousands):

For the year ended December 31, 2021

Reason for reacquisition Transferring to employees	Number of shares, Beginning of Year 125,000	Additions -	Reductions Number of shares, End of Year (70,801) 54,199

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

For the year ended December 31, 2020

Reason for reacquisition Transferring to employees	Number of shares, Beginning of Year 125,000	Additions -	Reductions Number of shares, End of Year - 125,000

Refer to Note 6(20) for information on employee treasury shares plan for 2021. A total of 70,801 thousand shares were transferred with total costs for treasury shares of $574,195 thousand and cost per share of $8.11.

Pursuant to the Securities and Exchange Act, the number of shares repurchased shall not exceed 10 percent of the number of the company’s issued and outstanding shares, and the total amount repurchased shall not exceed the sum of the company’ s retained earnings, share premium, and realized capital surplus. Also, the shares repurchased for transferring to employees shall be transferred within five years from the date of reacquisition and those shares not transferred within the five-year period are to be retired.

In accordance with the Securities and Exchange Act, treasury shares held by AUO shall not be pledged, and do not hold any shareholder rights before their transfer.

e. Other components of equity

Balance at January 1, 2021 Foreign operations – foreign currency translation differences Net change in fair value of financial assets at FVTOCI Equity-accounted investees – share of other comprehensive income Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal Acquisition of interest in subsidiary Realized loss on sales of securities reclassified to profit or loss Related tax Balance at December 31, 2021	Cumulative translation differences $ (3,206,520) (1,267,032) - (166,521) - (753,444) 183,820 336,124 $ (4,873,573)	Unrealized gains (losses) on financial assets at FVTOCI (63,783) - (33,560) 253,084 (25,350) - - - 130,391	Total (3,270,303) (1,267,032) (33,560) 86,563 (25,350) (753,444) 183,820 336,124 (4,743,182)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Balance at January 1, 2020 Foreign operations – foreign currency translation differences Net change in fair value of financial assets at FVTOCI Equity-accounted investees – share of other comprehensive income Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal Related tax Balance at December 31, 2020 f. Non-controlling interests, net of tax	Cumulative translation differences $ (3,129,982) (26,626) - (49,783) - (129) $ (3,206,520)	Unrealized gains (losses) on financial assets at FVTOCI 1,124,598 - 2,673,994 2,788 (3,865,163) - (63,783)	Total (2,005,384) (26,626) 2,673,994 (46,995) (3,865,163) (129) (3,270,303)

Balance at beginning of the year

Equity attributable to non-controlling interests:
Profit (loss) for the year
Foreign currency translation differences, net of tax
Unrealized gain on financial assets at FVTOCI
Acquisition of subsidiaries
Acquisition of interest in subsidiary from non-controlling
interests
Subsidiaries capital return and cash dividends
Subsidiaries capital increase and others
Balance at end of the year

For the years ended
December 31,
2021
2020
$ 10,985,674
11,304,909
2,128,470
(468,897)
(77,160)
146,951
-
2,712
887,129
-
(7,530,685)
-
(251,415)
-
37,418
(1)
$
6,179,431
10,985,674

2021
$ 10,985,674
2,128,470
(77,160)
-
887,129
(7,530,685)
(251,415)
37,418
$
6,179,431

AUO, upon the resolution of the Board of Directors on April 28, 2021, decided to purchase 49% equity interests of AUOKS from its joint venture partner through a capital injection of USD625,462 thousand (equivalent to RMB3,995,210 thousand) in its subsidiary AUOLB. The aforementioned equity transaction has been approved by the Investment Commission, Ministry of Economic Affairs on October 21, 2021, and completed on December 24, 2021. The procedure of change of shareholder has been completed on December 27, 2021, and therefore AUOKS became a 100%-owned subsidiary of AUOLB.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Carrying amount of the equity interests acquired
Consideration paid to non-controlling interests
Capital surplus－changes in ownership interest of subsidiary
Other equity－effect from foreign currency translation differences arising from
foreign operations
Capital surplus and retained earnings – differences between consideration and
carrying amount arising from acquisition of interest in subsidiary For the year
ended
December
31, 2021
$ 7,530,685
(17,317,787)
534
753,444
$
(9,033,124)

(20) Share-based Payments
a. Employee treasury shares plan

AUO granted the treasury shares to eligible employees, including those of AUO and its subsidiaries in accordance with the relevant plan. The key terms and conditions related to the grants were disclosed as follows:

Grant date Total shares granted Contract term Grant object Vesting conditions	Plan 1 Plan 2 February 18, 2021 August 16, 2021~August 24, 2021 3,978 thousand shares 66,823 thousand shares - - Employees Employees Vest immediately Vest immediately

The fair value of the share-based payments granted by AUO was measured at the date of grant using the Black-Scholes option pricing model. For the year ended December 31, 2021, the related compensation costs recognized for the abovementioned plan amounted to $826,705 thousand.

b. Employee restricted stock plan

As of December 31, 2021, information about the share-based payment rewards plan that ADTHLD, a subsidiary of AUO, granted to employees of AUO and its subsidiaries was as follows:

Plan Grant date Granted units Vesting conditions
Employee restricted stock plan April 1, 2021 850,000 Note
Employee restricted stock plan December 2, 2021 400,000 Note
Note: Employees are granted restricted stocks without consideration, and are eligible to vest
100% of 250,000 units when they provide two years of service subsequent to the grant
date. Further employees who provide two years and five years of service, respectively,
subsequent to the grant date as well as fulfill specific performance conditions are eligible
to vest 40% and 60% of 1,000,000 units, respectively.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

ADTCM’s special shares without voting right which are held by AUO are the subject for the execution of the aforementioned plan. According to the relevant plan, one special share without voting right of ADTCM represents one common share right of ADTHLD.

The weighted average fair value per share estimated using the income approach for the abovementioned plan was USD1.105. The weighted average cost of capital which is the principal parameter was between 18.1% and 20.1%. For the nine months ended December 31, 2021, the compensation costs recognized for the abovementioned plan amounted to $4,546 thousand.

(21) Revenue from Contracts with Customers
a. Disaggregation of revenue

For the years ended December 31,

	2021		2020
Display segment $ 111,848,026 114,629,475 55,035,626 22,628,900 54,272,074 $ 358,414,101 $ 85,372,809 63,797,402 110,617,765 29,389,600 47,375,823 21,860,702 $ 358,414,101 $ 38,556,227 319,857,874 $ 358,414,101	Energy segment 1,268,984 7,824,949 2,173 174,862 3,000,072 12,271,040 - - - - - 12,271,040 12,271,040 - 12,271,040 12,271,040	Display segment 89,796,921 84,666,944 41,955,024 19,218,501 26,166,171 261,803,561 70,477,336 41,888,242 77,422,244 22,784,935 35,350,178 13,880,626 261,803,561 33,213,909 228,589,652 261,803,561	Energy segment 347,005 5,174,783 484 505,526 3,124,022 9,151,820 - - - - - 9,151,820 9,151,820 - 9,151,820 9,151,820	Total segments
				90,143,926 89,841,727 41,955,508 19,724,027 29,290,193
				270,955,381
				70,477,336 41,888,242 77,422,244 22,784,935 35,350,178 23,032,446
				270,955,381
				33,213,909 237,741,472
				270,955,381

(i) Including sales of solar-related products, raw materials and components and from products for other applications and service charges.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. Contract balances

Contract assets`－`current (recorded in other current financial assets) Contract liabilities`－`current (recorded in other current liabilities) Contract liabilities`－`noncurrent	December 31, 2021 $ 1,371,390 $ 3,325,765 8,739,846 $ 12,065,611	December 31, 2020
		145,558
		455,551 -
		455,551

The amounts of revenue recognized for the years ended December 31, 2021 and 2020 that previously included in the contract liability balance at the beginning of the year were $264,480 thousand and $505,968 thousand, respectively. Additionally, in the first quarter of 2021, AUO entered into long-term sales agreements with customers and has received payments in advance. Under the agreements, the customers should fulfill the requirement of minimum order quantity and AUO should fulfill the obligation of relevant delivery quantity as agreed. AUO accounted for such obligation as contract liabilities.

(22) Remuneration to Employees and Directors

According to AUO’s Articles of Incorporation, AUO should distribute remuneration to employees and directors no less than 5% and no more than 1% of annual profits before income tax, respectively, after offsetting accumulated deficits, if any. Only employees, including employees of affiliate companies that meet certain conditions are entitled to the abovementioned remuneration which to be distributed in stock or cash. The said conditions and distribution method are decided by Board of Directors or the personnel authorized by Board of Directors.

AUO accrued remuneration to employees based on the profit before income tax excluding the remuneration to employees and directors for the period, multiplied by the percentage resolved by Board of Directors. For the years ended December 31, 2021 and 2020, AUO estimated the remuneration to employees amounting to $6,339,435 thousand and $253,493 thousand, respectively. Remuneration to directors was estimated based on the amount expected to pay and recognized together with the remuneration to employees as cost of sales or operating expenses. If remuneration to employees is resolved to be distributed in stock, the number of shares is determined by dividing the amount of remuneration by the closing price of the shares (ignoring ex-dividend effect) on the day preceding the Board of Directors’ meeting. If there is a change in the proposed amounts after the annual consolidated financial statements are authorized for issue, the differences are accounted for as a change in accounting estimate and adjusted prospectively to next year’s profit or loss.

Remuneration to employees and directors for 2020 in the amounts of $253,493 thousand and $8,275 thousand, respectively, in cash for payment had been approved in the meeting of Board of Directors held on March 16, 2021. The aforementioned approved amounts are the same as the amounts charged against earnings of 2020.

The information about AUO’s remuneration to employees and directors is available at the Market Observation Post System website.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(23) Additional Information of Expenses by Nature

Employee benefits expenses: Salaries and wages Labor and health insurances Retirement benefits Other employee benefits Depreciation Amortization		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2021	Total 42,905,249 1,990,997 1,815,869 5,294,966 33,457,081 207,519		2020
	Recognized in cost of sales $30,648,271 1,432,506 1,384,747 3,801,411 29,022,101 188,613	Recognized in operating expenses 12,256,978 558,491 431,122 1,493,555 4,434,980 18,906		Recognized in cost of sales 22,698,460 1,274,706 829,019 3,234,404 30,371,202 256,996	Recognized in operating expenses Total 7,683,280 30,381,740 448,987 1,723,693 230,039 1,059,058 556,033 3,790,437 4,759,146 35,130,348 10,186 267,182

(24) Non-Operating Income and Expenses

a. Interest income

Interest income on bank deposits Interest income on government bonds with reverse repurchase agreements and others b. Other income	For the years ended December 31,	For the years ended December 31,
	2021 $ 495,281 51 $ 495,332	2020
		522,158 10,894
		533,052

Rental income, net Dividend income Grants Others	For the years ended December 31,	For the years ended December 31,
	2021 $ 569,970 8,090 374,445 437,175 $ 1,389,680	2020
		494,348 261,382 2,349,464 653,662
		3,758,856

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

c. Other gains and losses

Foreign exchange gains (losses), net Gains (losses) on valuation of financial instruments at FVTPL, net Gains on disposals of property, plant and equipment, net Gains on disposals of investments and financial assets, net Impairment losses on assets Gains (losses) on litigation and others	For the years ended December 31, 2021 2020 $ 144,679 (584,821) (376,949) 312,561 1,841,771 58,558 890,046 159 (1,046,693) (396,339) (415,396) (151,261) $ 1,037,458 (761,143)
	2021 $ 144,679 (376,949) 1,841,771 890,046 (1,046,693) (415,396) $ 1,037,458

d. Finance costs

nterest expense on bank borrowings nterest expense on lease liabilities Other interest expense Finance expense	For the years ended December 31,	For the years ended December 31,
	2021 $ 1,889,834 182,853 62,757 82,121 $ 2,217,565	2020
		2,597,055 182,919 86,813 77,085
		2,943,872

(25) Income Taxes

The Company cannot file a consolidated tax return under local regulations. Therefore, AUO and its subsidiaries calculate their income taxes liabilities individually on a stand-alone basis using the enacted tax rates in their respective tax jurisdictions.

a. Income tax expense (benefit)

The components of income tax expense (benefit) for the years ended December 31, 2021 and 2020 were as follows:

Current income tax expense (benefit): Current year Adjustment to prior years and others Deferred tax expense (benefit): Temporary differences	For the years ended December 31, 2021 2020 $ 2,052,141 712,966 62,676 96,592 2,114,817 809,558 832,880 (929,314) $ 2,947,697 (119,756)
	2021 $ 2,052,141 62,676 2,114,817 832,880 $ 2,947,697

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Income taxes expense (benefit) recognized directly in other comprehensive income for the years ended December 31, 2021 and 2020 were as follows:

Items that will never be reclassified to profit or loss: Remeasurement of defined benefit obligations Items that are or may be reclassified subsequently to profit or loss: Foreign operations – foreign currency translation differences	For the years ended December 31,	For the years ended December 31,
	2021 $ 4,577 $ (345,815)	2020
		28,043
		16,855

Reconciliation of the expected income tax expense (benefit) calculated based on the ROC statutory income tax rate compared with the actual income tax expense as reported in the consolidated statements of comprehensive income for the years ended December 31, 2021 and 2020, was as follows:

Income tax expense at AUO’s statutory tax rate Tax on undistributed earnings, net Effect of different subsidiaries income tax rate Share of profit of equity-accounted subsidiaries Net of non taxable income from domestic investments and non-deductible expense Change of unrecognized deductible temporary differences Adjustments to prior year Others Income tax expense (benefit)	For the years ended December 31, 2021 2020 $ 13,281,359 557,534 62,580 - 728,228 384,919 3,365,832 736,608 (2,979,703) (636,962) (11,604,638) (1,232,902) 62,676 96,592 31,363 (25,545) $ 2,947,697 (119,756)
	2021 $ 13,281,359 62,580 728,228 3,365,832 (2,979,703) (11,604,638) 62,676 31,363 $ 2,947,697

The above reconciliation is prepared based on each individual entity of the Company and presented on an aggregate basis.

b. Deferred tax assets and liabilities

Deferred tax assets have not been recognized in respect of the following items.

Deductible temporary differences Unused investment tax credits Unused tax losses carryforwards	December 31, 2021 $ 2,480,011 952,111 19,541,669 $ 22,973,791	December 31, 2020
		1,598,886 1,063,294 31,289,400
		33,951,580

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As of December 31, 2021, the unused investment tax credits include $939,807 thousand from AUST with no expiration, and $11,937 thousand and $366 thousand from domestic subsidiaries, DPTW and AETTW, respectively.

Tax loss carryforwards is utilized in accordance with the relevant jurisdictional tax laws and regulations. Net losses from foreign subsidiaries are approved by tax authorities in respective jurisdiction to offset future taxable profits. Under the ROC tax laws, approved tax losses of AUO and its domestic subsidiaries can be carried forward for 10 years to offset future taxable profits.

As of December 31, 2021, the expiration period for abovementioned unrecognized deferred tax assets of unused tax losses carryforwards were as follows:

Year of assessment 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021	Unrecognized deferred tax assets Expiration in year $ 349,610 2022(i) 1,620,628 2022 ~ 2023 2,185,347 2023 ~ 2024 3,186,912 2024 ~ 2025 3,475,366 2021 ~ 2026 1,492,637 2021(i) 1,249,260 2023(i) 5,179,170 2023(i) 592,927 2024 ~ 2030 209,812 2025(i) $ 19,541,669

(i) As of December 31, 2021, the unrecognized deferred tax assets of unused tax losses carryforwards include $9,604 thousand with no expiration.

As of December 31, 2021 and 2020, the aggregate taxable temporary differences associated with investments in subsidiaries not recognized as deferred tax liabilities amounted to nil and $832,350 thousand, respectively.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The components of and changes in deferred tax assets and liabilities were as follows:

Investment tax credits Tax losses carryforwards Unrealized loss and expenses Inventories write- down Foreign investment gains under the equity method Accumulated amortization of goodwill in accordance with local tax laws Remeasurement of defined benefit plans Foreign operations –foreign currency translation differences Others	Deferred tax assets December 31, 2021 December 31, 2020	Deferred tax assets December 31, 2021 December 31, 2020	Deferred tax liabilities December 31, 2021 December 31, 2020	Deferred tax liabilities December 31, 2021 December 31, 2020	Total December 31, 2021 December 31, 2020	Total December 31, 2021 December 31, 2020
	December 31, 2021		December 31, 2021		December 31, 2021
	$ 299,861 1,289,775 233,405 740,795 - - 124,596 1,215,022 2,563,134 $ 6,466,588	228,056 2,209,244 298,553 559,809 - - 129,173 869,207 1,711,304 6,005,346	- - (74,637) - (2,007,545) (2,024,091) - - (118,447) (4,224,720)	- - (64,590) - (869,124) (2,213,429) - - (66,183) (3,213,326)	299,861 1,289,775 158,768 740,795 (2,007,545) (2,024,091) 124,596 1,215,022 2,444,687 2,241,868	228,056 2,209,244 233,963 559,809 (869,124) (2,213,429) 129,173 869,207 1,645,121 2,792,020

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Recognized in profit or loss	Recognized in other comprehensive income	Effect of change in consolidated entities, exchange rate and others	December 31, 2020	Recognized in profit or loss	Recognized in profit or loss	Recognized in other comprehensive income	December 31, 2021
(141,931) (15,003) 72,823 (319,514) 174,362 - - - 1,158,577	- - - - - - (28,043) (16,855) -	(15,741) 807 68 56 - - - - 4,897	228,056 2,209,244 233,963 559,809 (869,124) (2,213,429) 129,173 869,207 1,645,121	79,276 (912,719) (75,171) 181,006 (1,138,421) 189,338 - - 843,811		- - - - - - (4,577) 345,815 -	299,861 1,289,775 158,768 740,795 (2,007,545) (2,024,091) 124,596 1,215,022 2,444,687
929,314	(44,898)	(9,913)	2,792,020	(832,880)		341,238	2,241,868
					the
						2021 61,330,628 9,522,200 6.44
					$ $

(26) Earnings per Share

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Diluted earnings per share Profit attributable to AUO’s shareholders Weighted-average number of common shares outstanding during the year Effect of employee remuneration in stock Diluted earnings per share (NT$)	For the Years ended December 31,	For the Years ended December 31,
	2021 $ 61,330,628 9,522,200 279,624 9,801,824 $ 6.26	2020
		3,376,324
		9,499,245 18,107
		9,517,352
		0.35

(27) Cash Flow Information

The reconciliation of liabilities to cash flows arising from financing activities was as follows:

Balance at January 1, 2021 Cash flows Non-cash changes: Additions Changes in consolidated entities Changes in exchange rate and others Balance at December 31, 2021 Balance at January 1, 2020 Cash flows Non-cash changes: Additions Changes in exchange rate and others Balance at December 31, 2020	Long-term borrowings (including current installments) $ 116,594,969 (62,929,880) - 1,149,806 (160,031) $ 54,654,864 $ 111,968,392 4,791,073 - (164,496) $ 116,594,969	Short-term borrowings 200,000 (154,574) - - (102) 45,324 1,725,602 (1,544,602) - 19,000 200,000	Guarantee deposits 864,868 (20,409) - - (72,582) 771,877 785,456 53,268 - 26,144 864,868	Lease liabilities 10,297,272 (551,367) 123,715 617 (144,996) 9,725,241 11,091,077 (597,221) 122,283 (318,867) 10,297,272	Total liabilities from financing activities 127,957,109 (63,656,230) 123,715 1,150,423 (377,711) 65,197,306 125,570,527 2,702,518 122,283 (438,219) 127,957,109

(28) Financial Instruments
a. Fair value and carrying amount

The carrying amounts of the Company’s current non-derivative financial instruments, including financial assets and financial liabilities at amortized cost, were considered to approximate their fair value due to their short-term nature. This methodology applies to cash and cash equivalents, receivables or payables (including related parties), other current financial assets, and short-term borrowings.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Disclosures of fair value are not required for the financial instruments abovementioned and lease liabilities. Other than those, the carrying amount and fair value of other financial instruments of the Company as of December 31, 2021 and 2020 were as follows:

Financial assets: Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL Financial assets at FVTOCI Financial assets at amortized cost: Domestic and foreign time deposits Refundable deposits Financial liabilities: Financial liabilities at FVTPL: Financial liabilities held for trading Financial liabilities at amortized cost: Long-term borrowings (including current installments) Guarantee deposits Long-term payables (including current installments)	December 31, 2021 Carrying Amount Fair Value $ 159,270 159,270 1,308,157 1,308,157 10,706,340 10,706,340 980,390 980,390 132,797 132,797 54,654,864 54,654,864 771,877 771,877 1,404,990 1,404,990	December 31, 2020
	Carrying Amount $ 159,270 1,308,157 10,706,340 980,390 132,797 54,654,864 771,877 1,404,990	Carrying Amount Fair Value 668,058 668,058 622,824 622,824 - - 432,202 432,202 170,956 170,956 116,594,969 116,594,969 864,868 864,868 309,900 309,900

b. Valuation techniques and assumptions applied in fair value measurement

The fair values of financial assets and financial liabilities with standard terms and conditions and traded in active markets are determined with reference to quoted market prices. The fair values of other financial assets and financial liabilities without quoted market prices are estimated using valuation approach. The estimates and assumptions used are the same as those used by market participants in the pricing of financial instruments.

Fair value of foreign currency forward contract is measured based on the maturity date of each contract with quoted spot rate and quoted swap points from Reuters quote system.

Fair value of structured investment product is measured based on the discounted future cash flows arising from principal consideration and probable gains estimate to be received.

For domestic and foreign time deposits, their fair value approximate to their carrying amount.

Fair value of long-term payable, which approximates to its carrying value is determined by discounting the expected cash flows at a market interest rate.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The refundable deposits and guarantee deposits are based on carrying amount as there is no fixed maturity.

The fair value of floating-rate long-term borrowings approximates to their carrying value.

c.
Fair value measurements recognized in the consolidated balance sheets

The Company determines fair value based on assumptions that market participants would use in pricing an asset or a liability in the principal market. When considering market participant assumptions in fair value measurements, the following fair value hierarchy distinguishes between observable and unobservable inputs, which are categorized in one of the following levels:

(i) Level 1 inputs: Unadjusted quoted prices for identical assets or liabilities in active markets.
(ii) Level 2 inputs: Other than quoted prices included within Level 1, inputs are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices).
(iii) Level 3 inputs: Derived from valuation techniques that include inputs for the asset or liability that are not based on observable market data (unobservable inputs).

The fair value measurement level of an asset or a liability within their fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. The Company uses valuation techniques that maximize the use of observable inputs and minimize the use of unobservable inputs.

December 31, 2021 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL Financial assets at FVTOCI Financial assets at amortized cost: Domestic and foreign time deposits Financial liabilities at FVTPL: Financial liabilities held for trading Financial liabilities at amortized cost: Long-term payables (including current installments)	Level 1 $ - 149,177 - - -	Level 2 159,270 - 10,706,340 132,797 1,404,990	Level 3 Total - 159,270 1,158,980 1,308,157 - 10,706,340 - 132,797 - 1,404,990

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

December 31, 2020 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL Financial assets at FVTOCI Financial liabilities at FVTPL: Financial liabilities held for trading Financial liabilities at amortized cost: Long-term payables (including current installments)	Level 1 $ - 294,668 - -	Level 2 668,058 - 170,956 309,900	Level 3 Total - 668,058 328,156 622,824 - 170,956 - 309,900

There were no transfers between Level 1 and 2 for the years ended December 31, 2021 and 2020.

d. Reconciliation for fair value measurements categorized within Level 3

Financial assets at FVTOCI`－`equity instruments without active market Balance at beginning of the year Net gains (losses) included in other comprehensive income Purchases Disposals Reclassification Effect of exchange rate change Balance at end of the year	For the years ended December 31 2021 2020 $ 328,156 188,670 - 4,600 780,026 173,036 - (18,568) 51,015 (20,000) (217) 418 $ 1,158,980 328,156
	2021 $ 328,156 - 780,026 - 51,015 (217) $ 1,158,980

e. Description of valuation processes and quantitative disclosures for fair value measurements categorized within Level 3

The Company’s management reviews the policy and procedures of fair value measurements at least once at the end of the annual reporting period, or more frequently as deemed necessary. When a fair value measurement involves one or more significant inputs that are unobservable, the Company monitors the valuation process discreetly and examines whether the inputs are used the most relevant market data available.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Item Financial assets at FVTOCI–equity instruments without active market	Valuation technique Market approach	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement `•`Price-Book ratio (1.44~17.85 at Dec. 31, 2021 and 1.01~2.64 at Dec. 31, 2020) `•`Price-Earnings ratio (8.82~26.12 at Dec. 31, 2021 and 12.95~24.99 at Dec. 31, 2020) `•`Discount for lack of marketability (20% at Dec. 31, 2021 and 20%~30% at Dec. 31, 2020) `•`The higher the price- book ratio is, the higher the fair value is. `•`The higher the price- earnings ratio is, the higher the fair value is. `•`The greater degree of lack of marketability is, the lower the fair value is.

(29) Financial Risk Management
a. Risk management framework

The managerial officers of related divisions are appointed to review, control, trace and monitor the strategic risks, financial risks and operational risks faced by the Company. The managerial officers report to executive officers the progress of risk controls from time to time and, if necessary, report to the board of directors, depending on the extent of impact of risks.

b. Financial risk information

Hereinafter discloses information about the Company’ s exposure to variable risks, and the goals, policies and procedures of the Company’s risk measurement and risk management.

The Company is exposed to the following risks due to usage of financial instruments:

(i) Credit risk

Credit risk is the risk of financial loss to the Company if a customer or counterparty to a financial instrument fails to meet its contractual obligations. The Company’s exposures to credit risk are mainly from:

(a) The carrying amount of financial assets recognized in the consolidated balance sheets.
(b) The amount of contingent liabilities as a result from the Company providing financial guarantee to its customers.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Company’ s potential credit risk is derived primarily from cash in bank, cash equivalents and trade receivables. The Company deposits its cash with various reputable financial institutions of high credit quality. The Company also entered into reverse repurchase agreements with securities firms or banks in Taiwan covering government bonds that classified as cash equivalents. There should be no major concerns for the performance capability of trading counterparts. Management performs periodic evaluations of the relative credit standing of these financial institutions and limits the amount of credit exposure with any one institution. Management believes that there is a limited concentration of credit risk in cash and cash equivalent investments.

The majority of the Company’ s customers are in high technology industries. Management continuously evaluates and controls the credit quality, credit limit and financial strength of its customers to ensure any overdue receivables are taken necessary procedures. The Company also flexibly makes use of advance receipts, accounts receivable factoring and credit insurance as credit enhancement instruments. If necessary, the Company will request collaterals or assurance from its customers in order to reduce the credit risk from particular customers.

Additionally, on the reporting date, the Company reviews the recoverability of its receivables to provide appropriate valuation allowances. Consequently, management believes there is a limited concentration of its credit risk.

For the years ended December 31, 2021 and 2020, the Company’s five largest customers accounted for 43.0% and 40.8%, respectively, of the Company’ s consolidated net revenue. There is no other significant concentration of credit risk.

Refer to Note 6(5) for expected credit loss analysis of accounts receivable and the movement in the loss allowance of accounts receivable.

For credit of guarantee, the Company’s policy is to provide financial guarantees only to subsidiaries. Refer to Note 13(1)b. for information about endorsements or guarantees provided by the Company to its subsidiaries as of December 31, 2021.

(ii) Liquidity risk

Liquidity risk is the risk that the Company has no sufficient working capital and unused credit facilities to meet its obligations associated with matured financial liabilities, that may resulting from an economic downturn or uneven demand and supply in the market and cause a significant decrease in product selling prices and market demands.

Liquidity risk of the Company is monitored through its corporate treasury department which tracks the development of the actual cash flow position for the Company and uses input from a number of sources in order to forecast the overall liquidity position both on a short and long term basis. Corporate treasury invests surplus cash in money market deposits with appropriate maturities to ensure sufficient liquidity is available to meet liabilities when due, without incurring unacceptable losses or risking damage to the Company’s reputation.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The following, except for payables (including related parties) and equipment and construction payable, are the contractual maturities of other financial liabilities. The amounts include estimated interest payments (except for short-term borrowings) but exclude the impact of netting agreements.

Contractual cash flows December 31, 2021 Non-derivative financial liabilities Short-term borrowings $ 45,324 Long-term borrowings (including current installments) 56,690,221 Guarantee deposits 771,877 Long-term payables (including current installments) 1,404,990 Derivative financial instruments Foreign currency forward contracts`－`inflows (30,039,393) Foreign currency forward contracts`－`outflows 30,005,597 $ 58,878,616 Contractual cash flows December 31, 2020 Non-derivative financial liabilities Short-term borrowings $ 200,000 Long-term borrowings (including current installments) 121,514,089 Guarantee deposits 864,868 Long-term payables (including current installments) 309,900 Derivative financial instruments Foreign currency forward contracts`－`inflows (19,440,746) Foreign currency forward contracts`－`outflows 19,507,927 $ 122,956,038	2022.1.1~ 2022.12.31 45,324 17,682,179 53,319 467,460 (30,039,393) 30,005,597 18,214,486 2021.1.1~ 2021.12.31 200,000 18,953,264 39,348 154,950 (19,440,746) 19,507,927 19,414,743	2023.1.1~ 2024.12.31 - 31,778,153 3,590 625,020 - - 32,406,763 2022.1.1~ 2023.12.31 - 75,716,835 3,619 154,950 - - 75,875,404	2025.1.1~ 2026.12.31 - 6,742,119 717 312,510 - - 7,055,346 2024.1.1~ 2025.12.31 - 25,473,429 - - - - 25,473,429	2027 and thereafter
				- 487,770 714,251 - - -
				1,202,021
				2026 and thereafter
				- 1,370,561 821,901 - - -
				2,192,462

The Company is not expecting that the cash flows included in the maturity analysis could occur significantly earlier or at significantly different amounts.

As at December 31, 2021, the management believes the Company’ s existing unused credit facilities under its existing loan agreements, together with net cash flows expected to be generated from its operating activities, will be sufficient for the Company to fulfill its payment obligations. Therefore, management believes that the Company does not have significant liquidity risk.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, which will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable range.

The Company buys and sells derivatives, and also incurs financial assets and liabilities, in order to manage market risks. All such transactions are executed in accordance with the Company’ s handling procedures for conducting derivative transactions, and also monitored by internal audit department.

(a) Currency risk

The Company is exposed to currency risk on foreign currency denominated financial assets and liabilities arising from operating, financing and investing activities such that the Company uses forward exchange contracts to hedge its currency risk. Gains and losses derived from the foreign currency fluctuations on underlying assets and liabilities are likely to offset. However, transactions of derivative financial instruments help minimize the impact of foreign currency fluctuations, but the risk cannot be fully eliminated.

The Company periodically examines portions exposed to currency risks for individual asset and liability denominated in foreign currency and uses forward contracts as hedging instruments to hedge positions exposed to risks. The contracts have maturity dates that do not exceed one year, and do not meet the criteria for hedge accounting.

I. Exposure of currency risk

The Company’s significant exposure to foreign currency risk was as follows:

December 31, 2021 Foreign currency amounts Exchange rate NTD Financial assets Monetary items USD $ 3,001,028 27.6880 83,092,463 JPY 4,543,754 0.2409 1,094,590 EUR 34,718 31.4203 1,090,850 Non-monetary items USD 34,579 27.6880 957,423 Financial liabilities Monetary items USD 1,944,481 27.6880 53,838,790 JPY 20,754,389 0.2409 4,999,732 EUR 28 31.4203 880	December 31, 2020	December 31, 2020
	Foreign currency amounts 2,380,316 11,404,938 32,931 6,657 1,620,121 20,631,647 51	Exchange rate NTD 28.5070 67,855,668 0.2763 3,151,184 35.0494 1,154,212 28.5070 189,771 28.5070 46,184,789 0.2763 5,700,524 35.0494 1,788

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

II. Sensitivity analysis

The Company’ s exposure to foreign currency risk arises mainly from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade receivables, loans and borrowings and trade payables that are denominated in foreign currency. Depreciation or appreciation of the NTD by 1% against the USD, EUR and JPY at December 31, 2021 and 2020, while all other variables were remained constant, would have increased or decreased the net profit before tax for the years ended December 31, 2021 and 2020 as follows:

1% of depreciation 1% of appreciation	For the years ended December 31, 2021 2020 $ 264,385 202,740 (264,385) (202,740)

III. Foreign exchange gain (loss) on monetary items

With varieties of functional currencies within the Company, the Company disclosed foreign exchange gain (loss) on monetary items in aggregate. The aggregate of realized and unrealized foreign exchange gains (losses) for the years ended December 31, 2021 and 2020 were $144,679 thousand in gains and $584,821 thousand in losses, respectively.

(b) Interest rate risk

The Company’s exposure to changes in interest rates is mainly from floating-rate long-term debt obligations. Any change in interest rates will cause the effective interest rates of long-term borrowings to change and thus cause the future cash flows to fluctuate over time. The Company will, depending on the market condition, enter into and designate interest rate swaps as hedges of the variability in cash flows attributable to interest rate risk.

Assuming the amount of floating-rate debts at the end of the reporting period had been outstanding for the entire year and all other variables were remained constant, an increase or a decrease in the interest rate by 0.25% would have resulted in a decrease or an increase in the net profit before tax for the years ended December 31, 2021 and 2020 by $137,675 thousand and $292,271 thousand, respectively.

(c) Equity price risk

See Note 6(3) for disclosure of equity price risk analysis.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(30) Capital Management

Through clear understanding and managing of significant changes in external environment, related industry characteristics, and corporate growth plan, the Company manages its capital structure to ensure it has sufficient financial resources to sustain proper liquidity, to invest in capital expenditures and research and development expenses, to repay debts and to distribute dividends in accordance to its plan. The management pursues the most suitable capital structure by monitoring and maintaining proper financial ratios as below. The Company aims to enhance the returns of its shareholders through achieving an optimized debt-to-equity ratio from time to time.

Short-term borrowings Long-term borrowings (including current installments) Total liabilities Total equity Debt-to-equity ratio Net debt-to-equity ratio(i)	December 31,
	2021 2020 $ 45,324 200,000 54,654,864 116,594,969 186,844,575 213,479,930 237,966,471 193,790,365 % 79 % 110 % (11) % 14

(i) Net debt-to-equity ratio is defined as short-term borrowings plus long-term borrowings less cash and cash equivalents and divided by total equity.

7. Related-party Transactions

All inter-company transactions and balances between AUO and its subsidiaries have been eliminated upon consolidation, and therefore, are not disclosed in this note. The transactions between the Company and other related parties are set out as follows:

(1) Name and relationship of related parties

The following is a summary of related parties that have had transactions with the Company during the periods presented in the consolidated financial statements.

Name of related party	Relationship with the Company
Ennostar Inc. (“Ennostar”)	Associate
Lextar Electronics Corporation (“Lextar”)	Subsidiary of Ennostar
TRENDYLITE CORPORATION (“TRENDYLITE”)	Subsidiary of Ennostar
Lextar Electronics (Suzhou) Co., Ltd. (“LESZ”)	Subsidiary of Ennostar
Lextar Electronics (Xiamen) Co., Ltd. (“LEXM”)	Subsidiary of Ennostar
Lextar Electronics (Chuzhou) Corp. (“LEXCZ”)	Subsidiary of Ennostar
Wellybond Corporation (“WBC”)	Subsidiary of Ennostar
Epistar Corporation (“Epistar”)	Subsidiary of Ennostar
Yenrich Technology Corporation (“Yenrich”)	Subsidiary of Ennostar

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of related party

Raydium Semiconductor Corporation (“Raydium”) Raydium Semiconductor (Kunshan) Co., Ltd. (“RKS”) Star River Energy Corp. (“SREC”) Sungen Power Corporation (“SGPC”) Evergen Power Corporation (“EGPC”) Star Shining Energy Corporation (“SSEC”) Fargen Power Corporation (“FGPC”) Sheng Li Energy Corporation (“SLEC”) ChampionGen Power Corporation (“CGPC”) TronGen Power Corporation (“TGPC”) Ri Ji Power Corporation (“RJPC”) Ri Jing Power Corporation (“RGPC”) Mao Zheng Energy Corporation (“MZEC”) Mao Xin Energy Corporation (“MXEC”) Sheng Feng Power Corporation (“SFPC”) Sheng He Power Corporation (“SHPC”) Sheng Yao Power Corporation (“SYPC”) Sheng Da Power Corporation (“SDPC”) Shin Sheng Feng Investment Corp. (“SSFI”) Daxin Materials Corp. (“Daxin”) Darwin Summit Corporation Ltd. (“DSC”) Ubitech Inc. (“Ubitech”) ADLINK Technology Inc. (“ADLINK”) ADLINK Technology GmbH (“ATG”) ADLINK Technology (China) Co., Ltd. (“ADLINKCN”) IRIS Optronics Co., Ltd. (“IOC”) Evonik Forhouse Optical Polymers Corp. (“EFOP”) WishMobile, Inc. (“WMI”)

WiBASE Industrial Solutions Inc. (“WIS”) ToYou Display (Suzhou) Co., Ltd. (“TYSZ”) Qisda Corporation (“Qisda”) Qisda Vietnam Co., Ltd (“QVH”) BenQ Corporation (“BenQ”)

Relationship with the Company Associate Subsidiary of Raydium Associate[(i)] Subsidiary of SREC[(i)] Subsidiary of SREC[(i)] Associate Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Associate Associate Associate[(ii)] Associate Subsidiary of ADLINK Subsidiary of ADLINK Associate Joint venture Konly represented as a director of WMI[(iii)] DPTW represented as a director of WIS AUSZ represented as a director of TYSZ[(iv)] Associate[(v)] Subsidiary of Qisda Subsidiary of Qisda

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of related party

BenQ Materials Corp. (“BMC”) Qisda (Suzhou) Co., Ltd. (“QCSZ”) Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) Qisda Precision Industry (Suzhou) Co., Ltd. (“QCPS”) BenQ Europe B.V. (“BQE”) BenQ Asia Pacific Corp. (“BQP”) BenQ America Corporation (“BQA”) Mainteq Europe B.V. (“MQE”) BenQ Co., Ltd. (“BQC”) BenQ Technology (Shanghai) Co., Ltd. (“BQls”) Guru Systems (Suzhou) Co., Ltd. (“GSS”) BenQ GURU Corp. (“GST”) BenQ Material (Suzhou) Co., Ltd. (“BMS”) BenQ Materials Medical Supplies (Suzhou) Co., Ltd. (“BMM”) Suzhou BenQ Hospital Co., Ltd. (“QCHS”) DFI Inc. (“DFI”) Data Image Corporation (“DIC”) Data Image (Suzhou) Corporation (“DICSZ”) Partner Tech Corp. (“PTT”) Webest Solution Corp. (“WEBEST”) AEWIN Technologies Co., Ltd. (“AEW”) Sysage Technology Co., Ltd. (“Sysage”) ACE Pillar Co., Ltd. (“ACE”) Tianjin ACE Pillar Co., Ltd. (“ACETJ”) Golden Spirit Co., Ltd. (“GSC”) LILY MEDICAL CORPORATION (“LILY”) BenQ Medical Technology Corp. (“TMC”) HITRON TECHNOLOGIES INC. (“HHC”) ADVANCEDTEK INTERNATIONAL CORP. (“ADVANCEDTEK”) Daxon Biomedical (Suzhou) Co., Ltd. (“DTB”) Qisda Optronics Corp. ( “QTOS” ) AUO Foundation

Relationship with the Company

Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda

Subsidiary of Qisda Subsidiary of Qisda Substantive related party

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of related party	Relationship with the Company
BenQ Foundation	Substantive related party(vi)
Jector Digital System Inc. (“JDSI”)	The party which co-invests with ADP
	in Jector
SINTRONES Technology Corp. (“SINTRONES”)	AUO represented as a director of
	SINTRONES
Play Nitride Inc. (“PlayNitride”)	Konly represented as a director of
	PlayNitride
PlayNitride Display Co., Ltd. (“PND”)	Subsidiary of PlayNitride

(i) SREC and its subsidiaries were included in the Company’ s consolidated financial statements from January 2021. Refer to Note 6(8) for the relevant information.
(ii) The Company sold all of its ownership interests in Ubitech in July 2021. Therefore, Ubitech is no longer a related party of the Company starting from the date of disposal.
(iii) The Company has not had significant influence over WMI since October 2021; therefore, WMI was changed from associate to other related party.
(iv) The Company sold part of its ownership interests in TYSZ in January 2021. After the disposal, the Company assessed and considered that it did not have significant influence over TYSZ; therefore, TYSZ was changed from joint venture to other related party.
(v) The Company has accounted for the investment in Qisda using the equity method since December 31, 2020. Qisda and its subsidiaries are changed as the Company’s associates from the same date while previously they are categorized as other related parties. See Note 6(7) for the relevant information.
(vi) BenQ Foundation is no longer a related party of the Company starting from the second quarter of 2021.
(2) Compensation to key management personnel

Key management personnel’s compensation comprised:

Short-term employee benefits Post-employment benefits Share-based payments	For the years ended December 31,	For the years ended December 31,
	2021 $ 872,527 1,402 17,276 $ 891,205	2020
		222,373 2,032 -
		224,405

Refer to Note 6(20) for information on share-based payments.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(3) Except for otherwise disclosed in other notes to the consolidated financial statements, the Company’s significant related party transactions and balances were as follows:
a. Sales

Associates Joint ventures Others	Sales For the years ended December 31, 2021 2020 $ 12,904,965 845,339 - 7,571 2,101 11,048,561 $ 12,907,066 11,901,471	Accounts receivable from related parties December 31, 2021 2020 2,478,006 2,076,045 - 111 1,389 - 2,479,395 2,076,156	Accounts receivable from related parties December 31, 2021 2020 2,478,006 2,076,045 - 111 1,389 - 2,479,395 2,076,156
	2021 $ 12,904,965 - 2,101 $ 12,907,066		2020 2,076,045 111 -
			2,076,156

The collection terms for sales to related parties were 25 to 55 days from the end of the month during which the invoice is issued. The pricing for sales to related parties were not materially different from those with third parties.

b. Purchases

Associates Joint ventures Others	Purchases For the years ended December 31, 2021 2020 $ 27,141,672 8,168,972 797,785 900,612 31,226 16,518,558 $ 27,970,683 25,588,142	Accounts payable to related parties December 31, 2021 2020 8,821,310 7,297,560 - 5,232 4,051 - 8,825,361 7,302,792	Accounts payable to related parties December 31, 2021 2020 8,821,310 7,297,560 - 5,232 4,051 - 8,825,361 7,302,792
	2021 $ 27,141,672 797,785 31,226 $ 27,970,683		2020 7,297,560 5,232 -
			7,302,792

The payment terms for purchases from related parties were 30 to 120 days. The pricing and payment terms with related parties were not materially different from those with third parties.

c. Acquisition of property, plant and equipment

Associates Others	Acquisition prices	Acquisition prices
	For the years ended December 31,
	2021 $ 37,972 656 $ 38,628	2020
		8,814 13,576
		22,390

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

d. Disposal of property, plant and equipment and others

Proceeds from disposal For the years ended December 31, 2021 2020 $ - 35,117 - 4,083 $ - 39,200	Gains on disposal	Gains on disposal
	For the years ended December 31,
2021 $ - - $ -	2021 - - -	2020
		29,541 3,197
		32,738

e. Other related party transactions

Type of related Transaction type party Other receivables due from related parties Associates Joint ventures Others Other payables due to related parties, Associates including payables for equipment Others Transaction Type of type related party Rental income Associates BMC Others Joint ventures Others: BMC Others Administration and other Associates income Joint ventures Others	December 31,	December 31,
	2021 2020 $ 20,682 7,053 - 4,502 17 10,374 $ 20,699 21,929 $ 62,110 24,254 11,734 66 $ 73,844 24,320 For the years ended December 31,	2020
		7,053 4,502 10,374
		21,929
		24,254 66
		24,320
	2021 $ 95,345 33,953 5,509 - 3,720 $ 138,527 $ 23,955 - 66 $ 24,021	2020
		- 47,476 11,180 94,766 20,096
		173,518
		21,419 26 7,789
		29,234

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Type of related party		For the years ended December 31,
	2021 $ 101,001 23 66,150 $ 167,174	2020
Associates Joint ventures Others		72,078 - 70,226
		142,304

The Company leased portion of its facilities and plants to related parties. The collection term was receipts in advance, and the pricing was not materially different from that with third parties.

The Company participated in capital increase of related parties, including PlayNitride, SSEC and WMI for 2021 in the aggregate of $1,231,730 thousand and WMI for 2020 by $660,000 thousand. In addition, for the years ended December 31, 2021 and 2020, the Company entitled for cash dividends declared by related parties of $914,322 thousand and $603,621 thousand, respectively. As of December 31, 2021 and 2020, the aforementioned dividends were all received.

8. Pledged Assets

The carrying amounts of the assets which the Company pledged as collateral were as follows:

Pledged assets Restricted cash in banks(i) Land and buildings Machinery and equipment Right-of-use assets	Pledged to secure Customs duties and guarantee for warranties Long-term borrowings limit Long-term borrowings limit Long-term borrowings limit	December 31,	December 31,
		2021 $ 93,124 49,863,581 31,810,247 79,030 $ 81,845,982	2020
			28,345 48,286,874 45,407,718 -
			93,722,937

(i) Classified as other current financial assets and other noncurrent assets by its liquidity.

9. Significant Contingent Liabilities and Unrecognized Commitments

The significant commitments and contingencies of the Company as of December 31, 2021, in addition to those disclosed in other notes to the consolidated financial statements, were as follows:

(1) Outstanding letters of credit

As at December 31, 2021, the Company had the following outstanding letters of credit for the purpose of purchasing machinery and equipment and materials:

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

		December 31,
		2021
	Currency	(in thousands)
USD		15,480
JPY		13,087,366
EUR		92

(2) Technology licensing agreements

Starting in 1998, AUO has entered into technical collaboration, patent licensing, and/or patent cross licensing agreements with Fujitsu Display Technologies Corp. (subsequently assumed by Fujitsu Limited), Toppan Printing Co., Ltd. (“Toppan Printing”), Semiconductor Energy Laboratory Co., Ltd., Japan Display Inc. (formerly Japan Display East Inc./Hitachi Displays, Ltd.), Panasonic Liquid Crystal Display Co., Ltd. (formerly IPS Alpha Technology, Ltd.), LG Display Co., Ltd., Sharp Corporation, Samsung Electronics Co., Ltd., Hydis Technologies Co., Ltd., Sanyo Electronic Co., Ltd., Seiko Epson Corporation and others. AUO believes that it is in compliance with the terms and conditions of the aforementioned agreements.

(3) Purchase commitments

a. In 2021, AUO entered into a long-term materials supply agreement with a supplier, under which, AUO and the supplier agreed on the supply of certain IC chip at agreed prices and quantities.
b. As at December 31, 2021, significant outstanding purchase commitments for construction in progress, property, plant and equipment totaled $31,220,622 thousand.
(4) Litigation

Antitrust civil actions lawsuits in the United States and other jurisdictions

In May 2014, LG Electronics Nanjing Display Co., Ltd. and seven of its affiliates filed a lawsuit in Seoul Central District Court against certain LCD manufacturers including AUO, alleging overcharge and claiming damages. AUO does not believe service has been properly made, but in order to protect its rights, AUO has retained counsel to handle the related matter, and at this stage, the final outcome of these matters is uncertain. AUO has been reviewing the merits of this lawsuit on an on-going basis.

In September 2018, AUOUS received a complaint filed by the Government of Puerto Rico on its own behalf and on behalf of all consumers and governmental agencies of Puerto Rico against certain LCD manufacturers including AUO and AUOUS in the Superior Court of San Juan, Court of First Instance alleging unjust enrichment and claiming unspecified monetary damages. AUO has retained counsel to handle the related matter and intends to defend this lawsuit vigorously, and at this stage, the final outcome of these matters is uncertain. AUO is reviewing the merits of this lawsuit on an ongoing basis.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As of February 10, 2022, the Company has made certain provisions with respect to certain of the above lawsuits as the management deems appropriate, considering factors such as the nature of the litigation or claims, the materiality of the amount of possible loss, the progress of the cases and the opinions or views of legal counsel and other advisors. Management will reassess all litigation and claims at each reporting date based on the facts and circumstances that exist at that time, and will make additional provisions or adjustments to previous provisions. The ultimate amount cannot be ascertained until the relevant cases are closed. The ultimate resolution of the legal proceedings and/or lawsuits cannot be predicted with certainty. While management intends to defend certain of the lawsuits described above vigorously, there is a possibility that one or more legal proceedings or lawsuits may result in an unfavorable outcome to the Company. In addition to the matters described above, the Company is also a party to other litigations or proceedings that arise during the ordinary course of business. Except as mentioned above, the Company, to its knowledge, is not involved as a defendant in any material litigation or proceeding which could be expected to have a material adverse effect on the Company’s business or results of operations.

10. Significant Disaster Losses: None

11. Subsequent Event: None

12. Others

Since 2010, there have been environmental proceedings relating to the development project of the Central Taiwan Science Park in Houli, Taichung, which AUO’ s second 8.5-generation fab is located at (the “Project”). The Environmental Protection Administration (“EPA”) of the Executive Yuan of Taiwan issued the environmental assessment and development approval on November 6, 2018. On October 24, 2019, the Appeal Review Committee of the Executive Yuan rejected the administrative appeal filed by five local residents. On December 24, 2019, the residents have proceeded to file an administrative action for invalidating the environmental assessment again. The matter is still under review by the court. Management does not believe that this event will have a material adverse effect on the Company’ s operation and will continue to monitor the development of this event.

13. Additional Disclosures

(1) Information on significant transactions:

Following are the additional disclosures required by the Regulations for the Company for the year ended December 31, 2021.

a. Financings provided: Please see Table 1 attached.
b. Endorsements/guarantees provided: Please see Table 2 attached.
c. Marketable securities held (excluding investment in subsidiaries, associates and joint ventures): Please see Table 3 attached.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

d. Individual marketable securities acquired or disposed of with costs or prices exceeding NT$300 million or 20% of the paid-in capital: Please see Table 4 attached.
e. Acquisition of individual real estate with costs exceeding NT$300 million or 20% of the paidin capital: None
f. Disposal of individual real estate with prices exceeding NT$300 million or 20% of the paid-in capital: Please see Table 5 attached.
g. Purchases from or sales to related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 6 attached.
h. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 7 attached.
i. Information about trading in derivative instruments: Please see Note 6(2).
j. Business relationship and significant intercompany transactions: Please see Table 8 attached.
(2) Information on investees (excluding information on investment in Mainland China): Please see Table 9 attached.
(3) Information on investment in Mainland China:
a. The related information on investment in Mainland China: Please see Table 10.1 and 10.2 attached.
b. Upper limit on investment in Mainland China: Please see Table 10.1 and 10.2 attached.
c. Significant transactions:

Significant direct or indirect transactions with the investees in Mainland China for the year ended December 31, 2021, for which intercompany transactions were eliminated upon consolidation, are disclosed in Note 13(1) “Information on significant transactions”.

(4) Major shareholders:

Major shareholders:
Major Shareholder	Shares
	Total Shares Owned	Ownership Percentage
Qisda	663,598,620	% 6.89

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

14. Segment Information

(1) Operating segment information

The Company has two operating segments: display and energy. The display segment generally is engaged in the research, development, design, manufacturing and sale of flat panel displays and most of our products are TFT-LCD panels. The energy segment primarily is engaged in the design, manufacturing and sale of ingots, solar wafers and solar modules, as well as providing technical engineering services and maintenance services for solar system projects.

Segment results are excluding non-operating income and expenses and income tax expense (benefit). There are no differences between the consolidated financial statements for the years ended December 31, 2021 and 2020 with the financial results received by the Company’s chief operating decision maker. The accounting policies for the operating segments are the same as those used in preparation of the consolidated financial statements of the Company. The Company uses the net revenue, profit (loss) from operations and segment profit (loss) excluding depreciation and amortization as the basis of segment performance assessment.

For the year ended December 31, 2021	For the year ended December 31, 2021	For the year ended December 31, 2021
Display segment Energy segment Total segments $ 358,414,101 12,271,040 370,685,141 $ 62,040,808 1,034,808 63,075,616 3,331,179 $ 66,406,795 $ 95,148,029 1,592,187 96,740,216 $ 424,811,046 For the year ended December 31, 2020		Total segments
		370,685,141
		63,075,616 3,331,179
	Energy segment Total segments 9,151,820 270,955,381 229,289 2,083,042 704,629 $ 2,787,671 803,252 37,480,572 $ 407,270,295	Total segments
		270,955,381
		2,083,042 704,629

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(2) Geographic information
a. Net revenue from external customers: See Note 6(21).
b. Consolidated noncurrent assets[(i)]

Region Taiwan PRC (including Hong Kong) Others	December 31, 2021 $ 148,037,327 47,035,469 3,636,987 $ 198,709,783	December 31, 2020
		158,001,599 50,113,912 4,634,540
		212,750,051

(i) Noncurrent assets are not inclusive of financial instruments, deferred tax assets and prepaid pension.
(3) Major customer and product information: See Note 6(21).

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Financings Provided

For the year ended December 31, 2021 (Amount in thousands of New Taiwan Dollars)

Table 1

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
0	AUO	S4M	Other	Yes	30,000	30,000	10,000	Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost	Needs for	-	Operating	-	-	-	23,178,704	92,714,816
			receivables						short-term		capital
			from related						financing
			parties
0	AUO	ACTW	Other	Yes	3,400,000	2,400,000	1,400,000		Needs for	-	Operating	-	-	-	23,178,704	92,714,816
			receivables						short-term		capital
			from related						financing
			parties
0	AUO	DPTW	Other	Yes	1,000,000	1,000,000	-		Needs for	-	Operating	-	-	-	23,178,704	92,714,816
			receivables						short-term		capital
			from related						financing
			parties
0	AUO	AUOKS	Other	Yes	8,738,000	8,695,600	-		Needs for	-	Operating	-	-	-	23,178,704	92,714,816
			receivables						short-term		capital
			from related						financing
			parties
0	AUO	AETTW	Other	Yes	400,000	400,000	100,000		Needs for	-	Operating	-	-	-	23,178,704	92,714,816
			receivables						short-term		capital
			from related						financing
			parties
1	AUOLB	AUOKS	Other	Yes	15,963,280	12,608,620	7,391,260		Needs for	-	Operating	-	-	-	68,042,510	68,042,510
			receivables						short-term		capital
			from related						financing
			parties
2	AUXM	AUOKS	Other	Yes	5,210,400	4,782,580	2,391,290	Markup rate on short-term financing cost	Needs for	-	Operating	-	-	-	15,322,527	15,322,527
			receivables						short-term		capital
			from related						financing
			parties

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
3	BVXM	AUOKS	Other	Yes	440,780	434,780	-	Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost Markup rate on short-term financing cost	Needs for	-	Operating	-	-	-	1,323,985	1,323,985
			receivables						short-term		capital
			from related						financing
			parties
4	AUSJ	ACTSZ	Other	Yes	96,118	52,174	4,348		Needs for	-	Operating	-	-	-	4,048,660	4,048,660
			receivables						short-term		capital
			from related						financing
			parties
4	AUSJ	AMISZ	Other	Yes	65,535	65,217	21,739		Needs for	-	Operating	-	-	-	4,048,660	4,048,660
			receivables						short-term		capital
			from related						financing
			parties
4	AUSJ	AUOKS	Other	Yes	1,529,150	1,521,730	-		Needs for	-	Operating	-	-	-	4,048,660	4,048,660
			receivables						short-term		capital
			from related						financing
			parties
4	AUSJ	AETSD	Other	Yes	220,390	-	-		Needs for	-	Operating	-	-	-	4,048,660	4,048,660
			receivables						short-term		capital
			from related						financing
			parties
4	AUSJ	AETSZ	Other	Yes	174,212	86,956	56,521		Needs for	-	Operating	-	-	-	4,048,660	4,048,660
			receivables						short-term		capital
			from related						financing
			parties
4	AUSJ	ATISZ	Other	Yes	43,690	43,478	21,739		Needs for	-	Operating	-	-	-	4,048,660	4,048,660
			receivables						short-term		capital
			from related						financing
			parties
5	AUSZ	AUOKS	Other	Yes	6,553,500	5,434,750	3,043,460		Needs for	-	Operating	-	-	-	17,821,288	17,821,288
			receivables						short-term		capital
			from related						financing
			parties
6	BVHF	AUOKS	Other	Yes	308,546	-	-		Needs for	-	Operating	-	-	-	333,308	333,308
			receivables						short-term		capital
			from related						financing
			parties
7	DPSZ	AUOKS	Other	Yes	438,240	-	-	Adjusted by base lending rate of People’s Bank of China	Needs for	-	Operating	-	-	-	592,669	592,669
			receivables						short-term		capital
			from related						financing
			parties

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
7	DPSZ	FTWJ	Other	Yes	218,450	217,390	217,390	Adjusted by base lending rate of People’s Bank of China Adjusted by short-term average lending rate Adjusted by base lending rate of People’s Bank of China	Needs for	-	Operating	-	-	-	1,481,672	1,481,672
			receivables						short-term		capital
			from related						financing
			parties
8	DPTW	DPSK	Other	Yes	52,574	-	-		Needs for	-	Operating	-	-	-	2,303,315	3,685,303
			receivables						short-term		capital
			from related						financing
			parties
9	FPWJ	FTWJ	Other	Yes	218,450	217,390	-		Needs for	-	Operating	-	-	-	696,499	696,499
			receivables						short-term		capital
			from related						financing
			parties
10	FTWJ	FHWJ	Other	Yes	87,106	21,739	21,739	Adjusted by base lending rate of People’s Bank of China	Needs for	-	Operating	-	-	-	1,510,006	1,510,006
			receivables						short-term		capital
			from related						financing
			parties

Note 1: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date. Note 2: The ending balance represents the amounts approved by the Board of Directors.

Note 3: The maximum balance for the period represents the highest amount in New Taiwan Dollars announced or occurred during the period.

Note 4: All inter-company transactions among AUO and its subsidiaries have been eliminated in the consolidated financial statements. Note 5: The policy for the limit on total financing amount and the financing limit for any individual entity are prescribed as follows:

a. AUO: The total amount available for lending purposes shall not exceed 40% of AUO’s net worth as stated in its latest financial statement. The total amount for lending to a company shall not exceed 10% of AUO’s net worth as stated in its latest financial statement.
b. AUOLB, AUSZ, AUXM, AUSJ, BVXM and BVHF: The total amount available for lending purposes shall not exceed 40% of the net worth of the lending company as stated in its latest financial statement. The total amount for lending to a company shall not exceed 40% of the net worth of the lending company as stated in its latest financial statement.
c. In the event that the financing is between foreign subsidiaries whose voting shares are 100% owned, directly or indirectly, by AUO, the aggregate amount available for lending to such borrowers and total amount lendable to a company both shall not exceed the net worth of the lending company as stated in its latest financial statement.
d. DPTW: The total amount available for lending purposes shall not exceed 40% of DPTW’s net worth as stated in its latest financial statement. The total amount for lending to a company shall not exceed 25% of DPTW’s net worth as stated in its latest financial statement.
e. DPSZ 、 FPWJ and FTWJ: The total amount available for lending purposes shall not exceed 40% of the net worth of the lending company. The total amount for lending to a company shall not exceed 40% of the net worth of the lending company.
f. In the event that the financing is between foreign subsidiaries whose voting shares are 100% owned, directly and indirectly, by DPTW, the aggregate amount available for lending to such borrowers and the total amount lendable to each of such borrowers shall not exceed the net worth of the lending company.

AU OPTRONICS CORP. AND SUBSIDIARIES Endorsements/Guarantees Provided For the year ended December 31, 2021

(Amount in thousands of New Taiwan Dollars)

Table 2

No.	Endorser/ Guarantor	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided for Each Party (Notes 4 and 5)	Maximum Endorsement/ Guarantee Balance for the Period (Note 2)	Ending Balance (Notes 3 and 4)	Amount Actually Drawn Down (Note 4)	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Worth per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowable (Notes 4 and 5)	Endorsement/ Guarantee Provided by Parent Company to Subsidiary	Endorsement/ Guarantee Provided by Subsidiary to Parent Company	Endorsement/ Guarantee Provided to Subsidiaries in Mainland China
		Name	Nature of Relationship (Note 1)
0	AUO	AUOKS	2	115,893,520	14,406,477	14,145,702	4,600,467	-	6.10%	231,787,040	Yes	No	Yes
1	AUXM	AUO	3	15,322,527	6,391,310	-	-	-	-	15,322,527	No	Yes	No
2	AUSZ	AUO	3	17,821,288	4,495,956	-	-	-	-	17,821,288	No	Yes	No
3	DPXM	DPTW	3	1,649,935	440,780	434,780	-	-	10.54%	1,649,935	No	No	No

Note 1: The relationship between the endorser/guarantor and the guaranteed party:

A company with which it does business.
A company in which the Company directly and indirectly holds more than 50% of the voting shares.
A company that directly and indirectly holds more than 50% of the voting shares in the Company.
Companies in which the Company holds, directly or indirectly, 90% or more of the voting shares.
A company that fulfills its contractual obligations by providing mutual endorsements/guarantees for another company in the same industry or for joint builders for purposes of undertaking a construction project.
A company that all capital contributing shareholders make endorsements/guarantees for their jointly invested company in proportion to their shareholding percentages.
Companies in the same industry provide among themselves joint and several security for a performance guarantee of a sales contract for pre-construction homes pursuant to the Consumer Protection Act for each other.
Note 2: The maximum endorsement/guarantee balance for the period represents the highest amount in New Taiwan Dollars announced or occurred during the period.

Note 3: The ending balance represents the amounts approved by the Board of Directors.

Note 4: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date.

Note 5: The policy for the limit of total endorsement/guarantee amount and the limit on endorsement/guarantee amount provided to each party are prescribed as follows:

a. AUO: The total endorsement/guarantee amount provided shall not exceed the net worth of AUO as stated in its latest financial statement. The aggregate amount of endorsement/guarantee provided to each guaranteed party shall not exceed 50% of AUO’s net worth as stated in its latest financial statement.
b. AUSZ and AUXM: The total endorsement/guarantee amount provided and the aggregate amount of endorsement/guarantee provided to each guaranteed party both shall not exceed the net worth of the endorser/guarantor as stated in its latest financial statement.
c. DPXM: The total endorsement/guarantee amount provided and the aggregate amount of endorsement/guarantee provided to each guaranteed party both shall not exceed 40% of DPXM’s net worth as stated in its latest financial statement.

AU OPTRONICS CORP. AND SUBSIDIARIES

Marketable Securities Held (Excluding Investment in Subsidiaries, Associates and Joint Ventures)

December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated, and shares in thousands)

Table 3

Name of Holder	Type and Name of Marketable Securities	Relationship with the Securities Issuer	Financial Statement Account		December 31, 2021	December 31, 2021		Maximum Shareholding in the Interim
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
AUO	BenQ ESCO Corp.'s stock	Related party	Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent	1,700	-	17.00%	-	17.00%
AUO	SINTRONES Technology Corp.'s stock	Related party		1,299	65,989	7.06%	65,989	7.06%
AUOLB	Abakus Solar AG's stock	-		3	-	2.22%	-	2.22%
AUSH	T-powertek Optronics Co.,Ltd.'s stock	-		1,293	CNY 6,250	1.58%	CNY 6,250	1.66%
AUSZ	ToYou Display (Suzhou) Co., Ltd's stock	Related party		-	CNY 7,931	18.00%	CNY 7,931	18.00%
Konly	Carota Corporation's stock	-		813	55,710	2.63%	55,710	2.63%
Konly	PlayNitride Inc.'s stock	Related party		7,535	698,991	7.47%	698,991	7.47%
Konly	SnapBizz CloudTech Pte. Ltd.'s stock	-		13	-	4.61%	-	4.74%
Konly	Azotek Co., Ltd.'s stock	-		2,407	7,345	3.98%	7,345	4.00%
Konly	WishMobile, Inc.'s stock	Related party		8,625	16,531	14.38%	16,531	14.38%
Konly	Chenfeng Optronics Corporation's stock	-		1,500	-	2.06%	-	2.35%
Konly	GCS Holdings, Inc.'s stock	-		1,119	54,943	1.23%	54,943	1.23%
Konly	a2peak power Co., Ltd.'s stock	-		4,000	-	10.87%	-	10.87%
Konly	SINTRONES Technology Corp.'s stock	Related party		556	28,245	3.02%	28,245	3.02%
DPTW	D8AI Holdings Corporation's stock	-		7,000	8,649	4.59%	8,649	4.59%
DPTW	Disign Incorporated's stock	-		2	10,714	19.89%	10,714	19.89%
DPTW	Evertrust Technology Ltd.'s stock	-		150	1,500	16.13%	1,500	16.13%
DPTW	HUAI I Precision Technology Co., Ltd.'s	-		2,914	34,968	10.00%	34,968	10.00%
	stock
DPTW	WiBASE Industrial Solutions Inc.'s	Related party		3,536	42,432	9.11%	42,432	9.11%
	stock
Ronly	PlayNitride Inc.'s stock	Related party		2,011	210,482	1.99%	210,482	1.99%
Ronly	Exploit Technology Co., Ltd.'s stock	-		41	-	0.49%	-	0.49%
Ronly	Profet AI Technology Co., Ltd.'s stock	-	Financial assets at FVTOCI－noncurrent	511	10,002	10.16%	10,002	10.16%

AU OPTRONICS CORP. AND SUBSIDIARIES

Individual Marketable Securities Acquired or Disposed of with Costs or Prices Exceeding NT$300 Million or 20% of the Paid-in Capital For the year ended December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated, and shares in thousands)

Table 4

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal	Disposal	Ending Balance	Ending Balance	Note
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Amount	Gain/Loss on Disposal	Shares	Amount
AUO	ADTHLD's stock AUOLB's stock Ennostar's stock Konly's stock SSEC's stock DPGE's stock Ronly's stock ADTSG's stock AUOKS's stock	Investments in	-	-	-	-	11,300	317,063	-	-	-		11,300	228,840	Note 1
		equity-accounted
		investees
AUO		Investments in	-	-	1,882,189	55,909,421	625,000	17,432,860	-	-	-		2,507,189	68,042,510	Note 1
		equity-accounted
		investees
AUO		Investments in	-	-	-	-	4,654	390,820	-	-	-		26,319	2,248,301	Note 2
		equity-accounted
		investees
AUO		Investments in	-	-	299,764	5,471,340	109,244	1,694,680	-	-	-		409,008	8,207,625	Note 1
		equity-accounted
		investees
AUO		Investments in	-	-	155,000	1,586,817	62,000	620,000	-	-	-		217,000	2,210,882	Note 2
		equity-accounted
		investees
AUO		Investments in	-	-	700	6,985	34,300	343,000	-	-	-		35,000	350,087	Note 2
		equity-accounted
		investees
AUO		Investments in	-	-	185,576	2,277,770	193,000	2,099,230	-	-	-		378,576	4,496,552	Note 2
		equity-accounted
		investees
ADTHLD		Investments in	-	-	-	-	12,300	USD 12,300	-	-	-		12,300	USD 8,573	Note 2
		equity-accounted
		investees
AUOLB		Investments in	-	-	-	USD 187,411	-	USD 625,462	-	-	-		-	USD 555,069	Note 4
		equity-accounted
		investees
FTKS	Structured deposit	Financial assets	-	-	-	CNY 72,585	-	-	-	CNY 72,697	CNY 72,697		-	-
		at FVTPL－
		current

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending Balance	Ending Balance	Note
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Amount	Gain/Loss on Disposal	Shares	Amount
Konly	PlayNitride Inc.'s stock Qisda's stock Ennostar's stock Ennostar's stock	Financial assets	-	-	967	113,640	6,568	585,351	-	-	-		7,535	698,991
		at FVTOCI－
		noncurrent
Konly		Investments in	-	-	17,817	515,805	32,328	925,606	-	-	-		50,145	1,616,675	Note 3
		equity-accounted
		investees
Konly		Investments in	-	-	-	-	4,320	320,208	-	-	-		16,413	1,364,734	Note 2
		equity-accounted
		investees
Ronly		Investments in	-	-	-	-	11,243	922,024	-	-	-		20,686	1,745,360	Note 2
		equity-accounted
		investees

Note 1: The acquisition amount refers to the participation in the investees’ capital increase. The ending balance includes the recognition of investment gain (loss) and other related adjustments under the equity method.

Note 2: a. Acquisition was made on the open market.

b. The ending balance and number of shares include the recognition of investment gain (loss) and other related adjustments under the equity method, and include the converted amount and number of shares arising from the joint share exchange carried out by Lextar and Epistar for a newly incorporated company, Ennostar, on January 6, 2021 as well. See Note 6(7) for the relevant information.
Note 3: a. Acquisition was made on the open market.
b. The ending balance includes the recognition of investment gain (loss) and other related adjustments under the equity method.
Note 4: a. Acquired from the joint venture partner of AUOKS. Refer to Note 6(19) for the relevant information.
b. The ending balance includes the recognition of investment gain (loss) and other related adjustments under the equity method.

AU OPTRONICS CORP. AND SUBSIDIARIES

Disposal of Individual Real Estate with Costs Exceeding NT$300 Million or 20% of the Paid-in Capital For the year ended December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 5

Company Name	Property	Date of the Event	Date of Original Acquisition	Carrying Amount	Transaction Amount	Status of Proceeds Collection	Gain (Loss) on Disposal	Counterparty	Relationship	Purpose of Disposal	Pricing Reference	Other Terms
ACTW AUO	Plant Plant	March 2021 April 2021	November 2011 October 2000, November 2001	134,801 20,189	482,000	482,000	347,199	Phoenix Silicon	Non-related party	Activating	A report on the	None
								International		assets	appraisal price of
								Corporation			a real estate
											appraiser
					694,376	299,138	674,187	Vanguard	Non-related party	Activating	A report on the	None
								International		assets	appraisal price of
								Semiconductor			a real estate
								Corporation			appraiser
DPSZ	Land and buildings	June 2021	December 2006	CNY 76,316	CNY 218,317	CNY218,317	CNY142,001	Suzhou Xinsheng	Non-related party	Activating	A report on the	None
								Real Estate Co.		assets and	appraisal price of
										enhancing the	a real estate
										efficient use of	appraiser
										working capital

AU OPTRONICS CORP. AND SUBSIDIARIES

Purchases from or Sales to Related Parties with Amounts Exceeding NT$100 Million or 20% of the Paid-in Capital For the year ended December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 6

Table 6
Company Name	Counterparty	Relationship	Transaction Details				Transactions with Terms Different from Others		Notes/Accounts Receivable (Payable)		Note
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO	AUOKS AUSK AUST AUSZ AUXM Qisda BMC Raydium Daxin DPTW AUOUS AUSZ AUXM DICSZ QCSZ CGPC BenQ SLEC	Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Associate Subsidiary of Qisda Associate Associate Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of Qisda Subsidiary of Qisda Subsidiary of SSEC Subsidiary of Qisda Subsidiary of SSEC	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Sales Sales Sales Sales Sales Sales Sales Sales	28,431,612 128,616 3,610,724 33,633,988 30,170,407 8,100,102 3,845,346 1,665,123 2,317,367 3,777,653 (226,478) (11,170,769) (3,413,931) (360,713) (6,514,523) (259,277) (3,085,387) (540,100)	14%	EOM 30 days EOM 45 days EOM 45 days EOM 45 days EOM 45 days EOM 45 days EOM 90 days EOM 120 days EOM 120 days EOM 60 days EOM 75 days EOM 45 days EOM 45 days EOM 45 days EOM 55 days EOM 25 days EOM 55 days EOM 25 days	- - - - - - - - - - - - - - - - - -		(5,354,029) (19,557) (658,231) (11,340,066) (10,829,640) (1,538,517) (1,159,790) (704,778) (843,103) (838,964) 3,336 - - 25,579 714,641 - 415,174 67,441	(9)%
					-					-
					2%					(1)%
					17%					(19)%
					15%					(18)%
					4%					(3)%
					2%					(2)%
					1%					(1)%
					1%					(1)%
					2%					(1)%
					-					-
					(3)%					-
					(1)%					-
					-					-
					(2)%					1%
					-					-
					(1)%					1%
					-					-
AUO	SFPC	Subsidiary of SSEC	Sales	(359,316)	-	EOM 25 days	-		-	-

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUO AUO ADPNL ATISZ AUOKS AUOKS AUOKS AUOKS AUOKS AUOKS AUOKS AUOUS AUOUS AUSH AUSK AUST AUSZ AUSZ AUSZ AUSZ AUSZ AUSZ AUSZ AUSZ	MXEC ADP ADP AUSZ AUO AUSZ Qisda Raydium DPTW AUO AUXM AUO AUO AUO AUO AUO AUO Qisda BMC Raydium DPTW AUO AUOKS ADP	Subsidiary of SSEC Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Ultimate parent company Subsidiary of AUO Associate Associate Subsidiary of AUO Ultimate parent company Subsidiary of AUO Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Associate Subsidiary of Qisda Associate Subsidiary of AUO Ultimate parent company Subsidiary of AUO Subsidiary of AUO	Sales Sales Purchases Sales Purchases Purchases Purchases Purchases Purchases Sales Sales Purchases Sales Sales Sales Sales Purchases Purchases Purchases Purchases Purchases Sales Sales Sales	(740,030) (18,352,179) USD 69,150 CNY (23,899) CNY 30,117 CNY 345,389 CNY 65,272 CNY 66,071 CNY 39,440 CNY (6,597,676) CNY (263,710) USD 8,167 USD (5,311) CNY (33,631) EUR (4,254) USD (128,884) CNY 2,657,405 CNY 448,028 CNY 281,265 CNY 715,945 CNY 244,370 CNY (7,805,409) CNY (345,389) CNY (4,922,914)	-	EOM 25 days EOM 45 days EOM 45 days EOM 30 days EOM 45 days EOM 60 days EOM 120 days EOM 120 days EOM 120 days EOM 30 days EOM 30 days EOM 75 days EOM 30 days End of quarter 25 days EOM 45 days EOM 45 days EOM 45 days EOM 120 days EOM 90 days EOM 120 days EOM 120 days EOM 45 days EOM 60 days EOM 45 days	- - - - - - - - - - - - - - - - - - - - - - - -		406,038 5,181,534 USD (8,103) CNY 8,264 CNY (4,526) CNY (113,800) CNY (32,496) CNY (32,657) CNY (18,541) CNY 1,237,241 CNY 94,666 USD (119) - - EUR 958 USD 23,773 - CNY (162,991) CNY (100,969) CNY (329,163) CNY (120,830) CNY 2,613,783 CNY 113,800 CNY 838,515	1%
					(6)%					9%
					100%					(100)%
					(58)%					40%
					1%					-
					10%					(8)%
					2%					(2)%
					2%					(2)%
					1%					(1)%
					(96)%					93%
					(4)%					7%
					100%					(100)%
					(39)%					-
					(99)%					-

					(85)%					83%
					(99)%					97%
					23%					-
					4%					(5)%
					2%					(3)%
					6%					(10)%
					2%					(4)%
					(60)%					73%
					(3)%					3%
					(38)%					23%
AUXM	AUO	Ultimate parent company	Purchases	CNY 874,006	12%	EOM 45 days	-		-	-

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUXM AUXM AUXM AUXM AUXM AUXM AUXM DPSZ DPXM DPXM DPXM DPXM FPWJ FTWJ FTWJ FTWJ M.Setek AETTW ACTW ADP ADP ADP ADP ADP DPTW	AUOKS DPXM BMC Raydium DPTW AUO ADP DPTW DPTW Lextar AUXM DPTW DPTW DPTW Lextar DPTW ACTW AUO M.Setek AUO AUSZ AUXM ADPNL QCOS DPSZ	Subsidiary of AUO Subsidiary of AUO Subsidiary of Qisda Associate Subsidiary of AUO Ultimate parent company Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of Ennostar Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of Ennostar Subsidiary of AUO Subsidiary of AUO Ultimate parent company Subsidiary of AUO Ultimate parent company Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of Qisda Subsidiary of AUO	Purchases Purchases Purchases Purchases Purchases Sales Sales Sales Purchases Purchases Sales Sales Purchases Purchases Purchases Sales Sales Sales Purchases Purchases Purchases Purchases Sales Sales Purchases	CNY 250,060 CNY 45,878 CNY 189,761 CNY 602,749 CNY 278,486 CNY (7,006,983) CNY (464,255) CNY (99,884) CNY 79,441 CNY 26,512 CNY (45,831) CNY (492,482) CNY 56,369 CNY 43,503 CNY 71,616 CNY (1,029,437) JPY (4,602,135) (215,808) 1,167,670 18,331,896 21,294,191 2,009,420 (1,922,264) (414,967) 432,225	4%	EOM 30 days EOM 120 days EOM 90 days EOM 120 days EOM 120 days EOM 45 days EOM 45 days EOM 90 days EOM 60 days EOM 120 days EOM 120 days EOM 90 days EOM 60 days EOM 60 days EOM 120 days EOM 90 days EOM 45 days EOM 60 days EOM 45 days EOM 45 days EOM 45 days EOM 45 days EOM 45 days EOM 55 days EOM 90 days	- - - - - - - - - - - - - - - - - - - - - - - - -		CNY (94,666) CNY (21,929) CNY (58,488) CNY (222,630) CNY (109,399) CNY 2,497,204 CNY 118,183 CNY 22,400 CNY (56,856) CNY (11,331) CNY 21,929 CNY 235,912 CNY (8,635) CNY (445,030) CNY (31,060) CNY 923,162 JPY 2,935,447 76,958 (706,987) (5,150,198) (3,641,450) (513,221) 224,361 84,479 (97,278)	(4)%
					1%					(1)%
					3%					(3)%
					9%					(10)%
					4%					(5)%
					(84)%					91%
					(6)%					4%
					(76)%					77%
					3%					(9)%
					1%					(2)%
					(2)%					5%
					(18)%					52%
					100%					(100)%
					6%					(57)%
					10%					(4)%
					(98)%					100%
					(95)%					99%
					(41)%					65%
					33%					(78)%
					44%					(55)%
					51%					(39)%
					5%					(6)%
					(4)%					3%
					(1)%					1%
					4%					(4)%
DPTW	DPXM	Subsidiary of AUO	Purchases	2,121,540	21%	EOM 90 days	-		(764,544)	(28)%

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
DPTW DPTW DPTW DPTW DPTW DPTW DPTW DPTW DPTW	FTWJ RFOP AUO AUOKS AUSZ AUXM DPXM FPWJ FTWJ	Subsidiary of AUO Joint Venture Ultimate parent company Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO	Purchases Purchases Sales Sales Sales Sales Sales Sales Sales	4,458,571 797,785 (3,940,824) (163,877) (1,053,928) (1,202,710) (344,392) (244,200) (188,284)	45%	EOM 90 days Payment in advance EOM 60 days EOM 120 days EOM 120 days EOM 120 days EOM 60 days EOM 60 days EOM 60 days	- - - - - - - - -		(1,633,262) - 739,201 80,934 524,735 475,090 104,445 37,500 71,164	(59)%
					8%					-
					(37)%					27%
					(2)%					3%
					(10)%					19%
					(11)%					17%
					(3)%					4%
					(2)%					1%
					(2)%					3%
DPTW	QCES	Subsidiary of Qisda	Sales	(117,822)	(1)%	EOM 120 days	-		24,572	1%

Note 1: Transaction terms with related parties were similar to those with third parties, except for particular transactions with no similar transactions to compare with. For those transactions, transaction terms were determined in accordance with mutual agreements.

Note 2: All inter-company transactions among AUO and its subsidiaries have been eliminated in the consolidated financial statements.

AU OPTRONICS CORP. AND SUBSIDIARIES

Receivables from Related Parties with Amounts Exceeding NT$100 Million or 20% of the Paid-in Capital December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 7

Table 7
					Overdue Receivables		Amounts
Company			Ending Balance of	Turnover	Amount	Action Taken	Received in	Allowance
	Counterparty	Relationship	Receivables				Subsequent	for Bad
Name				Rate
			(Note 3)				Period	Debts
							(Note 1)
AUO	MZEC QCSZ AETTW ACTW BenQ MXEC ADP AUO AUXM AUOKS AUO AUO AUOKS ADP AUO AUOKS ADP FTWJ DPTW DPTW	Subsidiary of SSEC	656,690	0.03	-	-	-	-
AUO		Subsidiary of Qisda	714,641	7.17	-	-	-	-
AUO		Subsidiary of AUO	102,523	(Note 2)	-	-	-	-
AUO		Subsidiary of AUO	1,406,251	(Note 2)	-	-	-	-
AUO		Subsidiary of Qisda	415,174	5.90	199	Will be collected in next period	-	-
AUO		Subsidiary of SSEC	406,038	3.65	-	-	-	-
AUO		Subsidiary of AUO	5,710,245	(Note 2)	62,861	Will be collected in next period	-	-
AUOKS		Ultimate parent company	CNY 1,237,241	6.30	CNY 40,511	Collected in subsequent period	CNY 645,136	-
AUOKS		Subsidiary of AUO	CNY 94,666	5.35	CNY 23,753	Collected in subsequent period	CNY 41,824	-
AUOLB		Subsidiary of AUO	USD 272,031	(Note 2)	-	-	-	-
AUST		Ultimate parent company	USD 23,773	5.43	-	-	-	-
AUSZ		Ultimate parent company	CNY 2,613,783	2.94	CNY 29,626	Collected in subsequent period	CNY 1,540,423	-
AUSZ		Subsidiary of AUO	CNY 827,416	(Note 2)	CNY 29,488	Collected in subsequent period	CNY 44,705	-
AUSZ		Subsidiary of AUO	CNY 838,515	11.74	CNY 29,794	Collected in subsequent period	CNY 497,529	-
AUXM		Ultimate parent company	CNY 2,497,204	3.05	CNY 12,410	Collected in subsequent period	CNY 1,204,908	-
AUXM		Subsidiary of AUO	CNY 563,715	(Note 2)	CNY 41	Will be collected in next period	-	-
AUXM		Subsidiary of AUO	CNY 118,183	7.86	CNY 2,442	Will be collected in next period	-	-
DPSZ		Subsidiary of AUO	CNY 53,736	(Note 2)	-	-	-	-
DPXM		Subsidiary of AUO	CNY 235,912	1.88	-	-	CNY 58,747	-
FTWJ		Subsidiary of AUO	CNY 923,162	1.33	-	-	CNY 203,785	-
M.Setek	ACTW	Subsidiary of AUO	JPY 2,935,447	2.23	JPY 568,603	Will be collected in next period	-	-

					Overdue Receivables	Overdue Receivables	Amounts
Company			Ending Balance of	Turnover	Amount	Action Taken	Received in	Allowance
	Counterparty	Relationship	Receivables				Subsequent	for Bad
Name				Rate
			(Note 3)				Period	Debts
							(Note 1)
ACTW	M.Setek ADPNL AUO AUSZ AUXM DPXM	Subsidiary of AUO	752,720	(Note 2)	-	-	-	-
ADP		Subsidiary of AUO	224,361	17.14	-	-	-	-
DPTW		Ultimate parent company	740,343	(Note 2)	51,244	Will be collected in next period	-	-
DPTW		Subsidiary of AUO	524,735	2.63	-	-	-	-
DPTW		Subsidiary of AUO	475,090	2.90	-	-	-	-
DPTW		Subsidiary of AUO	257,013	(Note 2)	2,365	Collected in subsequent period	92,327	-
DPTW	FTWJ	Subsidiary of AUO	1,939,414	(Note 2)	1,346	Collected in subsequent period	648,543	-

Note 1: Until the mid of January 2022.

Note 2: The ending balance includes other receivables from transactions not related to ordinary sales. Note 3: All inter-company transactions among AUO and its subsidiaries have been eliminated in the consolidated financial statements.

AU OPTRONICS CORP. AND SUBSIDIARIES Business Relationship and Significant Intercompany Transactions For the year ended December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 8

						Inter-company Transactions
N			Nt f Rltihi				Percentage of
	Company			Financial
		Ctt
o.	Name	ounerpary	aure o eaonsp	Statement	Amount	Trading Terms	Consolidated
							Net Revenue or
				Account			Total Assets

0	AUO	AUSZ	Parent to subsidiary	Net revenue	11,170,769	The prices of inter-company sales are not comparable with	3%
						those of third parties. The credit term is EOM 45 days.
0	AUO	AUXM	Parent to subsidiary	Net revenue	3,413,931	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 45 days.
0	AUO	ADP	Parent to subsidiary	Net revenue	18,352,179	The prices of inter-company sales are not comparable with	5%
						those of third parties. The credit term is EOM 45 days.
0	AUO	ADP	Parent to subsidiary	Receivables from	5,710,245	-	1%
				related parties
1	AUOKS	AUO	Subsidiary to parent	Net revenue	CNY 6,597,676	The prices of inter-company sales are not comparable with	8%
						those of third parties. The credit term is EOM 30 days.
1	AUOKS	AUO	Subsidiary to parent	Receivables from	CNY 1,237,241	-	1%
				related parties
2	AUOLB	AUOKS	Subsidiary to subsidiary	Receivables from	USD 272,031	-	2%
				related parties
3	AUST	AUO	Subsidiary to parent	Net revenue	USD 128,884	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 45 days.
4	AUSZ	AUO	Subsidiary to parent	Net revenue	CNY 7,805,409	The prices of inter-company sales are not comparable with	9%
						those of third parties. The credit term is EOM 45 days.
4	AUSZ	AUO	Subsidiary to parent	Receivables from	CNY 2,613,783	-	3%
				related parties
4	AUSZ	AUOKS	Subsidiary to subsidiary	Receivables from	CNY 827,416	-	1%
				related parties

						Inter-company Transactions
N			Nt f Rltihi				Percentage of
	Company			Financial
		Ctt
o.	Name	ounerpary	aure o eaonsp	Statement	Amount	Trading Terms	Consolidated
							Net Revenue or
				Account			Total Assets

4	AUSZ	ADP	Subsidiary to subsidiary	Net revenue	CNY 4,922,914	The prices of inter-company sales are not comparable with	6%
						those of third parties. The credit term is EOM 45 days.
4	AUSZ	ADP	Subsidiary to subsidiary	Receivables from	CNY 838,515	-	1%
				related parties
5	AUXM	AUO	Subsidiary to parent	Net revenue	CNY 7,006,983	The prices of inter-company sales are not comparable with	8%
						those of third parties. The credit term is EOM 45 days.
5	AUXM	AUO	Subsidiary to parent	Receivables from	CNY 2,497,204	-	3%
				related parties
5	AUXM	AUOKS	Subsidiary to subsidiary	Receivables from	CNY 563,715	-	1%
				related parties
5	AUXM	ADP	Subsidiary to subsidiary	Net revenue	CNY 464,255	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 45 days.
6	DPXM	DPTW	Subsidiary to subsidiary	Net revenue	CNY 492,482	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 90 days.
7	FTWJ	DPTW	Subsidiary to subsidiary	Net revenue	CNY 1,029,437	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 90 days.
7	FTWJ	DPTW	Subsidiary to subsidiary	Receivables from	CNY 923,162	-	1%
				related parties
8	ADP	ADPNL	Subsidiary to subsidiary	Net revenue	1,922,264	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 45 days.
9	DPTW	AUO	Subsidiary to parent	Net revenue	3,940,824	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 60 days.

Note 1: This table discloses the information on inter-company sales and receivables which are accounted for 1% or more of the consolidated net revenue or the consolidated total assets, respectively. The information of the corresponding inter-company purchases and payables is no more disclosed herein. Note 2: All inter-company transactions have been eliminated in the consolidated financial statements.

AU OPTRONICS CORP. AND SUBSIDIARIES

Information on Investees (Excluding Information on Investment in Mainland China)

For the year ended December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated, and shares in thousands)

Table 9

Table 9
				Original Investment Amount		December 31, 2021					Investor’s
									Maximum
Investor	Investee									Net Income	Share of Profit
		Location	Main Activities	December 31	December 31		Percentage	Carrying	Shareholding	(Loss) of	(Loss)	Note
Company	Company			, 2021	, 2020	Shares	of	Amount	in the	Investee	of Investee
							Ownership	(Notes 1 and 2)	Interim		(Notes 1 and 2)

AUO	AUOLB	Malaysia	Holding company	76,491,558	59,058,698	2,507,189	100.00%	68,042,510	100.00%	5,354,435	5,354,435	Subsidiary
AUO	AUONL	Netherlands	Sales and sales support of TFT-	24,275	24,275	50	100.00%	59,111	100.00%	(565)	(565)	Subsidiary
			LCD panels
AUO	Konly	Taiwan ROC	Investment	5,921,750	4,227,070	409,008	100.00%	8,207,625	100.00%	1,199,670	1,199,670	Subsidiary
AUO	Ronly	Taiwan ROC	Investment	4,177,912	2,078,682	378,576	100.00%	4,496,552	100.00%	202,853	202,853	Subsidiary
AUO	DPTW	Taiwan ROC	Design, manufacturing, and	3,569,155	3,569,155	190,108	28.56%	2,631,659	28.56%	(649,231)	(185,445)	Subsidiary
			sales of TFT-LCD modules,
			backlight modules, TV set and
			related parts
AUO	ACTW	Taiwan ROC	Manufacturing and sale of	15,687,921	15,687,921	418,583	100.00%	3,472,081	100.00%	1,051,352	1,051,352	Subsidiary
			ingots and solar wafers
AUO	Lextar	Taiwan ROC	Design, manufacturing, and	-	889,227	-	-	-	15.30%	-	-	(Note 5)
			sales of InGaN epi wafers and
			chips, and light emitting diode
			packages and modules
AUO	Qisda	Taiwan ROC	Manufacturing, sales and	9,505,477	9,505,477	335,231	17.04%	10,807,806	17.04%	8,235,985	1,614,449	Associate
			service of high-end displays,
			optical precision electronic
			products and functional film
			products; manufacturing, sales
			and service of products related
			to intelligent solutions; medical
			equipment and services;
			research, development, design,
			manufacturing and sales of
			network communication
			products
AUO	S4M	Taiwan ROC	Sales and leasing of content	30,000	30,000	3,000	100.00%	6,975	100.00%	(7,260)	(7,260)	Subsidiary
			management system and
			hardware

100

				Original Investment Amount	Original Investment Amount	December 31, 2021	December 31, 2021	December 31, 2021			Investor’s
									Maximum
Investor	Investee									Net Income	Share of Profit
		Location	Main Activities	December 31	December 31		Percentage	Carrying	Shareholding	(Loss) of	(Loss)	Note
Company	Company			, 2021	, 2020	Shares	of	Amount	in the	Investee	of Investee
							Ownership	(Notes 1 and 2)	Interim		(Notes 1 and 2)

AUO	AETTW	Taiwan ROC	Planning, design and	300,000	200,000	30,000	100.00%	192,262	100.00%	(39,762)	(39,762)	Subsidiary
			development of construction
			project for environmental
			protection and related project
			management
AUO	SSEC	Taiwan ROC	Investment	2,170,000	1,550,000	217,000	31.00%	2,210,882	31.00%	96,607	29,948	Associate
AUO	CQIL	Israel	Holding company	1,182,621	1,182,621	39,974	100.00%	889,163	100.00%	12,753	12,753	Subsidiary
AUO	ADLINK	Taiwan ROC	Manufacturing and sales of	2,411,693	2,411,693	42,310	19.45%	2,219,249	19.45%	118,884	(51,223)	Associate
			hardware, software and
			peripheral devices of industrial
			computers
AUO	DPGE	Taiwan ROC	Renewable energy power	350,000	7,000	35,000	100.00%	350,087	100.00%	102	102	Subsidiary
			generation
AUO	ADTHLD	Cayman	Holding company	317,063	-	11,300	80.71%	228,840	80.71%	(107,084)	(75,933)	Subsidiary
		Islands
AUO	ADTCM	Cayman	Holding company	76,437	-	2,700	100.00%	54,679	100.00%	(31,150)	(31,150)	Subsidiary
		Islands
AUO	AHTW	Taiwan ROC	Manufacturing, development	5,000	5,000	500	100.00%	3,832	100.00%	(1,153)	(1,153)	Subsidiary
			and sales of medical
			equipments
AUO	ADP	Taiwan ROC	Research, development and	369,555	1,000	36,956	100.00%	3,703,442	100.00%	3,304,816	3,304,816	Subsidiary
			sales of display									(Note 11)
AUO	SREC	Taiwan ROC	Investment	288,828	379,040	28,883	32.01%	341,654	32.01%	111,063	35,555	Subsidiary
												(Note 7)
AUO	Ennostar	Taiwan ROC	Holding company	1,280,047	-	26,319	3.86%	2,248,301	3.88%	2,178,349	26,892	Associate
												(Note 5)
AUO	ACTTW	Taiwan ROC	Design, development and sales	30,000	-	3,000	100.00%	20,934	100.00%	(9,066)	(9,066)	Subsidiary
			of software and hardware for
			health care industry
Konly	DPTW	Taiwan ROC	Design, manufacturing, and	703,795	703,795	42,598	6.40%	589,684	6.40%	(649,231)	(41,553)	Subsidiary
			sales of TFT-LCD modules,
			backlight modules, TV set and
			related parts
Konly	Raydium	Taiwan ROC	IC Design	175,857	175,857	11,454	17.11%	1,545,819	17.11%	4,290,981	734,279	Associate
Konly	Daxin	Taiwan ROC	Research, manufacturing and	154,748	154,748	19,114	18.61%	570,759	18.61%	680,409	126,613	Associate
			sales of display and
			semiconductor related
			chemicals
Konly	Lextar	Taiwan ROC	Design, manufacturing, and	-	565,616	-	-	-	6.06%	-	-	(Note 5)
			sales of InGaN epi wafers and
			chips, and light emitting diode
			packages and modules

101

				Original Investment Amount	Original Investment Amount	December 31, 2021	December 31, 2021	December 31, 2021			Investor’s
									Maximum
Investor	Investee									Net Income	Share of Profit
		Location	Main Activities	December 31	December 31		Percentage	Carrying	Shareholding	(Loss) of	(Loss)	Note
Company	Company			, 2021	, 2020	Shares	of	Amount	in the	Investee	of Investee
							Ownership	(Notes 1 and 2)	Interim		(Notes 1 and 2)

Konly	Qisda	Taiwan ROC	Manufacturing, sales and	1,363,481	437,875	50,145	2.55%	1,616,675	2.55%	8,235,985	241,522	Associate
			service of high-end displays,
			optical precision electronic
			products and functional film
			products; manufacturing, sales
			and service of products related
			to intelligent solutions; medical
			equipment and services;
			research, development, design,
			manufacturing and sales of
			network communication
			products
Konly	Ubitech Inc.	Taiwan ROC	Development and sales of	-	27,000	-	-	-	24.41%	(7,085)	(1,332)	(Note 9)
			software for POS system
Konly	SSEC	Taiwan ROC	Investment	140,000	100,000	14,000	2.00%	142,638	2.00%	96,607	1,932	Associate
Konly	WishMobile,	Taiwan ROC	Developing and providing	-	15,000	-	-	-	14.38%	(6,750)	(925)	(Note 10)
	Inc.		CRM APP/LINE software
			developer
Konly	SkyREC Ltd.	BVI	Data consulting service for	46,016	46,016	188	16.12%	-	16.12%	(19,545)	(2,163)	Associate
			retail
Konly	ADLINK	Taiwan ROC	Manufacturing and sales of	378,837	80,542	5,944	2.73%	300,682	2.73%	118,884	(18,045)	Associate
			hardware, software and
			peripheral devices of industrial
			computers
Konly	AUES	Taiwan ROC	Services related to educational	4,000	4,000	400	100.00%	5,547	100.00%	1,547	1,547	Subsidiary
			activities and site rental
Konly	IOC	Taiwan ROC	R&D and design of flexible	20,000	20,000	1,000	5.00%	13,846	5.00%	(61,792)	(5,637)	Associate
			electronics technology and
			processing equipment
			development
Konly	SREC	Taiwan ROC	Investment	13,533	17,760	1,353	1.50%	16,008	1.50%	111,063	1,666	Subsidiary
												(Note 7)
Konly	Ennostar	Taiwan ROC	Holding company	1,180,491	-	16,413	2.41%	1,364,734	2.41%	2,178,349	24,605	Associate
												(Note 5)
Konly	Naidun-tech	Taiwan ROC	Solution provider to improve	39,997	-	8,733	26.67%	14,315	26.67%	(7,711)	(25,682)	Associate
	Co., Ltd.		the performance and reliability
			of semiconductor components
Ronly	DPTW	Taiwan ROC	Design, manufacturing, and	845,510	845,510	40,509	6.09%	560,765	6.09%	(649,231)	(39,515)	Subsidiary
			sales of TFT-LCD modules,
			backlight modules, TV set and
			related parts
Ronly	Raydium	Taiwan ROC	IC Design	240,647	-	669	1.00%	254,215	1.00%	4,290,981	6,720	Associate

102

				Original Investment Amount	Original Investment Amount	December 31, 2021	December 31, 2021	December 31, 2021			Investor’s
									Maximum
Investor	Investee									Net Income	Share of Profit
		Location	Main Activities	December 31	December 31		Percentage	Carrying	Shareholding	(Loss) of	(Loss)	Note
Company	Company			, 2021	, 2020	Shares	of	Amount	in the	Investee	of Investee
							Ownership	(Notes 1 and 2)	Interim		(Notes 1 and 2)

Ronly	Daxin	Taiwan ROC	Research, manufacturing and	70,021	70,021	6,312	6.15%	188,486	6.15%	680,409	41,812	Associate
			sales of display and
			semiconductor related
			chemicals
Ronly	Lextar	Taiwan ROC	Design, manufacturing, and	-	323,431	-	-	-	6.67%	-	-	(Note 5)
			sales of InGaN epi wafers and
			chips, and light emitting diode
			packages and modules
Ronly	ADLINK	Taiwan ROC	Manufacturing and sales of	77,508	-	1,175	0.54%	73,771	0.54%	118,884	(3,699)	Associate
			hardware, software and
			peripheral devices of industrial
			computers
Ronly	IOC	Taiwan ROC	R&D and design of flexible	68,400	68,400	3,420	17.10%	47,354	17.10%	(61,792)	(19,279)	Associate
			electronics technology and
			processing equipment
			development
Ronly	Ennostar	Taiwan ROC	Holding company	1,245,456	-	20,686	3.03%	1,745,360	3.03%	2,178,349	18,625	Associate
												(Note 5)
DPTW	BVLB	Malaysia	Holding company	1,051,289	1,051,289	36,000	29.71%	247,950	29.71%	20,174	5,994	Subsidiary
DPTW	DPLB	Malaysia	Holding company	4,362,627	4,362,627	92,267	100.00%	5,599,040	100.00%	446,916	401,783	Subsidiary
DPTW	FHVI	BVI	Holding company	2,362,321	2,362,321	22,006	100.00%	3,561,424	100.00%	(262,743)	(253,658)	Subsidiary
DPTW	FFMI	Mauritius	Holding company	274,700	274,700	653	100.00%	103,606	100.00%	3,175	3,005	Subsidiary
DPTW	RFOP	Taiwan ROC	Manufacturing and sales of	338,729	338,729	33,873	49.00%	71,497	49.00%	(233,140)	(114,239)	Joint
			polymer plasticized raw									Venture
			materials
DPTW	Darwin	Thailand	International trade	3,740	3,740	40	40.00%	10,746	40.00%	2,745	1,098	Associate
	Summit
	Corporation
	Ltd.
ACTW	ACMK	Malaysia	Manufacturing and sale of solar	169,197	449,975	46,196	100.00%	69,774	100.00%	(32,726)	(32,726)	Subsidiary
			wafers
ACTW	SDMC	Taiwan ROC	Holding company	1,988,488	1,988,488	128,971	100.0000%	1,868,508	100.00%	212,025	179,478	Subsidiary
SDMC	M.Setek	Japan	Manufacturing and sale of	23,596,398	23,596,398	11,404,184	99.9991%	1,864,266	99.9991%	212,835	212,833	Subsidiary
			ingots
ADP	ADPNL	Netherlands	Sales and sales support of	96,733	-	-	100.00%	125,776	100.00%	33,481	33,481	Subsidiary
			display and holding company									(Note 6)
ADP	Jector	Taiwan ROC	Introduction of smart field	120,000	-	12,000	78.43%	124,687	78.43%	5,976	4,687	Subsidiary
			construction and other related
			software and hardware
			solutions

103

				Original Investment Amount	Original Investment Amount	December 31, 2021	December 31, 2021	December 31, 2021			Investor’s
									Maximum
Investor	Investee									Net Income	Share of Profit
		Location	Main Activities	December 31	December 31		Percentage	Carrying	Shareholding	(Loss) of	(Loss)	Note
Company	Company			, 2021	, 2020	Shares	of	Amount	in the	Investee	of Investee
							Ownership	(Notes 1 and 2)	Interim		(Notes 1 and 2)

SREC	SGPC	Taiwan ROC	Solar power generation	820,000	-	56,811	100.00%	733,938	100.00%	74,880	70,805	Subsidiary
												(Note 7)
SREC	EGPC	Taiwan ROC	Solar power generation	280,000	-	24,500	100.00%	330,831	100.00%	43,338	41,336	Subsidiary
												(Note 7)
AUOLB	AUOUS	United States	Sales and sales support of TFT-	USD 1,000	USD 1,000	1,000	100.00%	USD 2,462	100.00%	USD (279)	USD (279)	Subsidiary
			LCD panels
AUOLB	AUOJP	Japan	Sales support of TFT-LCD	USD 276	USD 276	1	100.00%	USD 1,778	100.00%	USD 35	USD 35	Subsidiary
			panels
AUOLB	AUKR	South Korea	Sales support of TFT-LCD	USD 155	USD 155	-	100.00%	USD 1,171	100.00%	USD 236	USD 236	Subsidiary
			panels
AUOLB	AUCZ	Czech	Assembly of solar modules	-	USD 20,531	-	-	-	100.00%	USD 2	USD 2	(Note 8)
		Republic
AUOLB	AUSK	Slovakia	Repairing of TFT-LCD	USD 1,359	USD 1,359	-	100.00%	USD 4,540	100.00%	USD 389	USD 389	Subsidiary
		Republic	modules
AUOLB	AUST	Singapore	Manufacturing TFT-LCD	USD 241,487	USD 241,487	907,114	100.00%	USD 96,037	100.00%	USD 6,813	USD 6,813	Subsidiary
			panels based on low
			temperature polysilicon
			technology
AUOLB	AUVI	United States	Research and development and	USD 5,000	USD 5,000	5,000	100.00%	USD 6,214	100.00%	USD 213	USD 213	Subsidiary
			IP related business
AUOLB	BVLB	Malaysia	Holding company	USD 85,171	USD 85,171	85,171	70.29%	USD 21,187	70.29%	USD 720	USD 506	Subsidiary
AUOLB	AUOSG	Singapore	Holding company and sales	USD 9,958	USD 9,958	266,268	100.00%	USD 6,792	100.00%	USD (78)	USD (78)	Subsidiary
			support of TFT-LCD panels
AUOSG	AEUS	United States	Sales support of solar-related	USD 1,194	USD 3,510	1,194	100.00%	USD 561	100.00%	USD (127)	USD (127)	Subsidiary
			products
AUOSG	ADPNL	Netherlands	Sales and sales support of	-	USD 3,245	-	-	-	100.00%	-	-	Subsidiary
			display and holding company									(Note 6)
DPLB	DPHK	Hong Kong	Holding company	USD 103,785	USD 103,785	10	100.00%	USD 206,572	100.00%	USD 16,344	USD 16,344	Subsidiary
												(Note 4)
DPLB	DPSK	Slovakia	Manufacturing and sales of	USD 4,216	USD 4,216	-	100.00%	USD 423	100.00%	USD (390)	USD (390)	Subsidiary
		Republic	automotive parts
FHVI	FTMI	Mauritius	Holding company	USD 6,503	USD 6,503	6,503	100.00%	USD 62,863	100.00%	USD (10,678)	USD (10,678)	Subsidiary
FHVI	FWSA	Samoa	Holding company	USD 19,000	USD 19,000	19,000	100.00%	USD 16,830	100.00%	USD 474	USD 474	Subsidiary
FHVI	PMSA	Samoa	Holding company	USD 39,673	USD 39,673	31,993	100.00%	USD 50,841	100.00%	USD 825	USD 825	Subsidiary
ADTCM	ADTHLD	Cayman	Holding company	USD 2,700	-	2,700	19.29%	USD 1,975	30.00%	USD (3,823)	USD (1,112)	Subsidiary
		Islands
ADPNL	ADPUS	United States	Sales and sales support of	USD 1,500	USD 1,500	1	100.00%	USD 1,566	100.00%	USD 66	USD 66	Subsidiary
			display
ADPNL	ADPJP	Japan	Sales and sales support of	USD 508	USD 508	1	100.00%	USD 450	100.00%	USD 16	USD 16	Subsidiary
			display

104

				Original Investment Amount	Original Investment Amount	December 31, 2021	December 31, 2021	December 31, 2021			Investor’s
									Maximum
Investor	Investee									Net Income	Share of Profit
		Location	Main Activities	December 31	December 31		Percentage	Carrying	Shareholding	(Loss) of	(Loss)	Note
Company	Company			, 2021	, 2020	Shares	of	Amount	in the	Investee	of Investee
							Ownership	(Notes 1 and 2)	Interim		(Notes 1 and 2)

ADTHLD	ADTSG	Singapore	Holding company	USD 12,300	-	12,300	100.00%	USD 8,573	100.00%	USD (3,789)	USD (3,789)	Subsidiary
ADTSG	ADTTW	Taiwan ROC	Design and sales of software	USD 1,080	-	3,000	100.00%	USD 878	100.00%	USD (223)	USD (223)	Subsidiary
			and hardware integration
			system and equipment,
			software development and
			consulting services relating to
			intelligent manufacturing
M.Setek	Ichijo	Japan	Manufacturing of	JPY 5,000	JPY 5,000	-	38.46%	-	38.46%	-	-	Associate
	Seisakusyo		semiconductor equipment and									(Note 3)
	Co., Ltd.		related parts
CQIL	CQHLD	United	Holding company	USD 26,548	USD 29,118	635,730	100.00%	USD 30,457	100.00%	USD (22)	USD (22)	Subsidiary
		Kingdom
CQHLD	CQUK	United	Sales and sales support of	GBP 1,874	GBP 1,874	-	100.00%	GBP 87	100.00%	GBP (21)	GBP (21)	Subsidiary
		Kingdom	content management system
CQHLD	CQUS	United States	Sales of content management	GBP 19,948	GBP 19,948	13	100.00%	GBP 11,135	100.00%	GBP 637	GBP 637	Subsidiary
			system and hardware
CQHLD	CQCA	Canada	Research and development of	GBP 798	GBP 798	-	100.00%	GBP 611	100.00%	GBP 92	GBP 92	Subsidiary
			content management system
CQUS	JRUK	United	Development and sales of	USD 1,500	USD 1,500	1	100.00%	USD 1,707	100.00%	USD 107	USD 107	Subsidiary
		Kingdom	content management system
			and sales of the related
			hardware
CQUS	JRUS	United States	Development and sales of	USD 8,000	USD 8,000	18	100.00%	USD 7,219	100.00%	USD (636)	USD (636)	Subsidiary
			content management system
			and sales of the related
			hardware

Note 1: All inter-company transactions among AUO and its subsidiaries have been eliminated in the consolidated financial statements.

Note 2: Inclusive of the amortization of differences between the investment cost and the entity’s share of the net value of investee, and the effect of upstream and sidestream transactions.

Note 3: The carrying amount includes accumulated impairment loss.

Note 4: The registration of the alteration of DPHK’s common stock has not been completed. Note 5: On January 6, 2021, Lextar carried out a joint share exchange with Epistar for a newly incorporated company, Ennostar. See Note 6(7) for the relevant information. Note 6: As part of a business restructuring, AUOSG sold all its shareholdings in ADPNL to ADP in January 2021.

Note 7: SREC and its subsidiaries were included in the Company’s consolidated financial statements from January 2021. See Note 6(8) for the relevant information. Note 8: The liquidation process was completed in July 2021.

Note 9: Being disposed in July 2021. Note 10: Ceased applying the equity method in October 2021. Note 11: AUO split net assets of NT$368,555 thousand in exchange for 36,856 thousand shares, with par value of NT$10 per share, of common shares of ADP.

105

AU OPTRONICS CORP. AND SUBSIDIARIES Information on Investment in Mainland China

For the year ended December 31, 2021

(Amount in thousands of New Taiwan Dollars and foreign currencies indicated)

Table 10

1. AUO `：`

(1) Related information on investment in Mainland China

							Accumulate
							d Outflow					Carrying
				Accumulated									Accumulate
		Total		Outflow of	Investment Flows		of		%		Investor’s	Amount of	d Inward
		Amount		Investment			Investment	Net Income	Ownership	Maximum	Share of	the	Remittance
Investee Company	Main Activities	of Paid-in Capital	Method of Investment	from Taiwan as of January			from Taiwan as	(Loss) of Investee	through Direct or	Shareholding in the Interim	Profit (Loss) of Investee	Investment as of	of Earnings as of	Note
		(Note 2)		1, 2021 (Note 2)	Outflow	Inflow	of December 31, 2021 (Note 2)	(Notes 4 and 5)	Indirect Investment		(Notes 4 and 5)	December 31, 2021 (Note 2)	December 31, 2021
ACTSZ	Design, development and sales of	108,695	(Note 1)	-	-	-	-	(35,361)	100%	100%	(35,361)	27,144	-
	software and hardware for health
	care industry
ADTSZ	Business management consulting	249,192	(Note 1)	-	249,192	-	249,192	(99,930)	100%	100%	(99,930)	151,584	-
	and services of technology
	promotion and application
AETSD	Planning, design and development	8,696	(Note 1)	-	-	-	-	(2)	100%	100%	(2)	2,399	-
	of construction project for
	environmental protection and
	related project management
AETSZ	Planning, design and development	52,174	(Note 1)	-	-	-	-	(11,259)	100%	100%	(11,259)	20,325	-
	of construction project for
	environmental protection and
	related project management
AMISZ	Development and licensing of	130,434	(Note 1)	-	-	-	-	(53,656)	100%	100%	(53,656)	24,195	-
	software relating to intelligent
	manufacturing, and related
	consulting services

106

							Accumulate
							d Outflow					Carrying
				Accumulated									Accumulate
		Total		Outflow of	Investment Flows		of		%		Investor’s	Amount of	d Inward
		Amount		Investment			Investment	Net Income	Ownership	Maximum	Share of	the	Remittance
Investee Company	Main Activities	of Paid-in Capital	Method of Investment	from Taiwan as of January			from Taiwan as	(Loss) of Investee	through Direct or	Shareholding in the Interim	Profit (Loss) of Investee	Investment as of	of Earnings as of	Note
		(Note 2)		1, 2021 (Note 2)	Outflow	Inflow	of December 31, 2021 (Note 2)	(Notes 4 and 5)	Indirect Investment		(Notes 4 and 5)	December 31, 2021 (Note 2)	December 31, 2021
AMIXM	Sales of software and hardware	21,739	(Note 1)	-	-	-	-	(13,150)	100%	100%	(13,150)	8,785	-
	relating to intelligent
	manufacturing, and related
	consulting services
ATISZ	Design and sales of software and	43,478	(Note 1)	-	-	-	-	(15,942)	100%	100%	(15,942)	14,825	-
	hardware integration system and
	equipment relating to intelligent
	manufacturing
AUOKS	Manufacturing and sales of TFT-	26,608,168	(Note 1)	13,570,166	17,305,000	-	30,875,166	4,971,540	100%	100%	2,535,485	15,368,744	-
	LCD panels
AUSH	Sales support of TFT-LCD panels	415,320	(Note 1)	27,688	-	-	27,688	(32,403)	100%	100%	(32,403)	310,607	-
AUSJ	Manufacturing and assembly of	2,990,304	(Note 1)	2,215,040	-	-	2,215,040	111,995	100%	100%	111,995	4,048,660	-
	TFT-LCD modules; leasing
AUSZ	Manufacturing, assembly and	12,902,608	(Note 1)	5,537,600	-	-	5,537,600	1,581,234	100%	100%	1,581,234	17,821,288	-
	sales of TFT-LCD modules
AUXM	Manufacturing, assembly and	12,570,352	(Note 1)	6,922,000	-	-	6,922,000	942,586	100%	100%	942,586	15,322,527	-
	sales of TFT-LCD modules
BVHF	Manufacturing and sale of liquid	2,033,684	(Note 1)	-	-	-	-	20,359	100%	100%	20,359	833,270	-
	crystal products and related parts
BVXM	Manufacturing and sales of liquid	2,608,680	(Note 1)	-	-	-	-	24,710	100%	100%	24,710	1,323,985	-
	crystal products and related parts;
	leasing

107

(2) Upper limit on investment in Mainland China

(2) Upper limit on investment in Mainland China
Accumulated Investment in Mainland China as of December 31, 2021 (Note 2)	Investment Amounts Authorized by the Investment Commission, MOEA (Note 2)	Upper Limit on Investment Stipulated by the Investment Commission, MOEA (Note 3)
45,826,686 (USD1,655,110)	76,632,668 (USD1,728,003 and HKD60,000 and CNY6,572,210)	142,779,883

Note 1: Indirect investments in Mainland China through companies registered in a third region.

Note 2: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date.
Note 3: Pursuant to the Regulations Governing Permission for Investment and Technical Cooperation in the Mainland Area, AUO’s accumulated investments in Mainland China did not exceed the upper limit on investment amount or ratio stipulated by the Investment Commission, Ministry of Economic Affairs (“MOEA”).
Note 4: Amounts were recognized based on the investees’ audited financial statements.

Note 5: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rates for the year of 2021. Note 6: BVHF is 100% owned by BVLB, a jointly-owned subsidiary of AUO and DPTW.

108

2. DPTW and ADP:

(1) Related information on investment in Mainland China

Investee			Method of				Accumulate					Carrying
				Accumulated
					Investment		d Outflow of		%		Investor’s	Amount of	Accumulated
		Total Amount of Paid-in		Outflow of Investment	Flows		Investment from Taiwan	Net Income (Loss) of	Ownership through	Maximum Shareholding	Share of Profit (Loss)	the Investment	Inward Remittance of
Company	Main Activities	Capital (Note 4)	Investment	from Taiwan as of January 1 2021	Outflow	Inflow	as of December	Investee (Notes 2 and 6)	Direct or Indirect	in the Interim	of Investee (Notes 2 and	as of December	Earnings as of December 31,	Note
				, (Note 4)			31, 2021		Investment		6)	31, 2021	2021
							(Note 4)					(Note 4)

ADPSZ	Sales and sales support of display Manufacturing and sale of liquid crystal products and related parts Manufacturing and sale of backlight modules and related parts Manufacturing and sale of backlight modules and related parts Manufacturing and sale of backlight modules and related parts Manufacturing, sales and trading of precision plastic parts Manufacturing and sale of backlight modules and related parts	20,766	(Note 1)	-	20,766	-	20,766	2,367	100%	100%	2,367	23,728	-
BVHF		2,033,684	(Note 1)	443,008	-	-	443,008	20,359	29.71%	29.71%	20,359	833,270	-	(Note 5)

DPSZ		692,200	(Note 1)	415,320	-	-	415,320	295,637	100%	100%	295,637	1,481,672	1,271,820	(Note 9)

DPXM		1,938,160	(Note 1)	1,938,160	-	-	1,938,160	158,346	100%	100%	158,346	4,124,838	1,741,413

FHWJ		179,972	(Note 1)	227,042	-	-	227,042	3,175	100%	100%	3,175	53,731	-

FPWJ		802,952	(Note 1)	526,072	-	-	526,072	20,244	100%	100%	20,244	696,500	-	(Note 8)

FTKS		996,768	(Note 1)	996,768	-	-	996,768	23,108	100%	100%	23,108	1,407,686	-

FTWJ	Manufacturing and sale of backlight modules and related parts	969,080	(Note 1)	179,972	-	-	179,972	(306,096)	100%	100%	(306,096)	1,510,006	389,696	(Note 7)

(2) Upper limit on investment in Mainland China

Entity	Accumulated Investment in Mainland China as of December 31, 2021 (Note 4)	Investment Amounts Authorized by the Investment Commission, MOEA (Note 4)	Upper Limit on Investment Stipulated by the Investment Commission, MOEA (Note 3)
DPTW	4,726,342 (USD170,700)	4,555,819 (USD164,541)	5,527,955
ADP	20,766 (USD750)	138,440 (USD5,000)	2,242,639

Note 1: Indirect investments in Mainland China through companies registered in a third region.

Note 2: Amounts were recognized based on the investees’ audited financial statements.

Note 3: Pursuant to the Regulations Governing Permission for Investment and Technical Cooperation in the Mainland Area, DPTW’s and ADP’s accumulated investments in Mainland China did not exceed the upper limit on investment amount or ratio stipulated by the Investment Commission, Ministry of Economic Affairs (“MOEA”).

109

Note 4: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the exchange rates at the reporting date. Note 5: BVHF is 100% owned by BVLB, a jointly-owned subsidiary of AUO and DPTW. Accordingly, the share of profit (loss) of investee and the carrying amount of the investment as of December 31, 2021 disclosed in the table are presented based on 100% held.
Note 6: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rates for the year of 2021. Note 7: The amount of paid-in capital includes the capitalization of retained earnings amounting to USD28,500 thousand for the years from 2005 to 2007. Note 8: The amount of paid-in capital includes the capital injection of USD10,000 thousand from the offshore holding company, which was originally from FTWJ’s appropriation of earnings.
Note 9: The amount of paid-in capital includes the capital injection of USD1,000 thousand from DPLB in 2010 and the capitalization of retained earnings of USD9,000 thousand from DPSZ in 2012.

AI assistant

AUO — Annual Report 2021

52062_rns_2021-12-28_b123999e-996c-4053-b31a-1ec2113adebb.pdf

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Financial Statements

Representation Letter

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Description of key audit matter:

How the matter was addressed in our audit:

2. Revenue recognition

Description of key audit matter:

How the matter was addressed in our audit:

Other Matters

Responsibilities of Management and Those Charged with Governance for the Consolidated Financial Statements

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notes to Readers

(English Translation of Consolidated Financial Statements Originally Issued in Chinese)

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2021 and 2020

(Expressed in thousands of New Taiwan dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2021 and 2020

(Expressed in thousands of New Taiwan dollars, except for Earnings per share)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Changes in Equity

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows

For the years ended December 31, 2021 and 2020

(Expressed in thousands of New Taiwan dollars)

(English Translation of Consolidated Financial Statements Originally Issued in Chinese) AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Statements of Cash Flows (Continued)

For the years ended December 31, 2021 and 2020 (Expressed in thousands of New Taiwan dollars)

Notes to Consolidated Financial Statements

For the years ended December 31, 2021 and 2020

1. Organization

2. The Authorization of Financial Statements

3. Application of New and Revised Standards, Amendments and Interpretations

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

4. Summary of Significant Accounting Policies

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(3) Basis of consolidation

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Impairment of financial assets

(iii) De-recognition of financial assets

b. Financial liabilities

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(a) Financial liabilities at fair value through profit or loss

(b) Other financial liabilities

c. Offsetting of financial assets and liabilities

(8) Inventories

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(10) Investment property

(11) Property, plant and equipment

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b.

c.

Depreciation

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(12) Leases

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Amortization

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(15) Impairment – non-financial assets

(16) Provisions

a. Warranties

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AUO Annual Report 2021