Stock Code：2409

AU OPTRONICS CORP.

Parent Company Only Financial Statements and Independent Auditors’ Report

For the Years Ended December 31, 2019 and 2018

The independent auditors’ report and the accompanying parent company only 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 version and Chinese version, the Chinese-language independent auditors’ report and the parent company only financial statements shall prevail.

Independent Auditors’ Report

To the Board of Directors of AU Optronics Corp.:

Opinion

We have audited the parent company only financial statements of AU Optronics Corp. (“the Company”), which comprise the balance sheets as of December 31, 2019 and 2018, the statements of comprehensive income, statements of changes in equity, and statements of cash flows for the years ended December 31, 2019 and 2018, and notes to the parent company only financial statements including a summary of significant accounting policies.

In our opinion, the accompanying parent company only financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and 2018, and its financial performance and its cash flows for each of the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers.

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 Parent Company Only 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.

Emphasis of Matter

As stated in Note 3(1) to the parent company only financial statements, the Company has initially adopted the IFRS 16, “Leases” from January 1, 2019 and applied the modified retrospective approach with no restatement of comparative period amounts. Our conclusion is not modified in respect of this matter.

Key Audit Matters

Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the parent company only financial statements of the current period. These matters were addressed in the context of our audit of the parent company only 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(2) and Note 5(3) “Critical accounting judgments and key sources of estimation and assumption uncertainty”, Note 6(8) “Property, plant and equipment”, Note 6(9) “Lease arrangements” and Note 6(11) “Intangible assets” to the parent company only 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 non-financial assets and other related disclosures.

Revenue recognition

Refer to Note 4(18) “Revenue from contracts with customers” and Note 6(18) “Revenue from contracts with customers” to the parent company only 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 sales revenue is easily influenced by various external factors such as supply and demand of the market, and this may impact the recognition of revenue. 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.

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Management is responsible for the preparation and fair presentation of the parent company only financial statements in accordance with Regulations Governing the Preparation of Financial Reports by Securities Issuers and for such internal control as management determines is necessary to enable the preparation of parent company only financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the parent company only 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.

2-1

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Our objectives are to obtain reasonable assurance about whether the parent company only 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 parent company only 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 parent company only 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 parent company only 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 parent company only financial statements, including the disclosures, and whether the parent company only 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 parent company only 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.

2-2

From the matters communicated with those charged with governance, we determined those matters that were of most significance in the audit of the parent company only 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 Wei, Shing-Hai and Lu, Chien-Hui.

KPMG Hsinchu, Taiwan (Republic of China) February 25, 2020

Notice to Readers

The accompanying parent company only financial statements are intended only to present the financial position, financial performance, and cash flows in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers. The standards, procedures and practices to audit such parent company only financial statements are those generally accepted and applied in the Republic of China.

The independent auditors’ report and the accompanying parent company only 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 version and Chinese version, the Chinese-language independent auditors’ report and parent company only financial statements shall prevail.

2-3

AU OPTRONICS CORP.

Balance Sheets

December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

December 31, 2019 2018 Assets Amount % Amount % Current assets: 1100 Cash and cash equivalents (Note 6(1)) $ 45,928,070 13 30,316,278 9 1110 Financial assets at fair value through profit or loss`－`current (Note 6(2)) 18,753 - 52,434 - 1170 Accounts receivable, net (Note 6(4)) 26,986,723 8 41,612,155 12 1180 Accounts receivable from related parties, net (Notes 6(4)&7) 1,938,966 1 4,625,330 1 1210 Other receivables from related parties (Note 7) 1,211,588 - 27,905 - 1220 Current tax assets 28,303 - 26,282 - 130X Inventories (Note 6(5)) 17,256,261 5 20,209,268 6 1476 Other current financial assets (Note 6(4)) 1,111,904 - 304,164 - 1479 Other current assets (Note 6(12)) 1,836,890 1 1,754,804 - 98,317,458 28 98,928,620 28 Noncurrent assets: 1517 Financial assets at fair value through other comprehensive income`－`noncurrent (Note 6(3)) 7,140,410 2 6,604,041 2 1550 Investments in equity-accounted investees (Notes 6(6)&(7)) 70,184,815 20 73,281,985 21 1600 Property, plant and equipment (Notes 6(8),7&8) 144,142,738 42 148,448,632 43 1755 Right-of-use assets (Note 6(9)) 9,346,877 3 - - 1760 Investment property (Note 6(10)&8) 465,868 - 539,436 - 1780 Intangible assets (Note 6(11)) 12,051,761 3 12,476,746 4 1840 Deferred tax assets (Note 6(24)) 4,265,480 1 5,151,811 1 1900 Other noncurrent assets (Notes 6(12)&8) 1,749,460 1 1,973,250 1 249,347,409 72 248,475,901 72 Total Assets $ 345,664,867 100 347,404,521 100 December 31, 2019 2018 Liabilities and Equity Amount % Amount % Current liabilities: 2120 Financial liabilities at fair value through profit or loss`－`current (Note 6(2)) $ 7,054 - 13,973 - 2170 Accounts payable 24,296,415 7 29,179,096 9 2180 Accounts payable to related parties (Note 7) 25,325,274 8 31,270,499 9 2213 Equipment and construction payable (Note 7) 4,568,963 1 7,125,831 2 2220 Other payables to related parties (Note 7) 405,656 - 224,886 - 2230 Current tax liabilities - - 1,267,055 - 2250 Provisions`－`current (Note 6(15)) 666,896 - 1,395,690 - 2280 Lease liabilities`－`current (Note 6(9)) 415,981 - - - 2399 Other current liabilities 13,584,470 4 17,353,370 5 2322 Current installments of long-term borrowings (Notes 6(13)&8) 4,000,000 1 22,212,000 7 73,270,709 21 110,042,400 32 Noncurrent liabilities: 2540 Long-term borrowings, excluding current installments (Notes 6(13)&8) 81,966,110 24 29,733,545 9 2550 Provisions`－`noncurrent (Note 6(15)) 805,729 - 777,445 - 2570 Deferred tax liabilities (Note 6(24)) 2,213,429 1 2,356,782 1 2580 Lease liabilities`－`noncurrent (Note 6(9)) 9,009,594 3 - - 2600 Other noncurrent liabilities (Note 6(16)) 1,727,456 - 1,631,634 - 95,722,318 28 34,499,406 10 Total liabilities 168,993,027 49 144,541,806 42 Equity(Note 6(17)): 3100 Common stock 96,242,451 28 96,242,451 28 3200 Capital surplus 60,544,474 18 60,622,043 17 3300 Retained earnings 22,903,722 6 46,845,991 13 3400 Other components of equity (2,005,384) (1) (847,770) - 3500 Treasury stock (1,013,423 ) - - - Total equity 176,671,840 51 202,862,715 58 Total Liabilities and Equity $ 345,664,867 100 347,404,521 100	December 31,	December 31,
	2019	2018
		Amount % 13,973 - 29,179,096 9 31,270,499 9 7,125,831 2 224,886 - 1,267,055 - 1,395,690 - - - 17,353,370 5 22,212,000 7 110,042,400 32 29,733,545 9 777,445 - 2,356,782 1 - - 1,631,634 - 34,499,406 10 144,541,806 42 96,242,451 28 60,622,043 17 46,845,991 13 (847,770) - - - 202,862,715 58 347,404,521 100

See accompanying notes to the parent company only financial statements

AU OPTRONICS CORP.

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars, except for earnings per share)

2019	2018
Amount 257,130,650 1,963,474 255,167,176 257,786,100 (2,618,924 ) 2,873,009 4,244,405 7,989,907 15,107,321 (17,726,245 ) 1,495,033 618,172 (1,546,400) (1,187,224 ) (620,419 ) (18,346,664) 838,594 (19,185,258 ) 188,110 536,369 (13,981) (37,622 ) 672,876 (1,211,454) (846,480) 377,862 (1,680,072 ) (1,007,196 ) (20,192,454 ) (2.00 ) (2.00 )	Amount 295,131,127 2,070,788 293,060,339 266,682,541 26,377,798 3,079,820 4,399,773 7,864,641 15,344,234 11,033,564 1,397,091 (152,891) (980,812) 688,041 951,429 11,984,993 1,824,395 10,160,598 (56,956) (756,179) 5,605 38,908 (768,622 ) 1,685,563 (2,125,649) 133,370 (306,716 ) (1,075,338 ) 9,085,260 1.06 1.04	%
		101 1
		100 91
		9
		1 1 3
		5
		4
		- - - -
		-
		4 1
		3
		- - - -
		-
		1 (1) -
		-
		-
		3

See accompanying notes to the parent company only financial statements

AU OPTRONICS CORP.

Statements of Changes in Equity

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

	Retained Earnings	Retained Earnings		Other Components of Equity	Other Components of Equity	Other Components of Equity	Total Equity 208,154,368 (195 ) 208,154,173 - (14,436,368 ) 10,160,598 (1,075,338)
Legal Reserve 3,439,686 - 3,439,686 3,235,942 - - - - - - - - 6,675,628 1,016,060 - - - - - - - - - - 7,691,688	Special Reserve - - - - - - - - - - - - - - 847,770 - - - - - - - - - 847,770	Unappropriated Earnings	Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income(Loss)	Unrealized Gains (Losses) on Available- for-sale Financial Assets 1,377,031 (1,377,031 ) - - - - - - - - - - - - - - - - - - - - - - -	Subtotal 256,062 (73,215 ) 182,847 - - - (1,058,476 ) (1,058,476 ) - - (22,225 ) 50,084 (847,770 ) - - - - (1,157,614 ) (1,157,614 ) - - - - - (2,005,384 )	Treasury Shares - -
		47,675,843 73,020 47,748,863 (3,235,942 ) (14,436,368 ) 10,160,598 (16,862 ) 10,143,736 - 158 - (50,084 ) 40,170,363 (1,016,060 ) (847,770 ) (4,812,122 ) (19,185,258) 150,418 (19,034,840 ) - - - (95,307 ) - 14,364,264	- 1,303,816 1,303,816 - - - (751,760 ) (751,760 ) - - - 50,084 602,140 - - - - 522,458 522,458 - - - - - 1,124,598
						-
						-
						-
						- -
						-	9,085,260 33,304 29,047 (2,701 ) - 202,862,715 - - (4,812,122 ) (19,185,258) (1,007,196 ) (20,192,454)
						-
						-
						-
						-
						-
						-
						-
						-
						- -
						-
						-	547 (1,013,423 ) (40,085 ) (111,056 ) (22,282 ) 176,671,840
						(1,013,423 ) -
						-
						-
						(1,013,423 )

See accompanying notes to the parent company only financial statements

AU OPTRONICS CORP.

Statements of Cash Flows

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

2019
Cash flows from operating activities:
Profit (loss) before income tax
$(18,346,664)
Adjustments for:
- depreciation
23,520,703
- amortization
424,985
- interest expense
1,546,400
- interest income
(300,199)
- dividend income
(284,946)
- share of loss (profit) of equity-accounted investees
1,187,224
- gains on disposals of property, plant and equipment, net
(27,307)
- impairment losses on assets
67,778
- losses (gains) on financial instruments at fair value through profit
or loss
26,762
- unrealized foreign currency exchange losses (gains)
(488,929)
- others
943
Changes in operating assets and liabilities:
- accounts receivable
14,270,038
- receivables from related parties
2,702,681
- inventories
2,953,007
- other current assets
(718,394)
- notes and accounts payable
(4,128,050)
- payables to related parties
(5,764,455)
- net defined benefit liability
(89,386)
- provisions
(690,939)
- other current liabilities
(3,349,523
)
Cash generated from operations
12,511,729
Cash received from interest income
301,758
Cash received from dividends
604,468
Cash paid for interest
(1,319,874)
Cash paid for income taxes
(1,024,452
)
Net cash provided by operating activities
11,073,629

2018
11,984,993
20,870,071
506,391
980,812

(288,091)

(452,561)
(688,041)

(55,482)
4,470
(71,713)

434,330
-
(6,056,978)
(2,588,189)
(982,953)

1,019,479

1,838,466

1,617,660

(86,706)

629,203
(2,265,052
)
26,350,109
304,697
1,191,234

(871,657)
(132,836
)
26,841,547

(Continued)

See accompanying notes to the parent company only financial statements

AU OPTRONICS CORP.

Statements of Cash Flows (Continued)

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

Cash flows from investing activities: Acquisitions of financial assets at fair value through other comprehensive income Acquisitions of equity-accounted investees Proceeds from disposals of equity-accounted investees Proceeds from return of capital by equity-accounted investees Acquisitions of property, plant and equipment Proceeds from disposals of property, plant and equipment Decrease (increase) in refundable deposits Increase in other financial assets Decrease (increase) in other receivables from related parties Net cash used in investing activities Cash flows from financing activities: Proceeds from long-term borrowings Repayments of long-term borrowings Payments of lease liabilities Cash dividends Repurchase of treasury shares Others Net cash provided by (used in) financing activities Effect of exchange rate change on cash and cash equivalents Net increase (decrease) in cash and cash equivalents Cash and cash equivalents at January 1 Cash and cash equivalents at December 31 $	2019 - (654,914) - - (21,196,552) 16,855 40,026 (2,412) (1,200,000 ) (22,996,997 ) 75,900,000 (42,087,000) (442,719) (4,812,122) (1,013,423) 547 27,545,283 (10,123 ) 15,611,792 30,316,278 45,928,070	2018 (3,418,633) (2,061,398) 2,338,360 94,760 (26,436,621) 78,774 (137,841) (5,161) 1,065,570 (28,482,190 ) 136,200 (26,217,000) - (14,436,368) - 33,304 (40,483,864 ) 17,638 (42,106,869) 72,423,147 30,316,278

See accompanying notes to the parent company only financial statements

6-1

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars, unless otherwise indicated)

1. Organization

AU Optronics Corp. (“AUO” or “the Company”) 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 overthe-counter (“OTC”) market.

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.

2. The Authorization of Financial Statements

These parent company only financial statements were approved and authorized for issue by the Board of Directors of AUO on February 5, 2020.

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”)

In preparing the accompanying parent company only financial statements, the Company has adopted the following 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”) issued by the International Accounting Standards Board (“IASB”) (collectively, “IFRSs”) and endorsed by the FSC with effective date from January 1, 2019.

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 9,Prepayment Features with Negative Compensation IFRS 16,Leases Amendments to IAS 19,Plan Amendment, Curtailment or Settlement Amendments to IAS 28,Long-term Interests in Associates and Joint Ventures	January 1, 2019 January 1, 2019 January 1, 2019 January 1, 2019

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
IFRIC 23,Uncertainty over Income Tax Treatments Annual Improvements to IFRSs 2015 – 2017 Cycle	January 1, 2019 January 1, 2019

Except for the item discussed below, the adoption of abovementioned standards and interpretations has not had a material impact on the Company’s accounting policies.

IFRS 16, Leases

IFRS 16 sets out the accounting standards for leases, which replaces IAS 17, Leases and the related interpretations.

Upon the initial application of IFRS 16, if the Company is a lessee, it is required to recognize a right-of-use asset and a lease liability on the balance sheet for all leases with exception for leases of low-value assets and short-term leases which the Company may elect to apply the accounting method similar to the accounting for operating lease under IAS 17. Additionally, a depreciation expense charged on the right-of-use asset and an interest expense accrued on the lease liability, for which interest is computed by using effective interest method, are recognized separately on the statement of comprehensive income. On the statement of cash flows, cash payments for the principal amount of the lease liability is classified within financing activities; cash payments for interest portion is classified within operating activities. See Note 4(13) for an explanation of the Company’s accounting policies on leases.

When IFRS 16 became effective, as a lessee, the Company applied this Standard using the modified retrospective approach with the cumulative effect of the initial application of this Standard recognized at the date of initial application. Comparative financial information, therefore, has not been restated. The Company is not required to make any adjustments on transition to IFRS 16 for leases in which it acts as a lessor, except for a sublease. The Company has accounted for those leases in accordance with IFRS 16 starting from the date of initial application. On January 1, 2019, based on the assessment of the remaining contractual terms and conditions agreed in head leases and subleases, all of the Company’s subleases were classified as operating leases.

As at January 1, 2019, lease liabilities recognized for leases previously classified as an operating lease under IAS 17, except for leases of low-value asset and short-term leases, were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application. Right-of-use assets were measured at an amount equal to the lease liabilities, adjusted by the amount of any prepaid or accrued lease payments relating to that lease. The Company also tested right-ofuse assets for impairment applying IAS 36.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

In addition, the Company used the following practical expedients when applying IFRS 16 to leases.

a. Applied a single discount rate to a portfolio of leases with reasonably similar characteristics.
b. Applied the exemption not to recognize right-of-use assets and lease liabilities to leases for which the lease term ends within 12 months of the date of initial application.
c. Excluded initial direct costs from the measurement of the right-of-use assets at the date of initial application.
d. Used hindsight when determining the lease term if the contract contains options to extend or terminate the lease.

For leases that were classified as finance leases under IAS 17, the carrying amount of the right-of-use asset and the lease liability at the date of initial application were determined at the carrying amount of the lease asset and lease payable under IAS 17 as at December 31, 2018.

The weighted average lessee’s incremental borrowing rate applied to lease liabilities recognized by the Company at January 1, 2019 is 1.82%. The reconciliation between the lease liabilities recognized and the future minimum lease payments of non-cancellable operating leases on December 31, 2018 is presented as follows:

The future minimum lease payments of non-cancellable operating leases on December 31, 2018 $ Other leases in scope of IFRS 16 Undiscounted amount on January 1, 2019 $ Discounted amount using the incremental borrowing rate on January 1, 2019 $ Extension of lease that reasonably certain to be exercised Leaseliabilities recognized on January 1, 2019 $	Amounts
	(in thousands) 3,845,080 119,504 3,964,584 3,639,324 7,149,661 10,788,985

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The following table summarized the impacts of initially applying IFRS 16 on the Company’s assets, liabilities and equity as at January 1, 2019.

Carrying amount under IAS 17 and related standards and interpretations Right-of-use assets $ - Impacts to total assets $ Lease liabilities–current $ - Lease liabilities–noncurrent - Impacts to total liabilities $ Impacts to total equity $		January 1, 2019
		Adjustments from changes in accounting policies (in thousands) 10,788,985 10,788,985 442,879 10,346,106 10,788,985 -	Carrying amount under IFRS 16
			10,788,985 442,879 10,346,106

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

According to Ruling No. 1080323028 issued by the FSC on July 29, 2019, commencing from 2020, the Company is required to adopt the IFRSs that have been endorsed by the FSC with effective date from 2020. The related new, revised or amended standards and interpretations are set out below:

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
Amendments to IFRS 3,Definition of a Business Amendments to IFRS 9, IAS 39 and IFRS 7,Interest Rate Benchmark Reform Amendments to IAS 1 and IAS 8,Definition of Material	January 1, 2020 January 1, 2020 January 1, 2020

The Company assesses that the initial adoption of the abovementioned standards would not have any material impact on its accounting policies.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(3) The IFRSs issued by the IASB but not yet endorsed by the FSC

A summary of the new or/and amended IFRSs issued by the IASB but not yet endorsed by the FSC is set out below.

New, Revised or Amended Standards and Interpretations	Effective Date Issued by IASB
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 Amendments to IAS 1,Classification of Liabilities as Current or Non- Current	Subject to IASB’s announcement January 1, 2021 January 1, 2022

Note: The aforementioned new, revised and amended standards and interpretations are effective for annual periods beginning on or after the respective effective dates.

As of the date that the accompanying parent company only 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. 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 parent company only financial statements are set out as below. The significant accounting policies have been applied consistently to all periods presented in these parent company only financial statements.

(1) Statement of compliance

The parent company only 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”).

(2) Basis of preparation

a. Basis of measurement

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

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

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only 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(16)).
b. Functional and presentation currency

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

(3) Foreign currency transactions and operations
a. Transactions in foreign currencies are translated to the functional currency 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 parent company only 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.

Notes to Parent Company Only Financial Statements

(4) 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.

(5) 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(6) 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.

(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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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.

(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 12-month expected credit losses. For trade receivables and contract assets, the Company measures their loss allowances at an amount equal to lifetime expected credit losses.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 forward-looking 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.

(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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(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 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.

(7) 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.

(8) 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

When intangible assets and property, plant and equipment are classified as held for sale, they are no longer amortized or depreciated. In addition, once an equity-accounted investee is classified as held for sale, it is no longer equity accounted.

(9) Investments in associates and joint ventures

Associates are those entities in which the Company together with its subsidiaries have 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 cost of the investment includes transaction costs. The parent company only 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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.

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 parent company only 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 in subsidiaries

The investees which are controlled by the Company are measured under equity method in preparing the parent company only financial statement. The profit or loss, other comprehensive income and equity in the parent company only financial statement are equal to the profit or loss, other comprehensive income and equity attributable to the shareholders of parent in the consolidated financial statement. The Company prepares the consolidated financial statement quarterly comprising of AUO and its subsidiaries.

Changes in the Company’s ownership interests in subsidiaries that do not result in the Company losing of control over the subsidiary are accounted for as equity transaction.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(11) 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.

(12) 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.

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 straight-line 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.

(13) Leases

Leases (policy applicable from January 1, 2019)

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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.

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Leases (policy applicable before January 1, 2019)

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 leased asset, and recognized as an expense on a straight-line basis over the lease term.

b. Lessee

Payments made under operating lease (excluding insurance and maintenance expenses) are recognized in profit or loss on a straight-line basis over the term of the lease.

(14) 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;
(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

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(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.

e. 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.

(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 nonfinancial 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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.

Notes to Parent Company Only 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. Onerous contracts

A provision for onerous contracts is recognized when the expected benefits to be derived by the Company from a contract are lower than the unavoidable cost of meeting its obligations under the contract. The provision is measured at the present value of the lower of the expected cost of terminating the contract and the expected net cost of continuing with the contract. Before a provision is established, the Company recognizes any impairment loss on the assets associated with that contract.

d. Loss contingencies

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 weightedaverage 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:

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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.

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) 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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.

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.

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.

(20) 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.

Notes to Parent Company Only 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.

(21) 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 case-by-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 IFRSs endorsed by the FSC with effective date (hereinafter referred to as “TIFRSs”).

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.

(22) Earnings (loss) per share

Basic earnings (loss) per share is computed by dividing profit or loss attributable to the shareholders of the Company 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 the Company 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 weighted-average outstanding shares are retroactively adjusted for the effects of stock dividends transferred from retained earnings or capital surplus to common stock.

(23) Operating segments

The Company has provided the operating segments disclosure in the consolidated financial statements. Thus, disclosure of the segment information in the parent company only financial statements is waived.

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

The preparation of the parent company only financial statements in conformity with the Regulations 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 parent company only financial statements is included in the following notes:

(1) Estimate of provisions

Provision for warranty is estimated when product revenue is recognized. The estimate has been made based on the quantities within the warranty period, the historical and anticipated warranty claims rate associated with similar products and services, and the projected unit cost of maintenance. The Company regularly reviews the basis of the estimate and if necessary, amends it as appropriate. There could be a significant impact on provision for warranty for any changes of the basis of the estimate.

Provision for unsettled litigation and claims is recognized when it is probable that it will result in an outflow of the Company’s resources and the amount can be reasonably estimated. While the ultimate resolution of litigation and claims cannot be predicted with certainty, the final outcome or the actual cash outflow may be materially different from the estimated liability.

(2) 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.

(3) 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.

(4) Measurement of defined benefit obligations

Accrued pension liabilities and the resulting pension expenses under defined benefit pension plans are calculated using the Projected Unit Credit Cost Method. Actuarial assumptions comprise the discount rate, rate of employee turnover, long-term average future salary increase, etc. Changes in economic circumstances and market conditions will affect these assumptions and may have a material impact on the amount of the expense and the liability.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(5) 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.

(6) Estimate of variable consideration of revenue

The Company estimates the amount of variable consideration by using methods either the expected value or the most likely amount based on historical experience, market and economic situation and any known factors that would significantly affect the estimates. The amount of variable consideration is recognized as a reduction of revenue in the same period the related revenue is recognized. The Company periodically reviews the reasonableness of the estimated variable consideration. However, the adequacy of estimations may be affected by factors such as market price competition and the evolution of product technology, which could result in significant adjustments to the variable consideration.

(7) 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

		December 31,	December 31,
		2019	2018
		(in thousands)
Cash on hand, demand deposits and checking accounts	$	32,188,485	19,180,244
Time deposits		13,739,585	11,136,034
	$	45,928,070	30,316,278

Refer to Note 6(28) for the disclosure of credit risk, currency risk and sensitivity analysis of the financial instruments of the Company.

As at December 31, 2019 and 2018, no cash and cash equivalents were pledged with banks as collaterals.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only 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 $ Financial liabilities held for trading: Foreign currency forward contracts $	December 31,	December 31,
	2019 2018 (in thousands) 18,753 52,434 7,054 13,973	2018
		13,973

The Company entered into derivative contracts to manage the exposure to currency risk arising from operating activities. Refer to Note 6(28) for the disclosure of the Company’s credit and currency risks related to financial instruments.

As of December 31, 2019 and 2018, the Company’s outstanding foreign currency forward contracts were as follows:

	December 31, 2019	December 31, 2019
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell CNY / Buy USD Sell EUR / Buy JPY Sell HKD / Buy USD	Maturity date Jan. 2020 Jan. 2020 Feb. 2020 – Mar. 2020 Jan. 2020 – Feb. 2020 Jan. 2020	Contract amount
		(in thousands) USD154,000 / NTD4,640,720 USD27,000 / JPY2,948,070 CNY1,285,305 / USD184,000 EUR23,000 / JPY2,788,285 HKD60,177 / USD7,721

	December 31, 2018	December 31, 2018
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell NTD / Buy JPY Sell EUR / Buy JPY Sell CNY / Buy JPY Sell CNY / Buy USD	Maturity date Jan. 2019 Jan. 2019 Jan. 2019 – Mar. 2019 Jan. 2019 Jan. 2019 – Feb. 2019 Jan. 2018 – Feb. 2019	Contract amount
		(in thousands) USD205,000 / NTD6,305,641 USD112,000 / JPY12,531,420 NTD2,054,260 / JPY7,400,000 EUR12,000 / JPY1,536,180 CNY60,800 / JPY981,383 CNY853,328 / USD124,000

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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

Investments in equity instruments at FVTOCI: Equity securities – listed stocks $	December 31	December 31
	2019 2018 (in thousands) 7,140,410 6,604,041	2018

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

If the value of these equity securities appreciates or depreciates by 10% at the reporting date, other comprehensive income would increase or decrease by $714,041 thousand and $660,404 thousand for the years ended December 31, 2019 and 2018, respectively.

(4) Accounts Receivable, net (Including Related and Unrelated Parties)

Accounts receivable $ Less: loss allowance $ Accounts receivable, net $ Accounts receivable from related parties, net $	December 31,	December 31,
	2019 2018 (in thousands) 28,925,839 46,252,776 (150 ) (15,291 ) 28,925,689 46,237,485 26,986,723 41,612,155 1,938,966 4,625,330	2018

The Company measures loss allowance for 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, 2019 Carrying amount of accounts receivable Weighted- average loss rate Loss allowance for lifetime expected credit losses (in thousands) (in thousands) Not past due $ 28,140,278 0.00% 1 Past due less than 60 days 773,489 0.00% 4 Past due 61~180 days 12,072 1.20% 145 $ 28,925,839 150	December 31, 2019	December 31, 2019	December 31, 2019
		Weighted- average loss rate 0.00% 0.00% 1.20%	Loss allowance for lifetime expected credit losses
			(in thousands) 1 4 145 150

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

December 31, 2018 Carrying amount of accounts receivable Weighted- average loss rate Loss allowance for lifetime expected credit losses (in thousands) (in thousands) Not past due $ 45,576,334 0.00% 89 Past due less than 60 days 653,327 0.07% 439 Past due 61~180 days 8,461 1.29% 109 $ 46,238,122 637	December 31, 2018	December 31, 2018	December 31, 2018
		Weighted- average loss rate 0.00% 0.07% 1.29%	Loss allowance for lifetime expected credit losses
			(in thousands) 89 439 109 637

In addition, there was objective evidence indicating that, under reasonable expectation, some of the accounts receivable would not be recovered in total; therefore, the Company recognized a loss allowance amounting to $0 and $14,654 thousand as of December 31, 2019 and 2018.

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

Balance at beginning of the year $ Reversals against expense Write-offs Balance at end of the year $	December 31, 2019 2018 (in thousands) 15,291 19,589 (487) (4,298) (14,654 ) - 150 15,291

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(28).

As at December 31, 2018, the Company did not sell its accounts receivables to banks. As at December 31, 2019, the Company’s accounts receivables sold and derecognized were as follows:

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

	December 31, 2019	December 31, 2019	December 31, 2019
Underwriting bank CTBC Bank Taipei Fubon Bank DBS Bank Bank of Taiwan	Factoring limit (in thousands) USD 152,000 USD 120,000 USD 154,000 USD 250,000	Amount sold and derecognized (in thousands) USD 18,526 USD 56,020 USD 56,730 USD 15,718	Amount advanced	Principal terms
			(in thousands) NTD 500,000 NTD 1,500,000 NTD 1,520,000 USD 14,000	See Notes(a)~(d) See Notes(a)~(d) See Notes(a)~(d) See Notes(a)~(d)

Note (a): Under these facilities, the Company transferred accounts receivable to the respective underwriting banks, which are without recourse subject to the underwriting consents.

Note (b): The Company informed its customers pursuant to the respective facilities to make payment directly to the respective underwriting banks.
Note (c): As of December 31, 2019, total outstanding receivables after the above transactions, net of fees charged by underwriting banks, of $487,754 thousand was recognized under other current financial assets. In addition, interest rate for the balance of advanced amount as of December 31, 2019 was ranging from 1.0700% to 2.4419%.
Note (d): To the extent of the amount transferred to the underwriting banks, risks of non-collection or potential payment default by customers in the event of insolvency are borne by respective banks. The Company is not responsible for the collection of receivables subject to these facilities, or for any legal proceedings and costs thereof in collecting these receivables. In case any commercial dispute between the Company and customers or other reasons results in the Company’s failure to perform the obligation under these facilities, the banks have requested the Company to issue promissory notes in the amounts equal to 10 percent of respective facilities or to transfer receivables in the amounts equal to 10 percent of respective facilities. Other than such arrangements, no collaterals were provided by the Company.

(5) Inventories

		December 31,	December 31,
		2019	2018
		(in thousands)
Finished goods	$	7,022,551	7,585,386
Work-in-progress		8,404,901	10,467,651
Raw materials		1,828,809	2,156,231
	$	17,256,261	20,209,268

For the years ended December 31, 2019 and 2018, the amounts recognized as cost of sales in relation to inventories were $257,786,100 thousand and $266,682,541 thousand, respectively. The net of provisions for inventories written down to net realizable value, which were also included in cost of sales, amounted to $265,330 thousand and $922,443 thousand for the years ended December 31, 2019 and 2018, respectively.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

As at December 31, 2019 and 2018, none of the Company’s inventories was pledged as collateral.

(6) Investments in Equity-accounted Investees

		December 31,	December 31,
		2019	2018
		(in thousands)
Subsidiaries	$	67,163,450	70,184,683
Associates		3,021,365	3,097,302
	$	70,184,815	73,281,985

a. Subsidiaries

Refer to consolidated financial statements for the years ended December 31, 2019 and 2018 for the details.

The following table summarized the amount recognized by the Company at its share of those subsidiaries.

The Company’s share of subsidiaries’: Profit (loss) $ Other comprehensive loss Total comprehensive income (loss) $	For the years ended December 31,	For the years ended December 31,
	2019 2018 (in thousands) (1,198,425) 638,531 (2,052,161 ) (427,892 (3,250,586 ) 210,639	2018
		210,639

b. Associates

Name of associate Lextar Electronics Corp. (“Lextar”) Star Shining Energy Corporation (“SSEC”) Star River Energy Corp. (“SREC”)	Principal activities Manufacturing and sales of Light Emitting Diode Investment Investment	Principal place of business Taiwan ROC Taiwan ROC Taiwan ROC	December 31, 2019 Amount Ownership interest (in thousands) % $ 1,642,746 15 953,966 31 424,653 32 $ 3,021,365	December	31, 2018 Ownership interest % 15 31 32
			Amount	Amount
			(in thousands) $ 1,642,746 953,966 424,653 $ 3,021,365	(in thousands) $ 1,740,230 942,094 414,978 $ 3,097,302

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 loss Total comprehensive income (loss) $	For the years ended December 31, 2019 2018 (in thousands) 11,201 49,510 (19,754) (6,588 ) (8,553) 42,922
	(8,553)

As at December 31, 2019 and 2018, none of the Company’s investments in equity-accounted investees was pledged as collateral.

(7) Acquisition of Subsidiaries

In March 2018, the Company obtained control over ComQi Holdings Ltd. (CQIL) and its subsidiaries (collectively as ComQi) by acquiring 100% of shareholdings of CQIL. ComQi is engaged in integration service of content management system and hardware. Through the acquisition of ComQi, the Company expects to be able to provide a total solution for the upstream and downstream of public information displays.

If the acquisition had taken place on January 1, 2018, management estimated that the Company’s consolidated revenue and consolidated net profit for the year ended December 31, 2018 would have been $307,673,560 thousand and $7,956,563 thousand, respectively. In determining these amounts, management had assumed that the fair value adjustments that arose on the acquisition date would have been the same if the acquisition had taken place on January 1, 2018. The aforementioned pro-forma information is presented for illustrative purposes only and is not necessarily an indication of consolidated revenue and consolidated results of operations of the Company that would have been achieved had the acquisition been completed on January 1, 2018, nor is it intended to be a projection of future results.

Acquisition-related costs of $12,191 thousand on legal fees and due diligence fees were expensed and recognized in operating expenses in the statement of comprehensive income for the year ended December 31, 2018.

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

a. Consideration transferred

		Amounts
		(in thousands)
Cash	$	467,920
Contingent consideration		283,354
	$	751,274

In accordance with the terms of the contingent consideration, in the event that ComQi’s annual net revenue and annual recurring revenue for the year ended December 31, 2018 are greater than the agreed revenue targets in the agreement, the Company should pay additional consideration of USD4,000 thousand and USD7,000 thousand, respectively, to the original shareholders of ComQi. Under the arrangement of the contingent consideration, the potential undiscounted amount of the contingent payment that the Company might have to pay was between USD0 and USD11,000 thousand.

The fair value of the contingent consideration estimated using Monte Carlo simulation amounted to $283,354 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 8.5%, revenue volatility rate of 30.8% and AUO’s credit spread of 0.88%.

As ComQi’s annual net revenue and annual recurring revenue for the year ended December 31, 2018 were not greater than the agreed revenue targets in the agreement, the Company remeasured the fair value of the contingent consideration and determined the value was zero. The change in the fair value of the contingent consideration of $283,354 thousand was not a measurement period adjustment, and therefore, was recognized under other gains and losses in the statement of comprehensive income for the year ended December 31, 2018.

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:

Cash $ Accounts receivable and other current assets Property, plant and equipment Intangible assets Accounts payable and other current liabilities Other liabilities $	Fair value (in thousands) 19,432 36,851 3,712 150,436 (57,361) (2,120 ) 150,950

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Goodwill arising from the acquisition for which is attributable mainly to the synergies expected to be achieved from integrating ComQi into the Company’s existing business has been recognized as follows:

Consideration transferred Less: Fair value of identifiable net assets

Amounts (in thousands) $ 751,274 (150,950) $ 600,324

(8) Property, Plant and Equipment

For the year ended December 31, 2019

Balance, Beginning of Year 6,344,658 87,696,804 694,184,513 24,056,317	Additions - - 1,028,763 3,789,557	Additions - - 1,028,763 3,789,557	Additions - - 1,028,763 3,789,557	Balance, End of Year
				6,344,658 87,793,792 706,595,480 25,764,841
812,282,292	4,818,320			826,498,771
22,950,335 626,632,857 19,233,488	1,793,785 17,204,842 4,068,438			24,767,492 641,166,292 19,859,655
668,816,680	23,067,065			685,793,439
4,983,020	13,879,180			3,437,406
148,448,632				144,142,738
				Balance, End of Year 6,344,658 87,696,804 694,184,513 24,056,317 812,282,292
Balance, Beginning of Year 6,344,658 87,649,494 661,302,840 19,077,836 774,374,828	Additions - (530) 1,410,817 3,950,266 5,360,553	Disposal or write off (in thousands) - - (5,753,325) (71,087 ) (5,824,412 )	Reclassification - 47,840 37,224,181 1,099,302 38,371,323

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

	For theyear ended December 31, 2018	For theyear ended December 31, 2018	For theyear ended December 31, 2018
Balance, Beginning of Year 21,158,080 617,002,758 15,596,915 653,757,753 21,179,915 141,796,990	Additions 1,792,255 15,373,101 3,707,302 20,872,658 22,174,428	Disposal or write off - (5,743,002) (70,729 ) (5,813,731 ) -	Reclassification - - - - (38,371,323 )	Balance, End of Year
				22,950,335 626,632,857 19,233,488
				668,816,680
				4,983,020
				148,448,632

As of December 31, 2019 and 2018, 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 2019, the Company wrote down certain machineries and equipment with extremely low utilization resulting from the decline in the application for certain products associated with its display segment and recognized an impairment loss of $52,829 thousand.

In 2019 and 2018, the Company wrote down certain long-term assets with extremely low capacity utilization associated with its energy segment and recognized impairment losses of $14,949 thousand and $4,470 thousand, respectively.

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

Capitalized borrowing costs $ Interest rates applied for the capitalization	For the years ended December 31,	For the years ended December 31,
	2019	2018

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

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(9) Lease Arrangements

a. Leasees
(i) Right-of-use assets

December 31, 2019

(in thousands)

Carrying amount of right-of-use assets
Land	$	9,236,323
Buildings		78,037
Other equipment		32,517
	$	9,346,877
		For the year
		ended
		December 31,
		2019
		(in thousands)
Additions to right-of-use assets	$	143,402
Depreciation charge for right-of-use assets
Land	$	431,013
Buildings		25,552
Other equipment		64,851
	$	521,416

(ii) Lease liabilities

		December 31, 2019	December 31, 2019	December 31, 2019	December 31, 2019
		Future			Present value
		minimum			of minimum
		lease			lease
		payments	Interests		payments
			(in thousands)
Less than one year	$	583,994	168,013		415,981
Between one and five years		2,143,485	601,155		1,542,330
More than five years		8,797,303	1,330,039		7,467,264
	$	11,524,782	2,099,207		9,425,575
Lease liabilities－current				$	415,981
Lease liabilities－noncurrent					9,009,594
				$	9,425,575

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(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 January 2019, AUO modified one of its lease contracts due to the decrease of the scope of the lease, and therefore, the carrying amount of the right-of-use asset was reduced by $1,064,094 thousand. 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) 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 $	For the year ended December 31, 2019
	(in thousands) 2,861

Total cash outflow for the Company’s leases in which it acts as a lessee for the year ended December 31, 2019 was $618,293 thousand.

b. Lessor

The Company leased out its investment properties and part of its land and buildings and did not transfer substantially all the risks and rewards incidental to their ownership to the lessees, therefore, those leases were recognized as operating leases. Refer to Note 6(21) for the information of rental income from operating leases. In addition, the direct costs relating to the aforementioned operating leases amounted to $ 1,803 thousand for the year ended December 31, 2019.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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

			December 31,
			2019
			(in thousands)
Year	1	$	8,052
Year	2		8,052
Year	3		8,052
Year	4		8,052
Year	5		8,052
Year	6 onwards		63,074
Total	undiscounted operating lease receivable	$	103,334

Refer to Note 6(14) for the Company’s respective information as lessor and lessee as of December 31, 2018.

(10) Investment Property

Investment Property
Cost: Land $ Buildings Accumulated depreciation: Buildings Net carrying amounts $ Fair Value $ Cost: Land $ Buildings Accumulated depreciation: Buildings Net carrying amounts $ Fair Value $	For	theyear ended December 31, 2019
	Balance, Beginning of Year 465,868 96,000 561,868 22,432 539,436 1,500,985 For	Additions Reclassification Balance, End of Year (in thousands) - - 465,868 - (96,000 ) - - (96,000 ) 465,868 940 (23,372 ) - 465,868 1,578,838 theyear ended December 31, 2018	Balance, End of Year
			465,868 - 465,868
			- 465,868
			1,578,838
	Balance, Beginning of Year 465,868 96,000 561,868 20,549 541,319 1,502,896	Additions Reclassification (in thousands) - - - - - - 1,883 -	Balance, End of Year
			465,868 96,000
			561,868
			22,432
			539,436
			1,500,985

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only 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 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. 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	December 31,	December 31,
	2019 2.53% 15.00%	2018
		1.86% 10.00%

As at December 31, 2019 and 2018, there was no investment property that was pledged as collateral.

(11) Intangible Assets

For theyear ended December 31, 2019	For theyear ended December 31, 2019	For theyear ended December 31, 2019
Balance, Beginning of Year 11,280,595 12,078,767 23,359,362 10,882,616 12,476,746	Additions Reclassification (in thousands) - - - - - - 424,985 -	Balance, End of Year
		11,280,595 12,078,767
		23,359,362
		11,307,601
		12,051,761

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

		For theyear ended	For theyear ended	December	December	31, 2018
		Balance,
		Beginning					Balance,
		of Year	Additions	Reclassification			End of Year
			(in thousands)
Cost:
Goodwill	$	11,280,595	-		-		11,280,595
Patent and technology fee		12,078,767	-		-		12,078,767
		23,359,362	-		-		23,359,362
Accumulated amortization:
Patent and technology fee		10,376,225	506,391		-		10,882,616
Net carrying amounts	$	12,983,137					12,476,746
For the purpose of impairment test, the following table				shows the information of the
operating business that the	Company’s goodwill allocating to.
					December 31,
					2019		2018
						(in thousands)
Display business				$	11,280,595		11,280,595

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

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, 2019 and 2018 were 12.25% and 11.57%, 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 0.5% and negative 1% for the years ended December 31, 2019 and 2018, respectively. 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 for the years ended December 31, 2019 and 2018, no impairment losses were recognized as the recoverable amount of the CGU was higher than its carrying value.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(12) Other Current Assets and Other Noncurrent Assets

Refundable deposits $ Refundable and overpaid tax Prepayments for purchases Others Less: current Noncurrent $	December 31,	December 31,
	2019 2018 (in thousands) 543,530 585,697 404,135 414,004 134,972 373,119 2,503,713 2,355,234 3,586,350 3,728,054 (1,836,890 ) (1,754,804 ) 1,749,460 1,973,250	2018

(13) 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 Taiwan and others Unsecured loans Secured loans Less: transaction costs Less: current portion Unused credit facilities Interest rate range	Durations From Feb. 2015 to Feb. 2019 $ From Apr. 2016 to Apr. 2019 From May 2017 to May 2022 From Feb. 2019 to Feb. 2024 From Mar. 2019 to Apr. 2023 From Aug 2018 to Aug. 2023 From Nov. 2019 to Dec. 2026 $ $	December 31,	December 31,
		2019 2018 (in thousands) - 5,912,000 - 36,175,000 10,000,000 10,000,000 42,000,000 - 23,000,000 - 5,000,000 300,000 6,200,000 - 86,200,000 52,387,000 (233,890 ) (441,455 ) 85,966,110 51,945,545 (4,000,000 ) (22,212,000 ) 81,966,110 29,733,545 31,000,000 75,120,300 1.0000%~ 1.8822% 1.5991%~ 1.9598%	2018

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, 2019.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

These credit facilities contain covenants that require the Company to maintain certain financial ratios, calculating based on the Company’s annual consolidated financial statements prepared in accordance with TIFRSs, such as current ratio, leverage ratio, interest coverage ratio, tangible net worth and others as specified in the loan agreements. As of December 31, 2019 and 2018, the Company complied with all financial covenants required under each of the loan agreements.

Refer to Note 6(28) 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.

(14) Operating Leases

a. Lessees

Future minimum lease payments under non-cancellable operating leases as of December 31, 2018 were as follows:

Less than one year $ Between one and five years More than five years $	December 31, 2018
	(in thousands) 570,122 2,076,520 1,198,438
	3,845,080

The Company entered into various operating lease agreements for land with Hsinchu Science Park Bureau beginning from March 1, 1994 for a period of 20 years, with renewal option upon expiration. The Company had on July 2003 and November 2006, entered into various operating lease for land with Central Science Park Administration Bureau for period from July 28, 2003 till December 31, 2023 and November 9, 2006 till December 31, 2025. All lease amounts are adjusted in accordance with the land value announced by the government from time to time.

The Company had also on February 2008 and October 2018, respectively, renewed its lease agreements with Hsinchu Science Park Bureau and Southern Taiwan Science Park Bureau, respectively, for the lands in Longtan Science Park and Kaohsiung Science Park. The period covers from February 9, 2008 till December 31, 2027 and October 23, 2018 till October 22, 2038, respectively. All lease amounts are adjusted in accordance with the land value announced by the government from time to time.

Rental expense for operating leases amounted to $691,663 thousand for the year ended December 31, 2018.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

c. Lessor

The Company leased its investment properties to third parties under operating lease. Refer to Note 6(10) for further information on investment properties.

Future minimum lease receivables under non-cancellable operating leases as of December 31, 2018 were as follows:

Less than one year $ Between one and five years More than five years $	December 31, 2018
	(in thousands) 21,684 45,840 71,126
	138,650

In addition to the above-mentioned, the Company also leased partial offices to others. See Note 6(21) for rental income. Repair and maintenance expenses incurred from aforementioned operating leases for the year ended December 31, 2018 amounted to $3,059 thousand.

(15) Provisions

Balance at January 1, 2019 $ Additions (Reversals) Usage Effect of change in exchange rate Balance at December 31, 2019 Less: current Noncurrent $ Balance at January 1, 2018 $ Additions (Reversals) Usage Effect of change in exchange rate Balance at December 31, 2018 Less: current Noncurrent $	Warranties(i) 1,433,887 126,356 (294,162) - 1,266,081 (460,352 ) 805,729 1,446,255 55,884 (68,252) - 1,433,887 (656,442 ) 777,445	Litigation, claims and others (in thousands) 739,248 (366,612) (156,521) (9,571 ) 206,544 (206,544 ) - 89,520 641,571 - 8,157 739,248 (739,248 ) -	Total 2,173,135 (240,256) (450,683) (9,571 ) 1,472,625 (666,896 ) 805,729 1,535,775 697,455 (68,252) 8,157 2,173,135 (1,395,690 ) 777,445

(i) The provisions for warranties for the years ended December 31, 2019 and 2018 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.

(Continued)

Notes to Parent Company Only Financial Statements

AU OPTRONICS CORP.

(16) Employee Benefits

a. Defined benefit plans

Pursuant to the ROC Labor Standards Act, the Company has established a defined benefit pension plan covering their full-time employees in the ROC. This plan provides 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 this retirement plan by the Company is contributed monthly based on a certain percentage of employees’ total salaries and wages. The fund is deposited with Bank of Taiwan.

(i) Reconciliation for the Company’s present value of defined benefit obligation and the fair value of plan assets

Present value of defined benefit obligation $ Fair value of plan assets Net defined benefit liability $	December 31, 2019 2018 (in thousands) (3,122,442) (3,224,379) 2,542,832 2,367,273 (579,610 ) (857,106 )

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

Balance at January 1, $ Included in profit or loss Service cost Interest cost Expected return on plan assets Included in other comprehensive income Remeasurements (loss) gain: Actuarial (loss) gain arising from: - demographic assumptions - financial assumptions - experience adjustment Return on plan assets excluding interest income	Defined benefit obligation 2019 2018 (3,224,379 ) (3,099,874 ) (1,177) (1,935) (39,337) (49,598) - - (40,514 ) (51,533 ) 89,851 (15,795) (206,995) (178,212) 228,466 84,437 - - 111,322 (109,570 )	Fair value of plan assets 2019 2018 (in thousands) 2,367,273 2,213,018 - - - - 28,881 35,408 28,881 35,408 - - - - - - 76,788 52,614 76,788 52,614	Net defined benefit asset(liability)	Net defined benefit asset(liability)
	2019 (3,224,379 ) (1,177) (39,337) - (40,514 ) 89,851 (206,995) 228,466 - 111,322		2019 (857,106 ) (1,177) (39,337) 28,881 (11,633 ) 89,851 (206,995) 228,466 76,788 188,110	2018
				(886,856 ) (1,935) (49,598) 35,408 (16,125 ) (15,795) (178,212) 84,437 52,614 (56,956 )

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Defined benefit obligation 2019 2018 - - 31,129 36,598 31,129 36,598 (3,122,442 ) (3,224,379 )	Net defined benefit asset(liability)	Net defined benefit asset(liability)
2019 - 31,129 31,129 (3,122,442 )	2019 101,019 - 101,019 (579,610 )	2018
		102,831 -
		102,831
		(857,106 )

(iii) Plan assets

Pursuant to the ROC Labor Standards Act, the Company contributes an amount based on a certain percentage of employees’ total salaries and wages paid every month to its pension fund (the “Fund”), which is 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, 2019, the Fund deposited in the Committee’s name in the Bank of Taiwan amounted to $2,542,832 thousand. 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.

(iv) Defined benefit obligation

(a) Principal actuarial assumptions

Discount rate Rate of increase in future salary	December 31,	December 31,
	2019 0.88% 2.90%	2018
		1.22% 2.90%

The Company anticipates contributing $100,799 thousand to the defined benefit plans in the next year starting from January 1, 2020.

As at December 31, 2019, the weighted-average duration of the defined benefit obligation was 20 years.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(b) Sensitivity analysis

Reasonably possible changes at December 31, 2019 and 2018 to one of the relevant actuarial assumptions, holding other assumptions constant, would have affected the defined benefit obligation by the amounts shown below.

Discount rate $ Rate of increase in future salary $	December 31, 2019 Changes in assumptions + 0.25% - 0.25% (in thousands) (150,518 ) 158,966 156,374 (147,992 )	December 31, 2018
		Changes in assumptions + 0.25% - 0.25% (in thousands) (159,872 ) 169,102 165,850 (157,706 )

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 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, the Company contributes 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 has set up defined contribution plan in accordance with the Act. For the years ended December 31, 2019 and 2018, $902,578 thousand and $942,864 thousand, respectively, of the pension costs under the pension plan to the ROC Bureau of the Labor Insurance.

(17) Capital and Other Components of Equity

a. Common stock

The Company’s authorized common stock, with par value of $10 per share, both amounted to $100,000,000 thousand as at December 31, 2019 and 2018.

The Company’s issued common stock, with par value of $10 per share, both amounted to $96,242,451 thousand as at December 31, 2019 and 2018.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

On September 9, 2019, the Company’s Board of Directors approved the delisting of ADSs from the NYSE and trading on the OTC market. On and from October 1, 2019, the Company’s ADSs has begun trading on the OTC market. As of December 31, 2019, the Company has issued 50,123 thousand ADSs, which represented 501,229 thousand shares of its common stock.

b. Capital surplus

The components of capital surplus were as follows:

From common stock $ From convertible bonds From others $	December 31, 2019 2018 (in thousands) 52,756,091 52,756,091 6,049,862 6,049,862 1,738,521 1,816,090 60,544,474 60,622,043

According to the ROC Company Act, capital surplus, including premium from stock issuing and donations received, shall be applied to offset accumulated deficits before it can 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. Legal reserve

According to the ROC Company Act, 10 percent of net profit shall be allocated as legal reserve until the accumulated legal reserve equals the paid-in capital. When a company incurs no loss, it may, pursuant to a resolution to be adopted by a shareholders’ meeting, distribute its legal reserve by issuing new shares or by cash, only the portion of legal reserve which exceeds 25 percent of the paid-in capital may be distributed.

d. Distribution of earnings

In accordance with the Company’s Articles of Incorporation, after payment of income taxes and offsetting accumulated deficits, the legal reserve shall be set aside until the accumulated legal reserve equals the Company’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 the Company’s Articles of Incorporation.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The Company’s dividend policy is to pay dividends from surplus considering factors such as the Company’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 the Company’s long-term financial plan. If the current-year retained earnings available for distribution reach 2% of the paid-in capital of the Company, 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 the Company, the Company 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.

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.

The Company’s appropriations of earnings for 2017 had been approved in the shareholders’ meeting held on June 15, 2018. The appropriations and dividends per share were as follows:

shareholders’ meeting held on June 15, share were as follows:	2018. The appropriations and dividends per	2018. The appropriations and dividends per
Legal reserve $ Cash dividends to shareholders $	For fiscalyear 2017
	Appropriation of earnings Dividends per share (in thousands, except for per share data) 3,235,942 14,436,368 $1.50 17,672,310	Dividends per share

The aforementioned appropriation of earnings for 2017 was consistent with the resolutions of the board of directors’ meeting held on March 23, 2018.

The Company’s appropriations of earnings for 2018 had been approved in the shareholders’ meeting held on June 14, 2019. The appropriations and dividends per share were as follows:

Legal reserve $ Special reserve Cash dividends to shareholders $	For fiscalyear 2018	For fiscalyear 2018
	Appropriation of earnings Dividends per share (in thousands, except for per share data) 1,016,060 847,770 4,812,122 $0.50 6,675,952	Dividends per share

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

The aforementioned appropriation of earnings for 2018 was consistent with the resolutions of the board of directors’ meeting held on March 22, 2019.

Information on the approval of board of directors and shareholders for the Company’s appropriations of earnings are available at the Market Observation Post System website.

e. Treasury shares

According to the resolution approved by the board of directors’ meeting held on September 9, 2019, the Company expects to repurchase 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:

For the year ended December 31, 2019

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

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 the Company shall not be pledged, and do not hold any shareholder rights before their transfer.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

f. Other components of equity

Balance at January 1, 2019 $ Foreign operations – foreign currency translation differences Net change in fair value of financial assets at FVTOCI Equity-accounted investees – share of other comprehensive income Related tax Balance at December 31, 2019 $	Cumulative translation differences (1,449,910) (1,211,454) - (846,480) 377,862 (3,129,982 )	Unrealized gains (losses) on financial assets at FVTOCI (in thousands) 602,140 - 536,369 (13,911) - 1,124,598	Total
			(847,770) (1,211,454) 536,369 (860,391) 377,862 (2,005,384 )

Balance at January 1, 2018 $ Adjustments on initial application of new standards 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 loss of equity instruments transferred to retained earnings due to disposal Group reorganization Related tax Balance at December 31, 2018 $	Cumulative translation differences (1,120,969) - 1,685,563 - (2,125,649) - (22,225) 133,370 (1,449,910 )	Unrealized gains (losses) on financial assets at FVTOCI Unrealized gains (losses) on available- for-sale financial assets (in thousands) - 1,377,031 1,303,816 (1,377,031) - - (756,179) - 4,419 - 50,084 - - - - - 602,140 -	Total 256,062 (73,215) 1,685,563 (756,179) (2,121,230) 50,084 (22,225) 133,370
			(847,770 )

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(18) Revenue from Contracts with Customers

For theyear ended December 31, 2019	For theyear ended December 31, 2019	For theyear ended December 31, 2019
Display segment Energy segment Total segments (in thousands) 92,747,943 1,262,345 94,010,288 76,020,646 4,486,119 80,506,765 38,550,665 7,666 38,558,331 18,861,590 280,429 19,142,019 21,459,052 1,490,721 22,949,773 247,639,896 7,527,280 255,167,176 86,426,165 - 86,426,165 69,290,266 - 69,290,266 39,522,268 - 39,522,268 52,401,197 - 52,401,197 - 7,527,280 7,527,280 247,639,896 7,527,280 255,167,176 31,426,701 - 31,426,701 216,213,195 7,527,280 223,740,475 247,639,896 7,527,280 255,167,176 For theyear ended December 31, 2018		Total segments
		94,010,288 80,506,765 38,558,331 19,142,019 22,949,773
		255,167,176
		86,426,165 69,290,266 39,522,268 52,401,197 7,527,280
		255,167,176
		31,426,701 223,740,475
		255,167,176
Display segment 109,586,951 91,085,995 39,367,379 16,888,485 24,898,667 281,827,477	Energy segment (in thousands) 1,031,491 5,464,243 - 460,783 4,276,345 11,232,862	Total segments
		110,618,442 96,550,238 39,367,379 17,349,268 29,175,012
		293,060,339

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

For theyear ended December 31, 2018	For theyear ended December 31, 2018	For theyear ended December 31, 2018
Display segment 110,451,334 74,393,888 47,032,467 49,949,788 - 281,827,477 34,869,029 246,958,448 281,827,477	Energy segment (in thousands) - - - - 11,232,862 11,232,862 - 11,232,862 11,232,862	Total segments
		110,451,334 74,393,888 47,032,467 49,949,788 11,232,862
		293,060,339
		34,869,029 258,191,310
		293,060,339

(i) Others include sales from products for other applications and sales of raw materials, components and from service charges.

(19) Remuneration to Employees and Directors

According to the Company’s Articles of Incorporation, the Company 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.

The Company did not accrue remuneration to employees and directors due to the loss making position for the year ended December 31, 2019.

The Company 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 year ended December 31, 2018, the Company estimated the remuneration to employees amounting to $1,215,696 thousand. 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 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Remuneration to employees and directors for 2018 in the amounts of $1,215,696 thousand and $27,780 thousand, respectively, in cash for payment had been approved in the meeting of board of directors held on March 22, 2019. The aforementioned approved amounts are the same as the amounts charged against earnings of 2018.

Remuneration to employees and directors for 2017 in the amounts of $4,062,114 thousand and $132,604 thousand, respectively, in cash for payment had been approved in the meeting of board of directors held on March 23, 2018. The aforementioned approved amounts are the same as the amounts charged against earnings of 2017.

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

(20) The Nature of Expenses

	For theyears ended December 31,	For theyears ended December 31,	For theyears ended December 31,
	2019	Total Recognized in cost of sales (in thousands) 19,594,895 16,109,604 1,714,465 1,394,015 914,211 707,531 31,681 - 1,490,692 1,236,157 23,520,703 18,424,568 424,985 506,391	2018
Recognized in cost of sales 14,352,414 1,322,702 668,826 - 1,275,784 20,708,657 424,985	Recognized in operating expenses		Recognized in operating expenses	Total
	5,242,481 391,763 245,385 31,681 214,908 2,812,046 -		5,554,392 407,740 251,458 58,713 242,955 2,443,620 -	21,663,996 1,801,755 958,989 58,713 1,479,112 20,868,188 506,391

(i) The above depreciation did not include the depreciation of investment property.

Additional information on the number of the Company’s employees and the average employee benefit expenses of the Company for the years ended December 31, 2019 and 2018 were as follows:

Number of employees Number of non-employee directors Average employee benefit expenses $ Average salaries expenses $ Average salary expense adjustment	For the years ended December 31,	For the years ended December 31,
	2019 2018 (in thousands) 21,263 23,261 7 7 1,115 1,114 922 931 (1)%	2018
		7
		1,114
		931

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(21) Other Income

Interest income on bank deposits $ Interest income on government bonds with reverse repurchase agreements and others Rental income, net Dividend income Grants and Others $	For the years ended December 31,	For the years ended December 31,
	2019 2018 (in thousands) 272,320 259,588 27,879 28,503 351,618 364,893 284,946 452,561 558,270 291,546 1,495,033 1,397,091	2018
		1,397,091

(22) Other Gains and Losses

Foreign exchange losses, net $ Gains on valuation of financial instruments at FVTPL, net Gains on disposals of property, plant and equipment, net Impairment losses on assets Gains (losses) on litigation and others $	For the years ended December 31, 2019 2018 (in thousands) (57,872) (111,958) 349,903 549,805 27,307 55,482 (67,778) (4,470) 366,612 (641,750 ) 618,172 (152,891 )

(23) Finance Costs

Interest expense on bank borrowings $ Interest expense on lease liabilities Interest expense on others $	For the years ended December 31,	For the years ended December 31,
	2019 2018 (in thousands) 1,154,398 851,067 172,713 - 219,289 129,745 1,546,400 980,812	2018
		980,812

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(24) Income Taxes

a. Income tax expense

The components of income tax expense for the years ended December 31, 2019 and 2018 were as follows:

Current income tax expense (benefit): Current year $ Adjustment to prior years and others Deferred tax expense (benefit): Temporary differences Investment tax credit and tax losses carryforwards Effect of changes in statutory income tax rate Total income tax expense $	For the years ended December 31, 2019 2018 (in thousands) - 1,266,731 (244,624 ) (388,025 ) (244,624 ) 878,706 553,216 (413,271) 530,002 1,911,841 - (552,881 ) 1,083,218 945,689 838,594 1,824,395

Income taxes expense (benefit) recognized directly in other comprehensive income for the years ended December 31, 2019 and 2018 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 $ Equity-accounted investees – share of other comprehensive income $	For the years ended December 31, 2019 2018 (in thousands) 37,622 (38,908 ) (242,291) 241,618 (135,571 ) (374,988 ) (377,862 ) (133,370 )

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 statements of comprehensive income for the years ended December 31, 2019 and 2018, was as follows:

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Income tax expense at statutory tax rate $ Tax on undistributed earnings, net Effect of changes in statutory income tax rate Net of non-taxable income and non-deductible expense Effect of change of unrecognized deductible temporary differences, tax losses carryforwards, and investment tax credits Adjustments to prior year Income tax expense $	For the years ended December 31,	For the years ended December 31,
	2019 2018 (in thousands) (3,669,333) 2,396,999 - 1,266,731 - (552,881) 442,825 (67,590) 4,309,726 (830,839) (244,624 ) (388,025 ) 838,594 1,824,395	2018
		1,824,395

b. Deferred tax assets and liabilities

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

Deductible temporary differences $ Unused tax losses carryforwards $	December 31,	December 31,
	2019 2018 (in thousands) 976,183 253,978 14,453,820 11,276,085 15,430,003 11,530,063	2018
		11,530,063

Under the ROC tax laws, approved tax losses can be carried forward for 10 years to offset future taxable profits.

As of December 31, 2019, the expiration period for abovementioned unrecognized deferred tax assets of unused tax losses carryforwards were as follows:

Year of assessment 2011 $ 2012 2019 (estimated) $	Unrecognized deferred tax assets (in thousands) 1,801,079 9,667,511 2,985,230 14,453,820	Expiration inyear
		2021 2022 2029

As of December 31, 2019, the aggregate taxable temporary differences associated with investments in subsidiaries not recognized as deferred tax liabilities amounted to $277,670 thousand.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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

Deferred	tax assets	Deferred tax liabilities	Total	Total
December 31, 2019	December 31, 2018	December 31, 2018		December 31, 2018
				2,650,785 300,881 809,322 (2,213,429) 194,838 1,052,632 2,795,029 December 31, 2019 2,120,783 161,146 857,255 (2,213,429) ) 157,216 969,080 2,052,051
			- - - - (37,622 377,862
			340,240

c. Assessments by the tax authorities

As of December 31, 2019, the tax authorities have completed the examination of income tax returns of the Company through 2017.

(25) Earnings (Loss) per Share

Basic earnings (loss) per share Profit (loss) attributable to shareholders $ Weighted-average number of common shares outstanding during the year Basic earnings (loss) per share (NT$) $	For the years ended December 31,	For the years ended December 31,
	2019 (in thousands, share (19,185,258 ) 9,597,268 (2.00 )	2018
		except for per data) 10,160,598 9,624,245 1.06

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Diluted earnings (loss) per share Profit (loss) attributable to shareholders $ Weighted-average number of common shares outstanding during the year Effect of employee remuneration in stock Diluted earnings (loss) per share (NT$) $	For the years ended December 31,	For the years ended December 31,
	2019 (in thousands, share (19,185,258 ) 9,597,268 - 9,597,268 (2.00 )	2018
		except for per data) 10,160,598
		9,624,245 164,609
		9,788,854
		1.04

Since AUO incurred net loss for the year ended December 31, 2019, there were no potential ordinary shares with dilutive effect for the year.

(26) Cash Flow Information

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

		Long-term
		borrowings
		(including					Total liabilities
		current	Guarantee				from financing
		installments)	deposits		Lease liabilities		activities
			(in	thousands)
Balance at January 1, 2019	$	51,945,545	757,315		10,788,985		63,491,845
Cash flows		33,813,000			(442,719)		33,370,281
Non-cash changes:
Increase (decrease) in lease		-	-		(920,691)		(920,691)
liabilities
Changes in exchange rate		-	(29,228)		-		(29,228)
Amortization on transaction
costs		207,565	-		-		207,565
Balance at December 31, 2019	$	85,966,110	728,087		9,425,575		96,119,772
		Long-term borrowings				Total liabilities
		(including current			Guarantee	from financing
		installments)			deposits		activities
				(in thousands)
Balance at January 1, 2018		$	77,902,271		765,883		78,668,154
Cash flows			(26,080,800)		-		(26,080,800)
Non-cash changes:
Changes in exchange rate					(8,568)		(8,568)
Amortization on transaction	costs		124,074		-		124,074
Balance at December 31, 2018		$	51,945,545		757,315		52,702,860

(Continued)

Notes to Parent Company Only Financial Statements

AU OPTRONICS CORP.

(27) Financial Instruments

a. Fair value and carrying amount

The carrying amounts of the Company’s current non-derivative financial instruments, including financial assets at amortized cost 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) and other current financial assets.

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, 2019 and 2018 were as follows:

December 31, 2019 December 31, 2018 Carrying Amount Fair Value Carrying Amount Fair Value (in thousands) Financial assets: Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ 18,753 18,753 52,434 52,434 Financial assets at FVTOCI 7,140,410 7,140,410 6,604,041 6,604,041 Financial assets at amortized cost: Refundable deposits 543,530 543,530 585,697 585,697 Financial liabilities: Financial liabilities at FVTPL: Financial liabilities held for trading 7,054 7,054 13,973 13,973 Financial liabilities at amortized cost: Long-term borrowings (including current installments) 85,966,110 85,966,110 51,945,545 51,945,545 Guarantee deposits 728,087 728,087 757,315 757,315	December 31, 2019	December 31, 2019	December 31, 2018	December 31, 2018
	Carrying Amount	Fair Value	Carrying Amount	Fair Value
				52,434 6,604,041 585,697 13,973 51,945,545 757,315

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only 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 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.

Level 1 December 31, 2019 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL $ - Financial assets at FVTOCI 7,140,410 Financial liabilities at FVTPL: Financial liabilities held for trading -	Level 2 Level 3 (in thousands) 18,753 - - - 7,054 -	Total
		18,753 7,140,410 7,054

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

December 31, 2018 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL Financial assets at FVTOCI Financial liabilities at FVTPL: Financial liabilities held for trading	Level 1 - 6,604,041 -	Level 2 Level 3 (in thousands) 52,434 - - - 13,973 -	Total
			52,434 6,604,041 13,973

There were no transfers between Level 1 and 2 for the years ended December 31, 2019 and 2018.

(28) 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 balance sheets.
(b) The amount of contingent liabilities as a result from the Company providing financial guarantee to its customers.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only 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 and cash equivalents investments with various reputable financial institutions of high credit quality. 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 in banks and cash equivalents.

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 prepayments, 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, 2019 and 2018, the Company’s five largest customers accounted for 38.7% and 37.8%, respectively, of the Company’s net revenue. There is no other significant concentration of credit risk.

Refer to Note 6(4) 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, 2019.

(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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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.

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 but exclude the impact of netting agreements.

December 31, 2019 Non-derivative financial liabilities Long-term borrowings (including current installments) $ Guarantee deposits Derivative financial instruments Foreign currency forward contracts`－`inflows Foreign currency forward contracts`－`outflows $ December 31, 2018 Non-derivative financial liabilities Long-term borrowings (including current installments) $ Guarantee deposits Derivative financial instruments Foreign currency forward contracts`－`inflows Foreign currency forward contracts`－`outflows $	Contractual cash flows 90,585,552 728,087 (12,006,046) 12,010,120 91,317,713 Contractual cash flows 53,691,689 757,315 (16,354,682) 16,337,417 54,431,739	2020.1.1~ 2020.12.31 5,494,005 - (12,006,046) 12,010,120 5,498,079 2019.1.1~ 2019.12.31 22,903,847 - (16,354,682) 16,337,417 22,886,582	2021.1.1~ 2022.12.31 2023.1.1~ 2024.12.31 (in thousands) 39,068,031 45,000,942 - - - - - - 39,068,031 45,000,942 2020.1.1~ 2021.12.31 2022.1.1~ 2023.12.31 (in thousands) 28,468,316 2,319,526 - - - - - - 28,468,316 2,319,526	2025 and thereafter 1,022,574 728,087 - - 1,750,661 2024 and thereafter - 757,315 - - 757,315

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

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

As at December 31, 2019, 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.

(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, while optimizing the return.

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 six months, and do not meet the criteria for hedge accounting.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

I. Exposure of currency risk

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

		December 31, 2019	December 31, 2019	December 31, 2019		December 31, 2018	December 31, 2018	December 31, 2018
		Foreign				Foreign
		currency	Exchange			currency	Exchange
		amounts	rate		NTD	amounts	rate	NTD
		(in thousands)		(in thousands)		(in thousands)		(in thousands)
Financial assets
Monetary items
USD	$	1,133,061	30.1350	34,144,793		1,716,412	30.8020	52,868,922
JPY		19,604,815	0.2768		5,426,613	8,705,129	0.2775	2,415,673
EUR		45,485	33.7422		1,534,764	28,478	35.2036	1,002,528
Non-monetary items
USD		1,765,302	30.1350	53,197,376		1,743,967	30.8020	53,717,672
Financial liabilities
Monetary items
USD		1,236,623	30.1350	37,265,634		1,511,459	30.8020	46,555,960
JPY		23,792,658	0.2768		6,585,808	29,016,969	0.2775	8,052,209
EUR		2,910	33.7422		98,190	3,490	35.2036	122,861

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, 2019 and 2018, while all other variables were remained constant, would have increased or decreased the net profit before tax for the years ended December 31, 2019 and 2018 as follows:

		For the years	ended
		December	31,
		2019	2018
		(in thousands)
1% of depreciation	$	(28,435)	15,561
1% of appreciation		28,435	(15,561)

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 losses for the years ended December 31, 2019 and 2018 were $57,872 thousand and $111,958 thousand, respectively.

(b) Interest rate risk

The Company’s exposure to changes in interest rates is mainly from floatingrate 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, 2019 and 2018 by $215,500 thousand and $130,968 thousand, respectively.

(c) Equity price risk

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

(29) 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-toequity ratio from time to time.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

		December 31,	December 31,
		2019	2018
		(in thousands)
Long-term borrowings (including current installments)	$	85,966,110	51,945,545
Total liabilities		168,993,027	144,541,806
Total equity		176,671,840	202,862,715
Debt-to-equity ratio		96%	71%
Net debt-to-equity ratio(i)		23%	11%

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

7. Related-party Transactions

(1) Name and relationship of related parties

The following is a summary of subsidiaries and related parties that have had transactions with the Company during the periods presented in the parent company only financial statements.

Name of related party

AU Optronics (L) Corp. (“AULB”) Konly Venture Corp. (“Konly”) Ronly Venture Corp. (“Ronly”) Darwin Precisions Corporation (“DPTW”) AUO Crystal Corp. (“ACTW”) Space Money Inc. (“SMI”) U-Fresh Technology Inc. (“UTI”) AU Optronics Corporation America (“AUUS”) AU Optronics Corporation Japan (“AUJP”) AU Optronics Europe B.V. (“AUNL”) AU Optronics Korea Ltd. (“AUKR”) AU Optronics Singapore Pte. Ltd. (“AUSG”) AU Optronics (Czech) s.r.o. (“AUCZ”) AU Optronics (Shanghai) Co., Ltd. (“AUSH”) AU Optronics (Xiamen) Corp. (“AUXM”) AU Optronics (Suzhou) Corp., Ltd. (“AUSZ”) AU Optronics (Slovakia) s.r.o. (“AUSK”) AFPD Pte., Ltd. (“AUST”)

Relationship with the Company

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Name of related party

AU Optronics (Kunshan) Co., Ltd. (“AUKS”) a.u. Vista Inc. (“AUVI”) Fortech Electronics (Suzhou) Co., Ltd. (“FTWJ”) Darwin Precisions (Xiamen) Corp. (“DPXM”) BriView (Xiamen) Corp. (“BVXM”) AUO Green Energy Europe B.V. (“AENL”) ComQi Inc. (“CQUS”) Lextar Electronics Corporation (“Lextar”) Raydium Semiconductor Corporation (“Raydium”) Star River Energy Corp. (“SREC”) Sungen Power Corporation (“SGPC”) Evergen Power Corporation (EGPC) Star Shining Energy Corporation (“SSEC”) TronGen Power Corporation (“TGPC”) Fargen Power Corporation (“FGPC”) Ri Ji Power Corporation (“RJPC”) Ri Jing Power Corporation (“RGPC”) ChampionGen Power Corporation (“CGPC”) Daxin Materials Corp. (“Daxin”) Qisda Corporation (“Qisda”)

Qisda (Suzhou) Co., Ltd. (“QCSZ”) Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) Qisda Japan Co., Ltd. (“QJTO”) Mainteq Europe B.V. (“MQE”) BenQ Corporation (“BenQ”) BenQ Materials Corp. (“BMC”) BenQ Asia Pacific Corp. (“BQP”) BenQ America Corporation (“BQA”) DFI Inc. (“DFI”) Data Image Corporation (“DIC”) Data Image (Suzhou) Corporation (“DICSZ”)

Relationship with the Company

Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Subsidiary of the Company Associate of the Company Associate of the Company Associate of the Company Subsidiary of SREC Subsidiary of SREC Associate of the Company Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Subsidiary of SSEC Associate of the Company Corporate shareholder of the Company of which accounts for the Company using the equity method 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

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

Name of relatedparty Sysage Technology Co., Ltd. (“Sysage”) Qisda Vietnam Co., Ltd (“QVH”) TRENDYLITE CORPORATION (“TRENDYLITE“) BenQ Foundation AUO Foundation	Relationship with the Company Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Lextar Substantive related party Substantive related party

Note : For the information in respect of the Company’s subsidiaries, please refer to the consolidated financial statements for the years ended December 31, 2019 and 2018.

(2) Compensation to key management personnel

Key management personnel’s compensation comprised:

		For the years	ended
		December	31,
		2019	2018
		(in thousands)
Short-term employee benefits	$	238,873	334,713
Post-employment benefits		2,633	2,457
	$	241,506	337,170

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

				Accounts receivable	Accounts receivable
		Sales		from relatedparties
		For the years	ended
		December	31,	December 31,
		2019	2018	2019	2018
			(in thousands)
Subsidiaries	$	4,053,100	2,476,237	313,465	2,028,364
Associates		1,124,483	1,871,511	236,971	659,372
Others		10,051,582	11,651,266	1,388,530	1,937,594
	$	15,229,165	15,999,014	1,938,966	4,625,330

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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

b. Purchases

				Accounts payable to related	Accounts payable to related
		Purchases		parties
		For the years ended
		December 31,		December	31,
		2019	2018	2019	2018
			(in thousands)
Subsidiaries	$	86,620,411	90,178,389	21,808,772	26,799,904
Associates		3,687,643	4,201,227	1,089,448	1,577,440
Others		12,380,236	13,949,794	2,427,054	2,893,155
	$	102,688,290	108,329,410	25,325,274	31,270,499

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

		Acquisitionprices
		For the years ended
		December 31,
		2019 2018
		(in thousands)
Subsidiaries	$	474,357 258,967
Associates		6,555 6,527
Others		5,909 3,418
	$	486,821 268,912

d. Disposal of property, plant and equipment and others

Proceeds from disposal Gains on disposal For the years ended December 31, For the years ended December 31, 2019 2018 2019 2018 (in thousands) 2,261 36,021 50 7,880	Gains on disposal	Gains on disposal
	For the years ended December 31,
2019 2,261		2018
		7,880

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

e. Other related party transactions

Transaction type Other receivables due from related parties Other payables due to related parties (including payables for equipment) Transaction type Rental income Administration and other income Other expenses	Type of relatedparty Subsidiaries $ Associates Others $ Subsidiaries $ Associates Others $ Type of relatedparty Subsidiaries $ Associates Others $ Subsidiaries $ Associates Others $ Subsidiaries $ Associates Others $	December 31, 2019 2018 (in thousands) 1,211,067 21,284 328 1,961 193 4,660 1,211,588 27,905 398,081 211,551 13,163 17,757 22,450 3,615 433,694 232,923 For the years ended December 31,	December 31, 2019 2018 (in thousands) 1,211,067 21,284 328 1,961 193 4,660 1,211,588 27,905 398,081 211,551 13,163 17,757 22,450 3,615 433,694 232,923 For the years ended December 31,
		2019 2018 (in thousands) 26,764 48,560 40,684 38,002 107,074 90,491 174,522 177,053 41,585 62,994 8,154 7,626 6,476 6,149 56,215 76,769 696,208 721,134 17,491 31,783 46,781 11,096 760,480 764,013	2018

The Company leased portion of its facilities to related parties. The collection term was 15 days from quarter-end, and the pricing was not materially different from that with third parties.

For the years ended December 31, 2019 and 2018, the Company had received cash dividends from related parties of $604,468 thousand and $1,191,234 thousand, respectively.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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 building Machinery and equipment	Pledged to secure Guarantees for warranties $ Long-term borrowings Long-term borrowings $	December 31,	December 31,
		2019 2018 (in thousands) 8,657 6,245 27,800,133 25,903,994 42,952,902 36,075,058 70,761,692 61,985,297	2018

(i) Classified as other noncurrent assets.

9. Significant Contingent Liabilities and Unrecognized Commitments

The significant commitments and contingencies of the Company as of December 31, 2019, in addition to those disclosed in other notes to the parent company only financial statements, were as follows:

(1) Outstanding letters of credit

As at December 31, 2019, the Company had the following outstanding letters of credit for the purpose of purchasing machinery and equipment and materials:

Currency USD JPY	December 31, 2019
	(in thousands) 5,768 1,951,409

(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., Seiko Epson Corporation and others. AUO believes that it is in compliance with the terms and conditions of the aforementioned agreements.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(3) Purchase commitments

As at December 31, 2019, significant outstanding purchase commitments for construction in progress, property, plant and equipment totaled $5,545,232 thousand.

(4) Litigation

a. Antitrust civil actions lawsuits in the United States and other jurisdictions

A lawsuit was filed by certain consumers in Israel against certain LCD manufacturers including AUO in the District Court of the Central District in Israel (“Israeli Court”). The defendants contested various issues including whether the lawsuit was properly served. In December 2016, the Israeli Court overturned the original decision and revoked the permission for this case to serve out of Israeli jurisdiction. The plaintiffs lodged an appeal to the Israeli Supreme Court but the Israeli Supreme Court overruled the appeal in August 2017. In January 2018, the parties reached a settlement agreement and agreed to commence the required proceedings for withdrawing the lawsuit. In April 2019, the Central District Court of Israel in Lod approved the settlement. 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, AUUS 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 AUUS 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 on-going basis.

b. Alleged patent infringements

In July 2018, Vista Peak Ventures, LLC (“VPV”) filed three lawsuits in the United States District Court for the Eastern District of Texas against AUO, claiming infringement of certain of VPV’s patents in the United States relating to the manufacturing of TFT-LCD panels. In the complaints, VPV seeks, among other things, unspecified monetary damages for past damages and an injunction against future infringement. On September 27, 2019, the relevant parties reached a settlement agreement, and all pending lawsuits that have been filed by VPV against AUO were dismissed on October 10, 2019.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

As of February 5, 2020, 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

On February 5, 2020, AUO’s Board of Directors resolved to acquire common shares of ADLINK Technology Inc. through tender offer. The tender offer consideration for each common share is NT$57 in cash. The planned acquisition amount is 65,249 thousand shares of ADLINK. The tender offer period will run from February 7, 2020 to March 12, 2020.

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 proceedings were initiated by six residents in Houli District, Taichung City (the “Plaintiffs”) to object the administrative dispositions of the environmental assessment and development approval issued in 2010 by the Environmental Protection Administration (“EPA”) of the Executive Yuan of Taiwan to the third phrase development area in the Central Taiwan Science Park (the “Project”). On August 8, 2014, the Plaintiffs reached a settlement with the defendants (i.e. the governmental authorities, including the EPA of the Executive Yuan of Taiwan, the Ministry of Science and Technology (former National Science Council of the ROC Executive Yuan) and the Central Taiwan Science Park Development Office) in the Taipei High Administrative Court. The second phase environmental impact assessment for the Project continues to proceed. On December 14, 2017, the EPA of the Executive Yuan of Taiwan held the third review meeting of the investigation group. The review meeting reached the conclusion of suggesting approval for the Project. On November 6, 2018, the EPA approved the Project, but on December 6, 2018, five residents in Houli District, Taichung City filed administrative appeal to the Appeals Review Committee of the Executive Yuan requesting a withdrawal of the approval. Currently 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.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

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, 2019.

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.
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 paid-in capital: None.
f. Disposal of individual real estate with prices exceeding NT$300 million or 20% of the paid-in capital: None.
g. Purchases from or sales to related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 5 attached.
h. Receivables from related parties with amounts exceeding NT$100 million or 20% of the paid-in capital: Please see Table 6 attached.
i. Information about trading in derivative instruments: Please see Note 6(2).
(2) Information on investees (excluding information on investment in Mainland China): Please see Table 7 attached.
(3) Information on investment in Mainland China:
a. The related information on investment in Mainland China: Please see Table 8.1 and 8.2 attached.
b. Upper limit on investment in Mainland China: Please see Table 8.1 and 8.2 attached.

(Continued)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

c. Significant transactions:

Significant direct or indirect transactions with the investees in Mainland China for the year ended December 31, 2019, for which intercompany transactions were eliminated upon consolidation, are disclosed in Note 13(1) “Information on significant transactions”.

14. Segment Information

The Company has provided the operating segments disclosure in the consolidated financial statements. Disclosure of the segment information in the parent company only financial statements is waived.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Financings Provided

For the year ended December 31, 2019

(Amount in thousands of New Taiwan Dollars)

Table 1

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Limits on
Maximum Amount Collateral Financing Financing
No. [Financing ] Company Borrowing Company Statement Financial Account Related Party Balance forthe Period (Note 3) Ending Balance(Notes 1 and 2) (Notes 1 and 4)Drawn DownActually Interest Rate FinancingNature of Transaction Amounts Reason for Financing Allowance for Bad Debt Item Value Limits for Each (Notes 1 and 5)Borrowing Company Company’s Total Financing Amount
(Notes 1 and 5)
0 AUO ACTW Other Yes 3,500,000 1,725,000 1,200,000 Markup rate on Needs for - Operating - - - 17,667,184 70,668,736
receivables short-term short-term capital
from related financing cost financing
parties
0 AUO AUKS Other Yes 1,524,810 1,294,650 - Markup rate on Needs for - Operating - - - 17,667,184 70,668,736
receivables short-term short-term capital
from related financing cost financing
parties
1 AULB AUSK Other Yes - - - Markup rate on Needs for - Operating - - - 53,221,601 53,221,601
receivables short-term short-term capital
from related financing cost financing
parties
1 AULB AUKS Other Yes 10,633,245 10,572,975 2,805,075 Markup rate on Needs for - Operating - - - 21,288,641 21,288,641
receivables short-term short-term capital
from related financing cost financing
parties
2 AUXM BVHF Other Yes - - - Markup rate on Needs for - Operating - - - 5,359,511 5,359,511
receivables short-term short-term capital
from related financing cost financing
parties
2 AUXM AUKS Other Yes 5,272,980 4,962,825 3,452,400 Markup rate on Needs for - Operating - - - 5,359,511 5,359,511
receivables short-term short-term capital
from related financing cost financing
parties
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(Continued)

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Limits on
No. [Financing ] Company Borrowing Company Statement Financial Account Related Party Balance forMaximum the Period (Note 3) Ending Balance(Notes 1 and 2) (Notes 1 and 4)Drawn DownActually Amount Interest Rate FinancingNature of Transaction Amounts Reason for Financing Allowance for Bad Debt ItemCollateralValue Limits for Each (Notes 1 and 5)Borrowing Financing Company Company’s Total Financing Financing Amount
(Notes 1 and 5)
3 BVXM AUKS Other Yes 434,010 431,550 - Markup rate on Needs for - Operating - - - 509,196 509,196
receivables short-term short-term capital
from related financing cost financing
parties
4 AUSJ UFSZ Other Yes 92,090 86,310 - Markup rate on Needs for - Operating - - - 3,783,730 3,783,730
receivables short-term short-term capital
from related financing cost financing
parties
4 AUSJ AUKS Other Yes 1,467,264 1,380,960 949,410 Markup rate on Needs for - Operating - - - 1,513,492 1,513,492
receivables short-term short-term capital
from related financing cost financing
parties
4 AUSJ A-Care Other Yes 46,045 43,155 - Markup rate on Needs for - Operating - - - 3,783,730 3,783,730
receivables short-term short-term capital
from related financing cost financing
parties
5 AUSZ AUKS Other Yes 5,272,980 4,962,825 4,099,725 Markup rate on Needs for - Operating - - - 5,886,493 5,886,493
receivables short-term short-term capital
from related financing cost financing
parties
6 DPSZ AUKS Other Yes 460,450 431,550 - Adjusted by Needs for - Operating - - - 711,740 711,740
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
7 FTKS AUKS Other Yes 450,170 431,550 431,550 Adjusted by Needs for - Operating - - - 540,321 540,321
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
8 FTWJ FHWJ Other Yes 92,090 64,733 64,733 Adjusted by Needs for - Operating - - - 2,071,120 2,071,120
receivables base lending short-term capital
from related rate of People’s financing
parties Bank of China
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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 Dollar 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.

(Continued)

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 audited financial statement. The total amount for lending to a company shall not exceed 10% of AUO’s net worth as stated in its latest audited financial statement.
b. AULB, AUSZ, AUXM, AUSJ and BVXM: The total amount available for lending purposes shall not exceed 40% of the net worth of the lending company as stated in its latest audited 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 audited 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 shall not exceed the net worth of the lending company as stated in its latest audited financial statement.
d. DPSZ, FTWJ and FTKS: 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.
e. 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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Endorsements/Guarantees Provided

For the year ended December 31, 2019

(Amount in thousands of New Taiwan Dollars)

Table 2

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Guaranteed Party Ratio of Maximum Endorsement/ Endorsement/ Endorsement/
Limits on Maximum Amount of Accumulated
Amount Endorsement/ Guarantee Guarantee Guarantee
Endorsement/ Endorsement/ Endorsement/ Endorsement/
Endorser/ Nature of Ending Balance Actually Guarantee Provided by Provided by Provided to
No. Guarantee Amount Guarantee Guarantee Guarantee to Net
Guarantor Name Relationship Provided for Each Balance for the (Notes 3 and 4) Drawn Down Collateralized Worth per Latest Amount Parent Subsidiary to Subsidiaries
(Note 1) Party (Notes 4 and 5) Period (Note 2) (Note 4) by Properties Statements Financial (Notes 4 and 5)Allowable Company to Subsidiary Company Parent in Mainland China
0 AUO AUKS 2 88,335,920 16,140,185 15,317,737 11,507,216 - 8.67% 176,671,840 Yes No Yes
1 AUXM AUO 3,4 13,398,777 2,302,250 - - - - 13,398,777 No Yes No
&AUST
1 AUXM AUO 3 13,398,777 9,577,360 6,257,475 - - 46.70% 13,398,777 No Yes No
2 AUSJ AUO 3 3,783,730 1,473,440 - - - - 3,783,730 No Yes No
3 AUSZ AUO 3 14,716,233 7,275,110 4,401,810 - - 29.91% 14,716,233 No Yes No
3 AUSZ AUO 3,4 14,716,233 1,519,485 - - - - 14,716,233 No Yes No
&AUSK
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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 Dollar 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 audited 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 audited financial statement.
b. AUSZ, AUXM and AUSJ: 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 audited financial statement.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

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

December 31, 2019

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

Table 3

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Type and Name Relationship December 31, 2019
Name of
Holder of Marketable with the Financial Statement Account Shares Carrying Percentage of Fair Value Note
Securities Securities Issuer Amount Ownership
AUO Stock Related party Financial assets at FVTPL— noncurrent 1,700 - 17.00% -
BenQ ESCO Corp.
AUO Stock Related party Financial assets at FVTOCI— noncurrent 335,231 7,140,410 17.04% 7,140,410
Qisda
AULB Stock - Financial assets at FVTPL— noncurrent 3 - 2.22% -
Abakus Solar AG
AUSH Stock - Financial assets at FVTOCI— noncurrent 352 CNY 6,250 2.16% CNY 6,250
T-powertek
Optronics Co., Ltd.
DPSZ Structured deposit - Financial assets at FVTPL－current - CNY 70,488 - CNY 70,488
FPWJ Structured deposit - Financial assets at FVTPL－current - CNY 100,642 - CNY 100,642
FTKS Structured deposit - Financial assets at FVTPL－current - CNY 171,493 - CNY 171,493
Konly Stock - Financial assets at FVTOCI— noncurrent 609 42,123 1.80% 42,123
PlayNitride Inc.
Konly Stock - Financial assets at FVTOCI— noncurrent 13 - 5.33% -
SnapBizz
CloudTech Pte.
Ltd.
Konly Stock - Financial assets at FVTPL－noncurrent 4,000 - 10.87% -
a2peak power Co.,
Ltd.
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(Continued)

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Type and Name Relationship December 31, 2019
Name of
Holder of Marketable with the Financial Statement Account Shares Carrying Percentage of Fair Value Note
Securities Securities Issuer Amount Ownership
Konly Stock - Financial assets at FVTPL－noncurrent 1,500 - 2.63% -
ChenFeng
Optronics
Corporation
Konly Stock - Financial assets at FVTPL－noncurrent 4,200 - 8.52% -
UniBright
Chemical Co., Ltd.
Konly Stock - Financial assets at FVTOCI— noncurrent 2,407 7,345 4.01% 7,345
Azotek Co., Ltd.
Konly Stock Related party Financial assets at FVTOCI— noncurrent 10,145 216,091 0.52% 216,091
Qisda
Konly Stock - Financial assets at FVTOCI— noncurrent 1,667 - 5.15% -
ATS International
Inc.
DPTW Stock Related party Financial assets at FVTOCI— noncurrent 4,700 56,400 12.11% 56,400
Wibase Industrial
Solutions Inc.
DPTW Stock - Financial assets at FVTOCI— noncurrent 150 1,500 16.13% 1,500
Evertrust
Technology Ltd.
DPTW Stock - Financial assets at FVTOCI— noncurrent 7,000 8,649 4.59% 8,649
D8AI Holdings
Corporation
DPTW Stock - Financial assets at FVTOCI— noncurrent 2,914 34,968 10.00% 34,968
HUAI I Precision
Technology Co.,
Ltd.
DPTW Stock - Financial assets at FVTOCI— noncurrent 2 10,714 19.89% 10,714
Disign
Incorporated
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(Continued)

Name of Holder	Type and Name of Marketable Securities	Relationship with the Securities Issuer Financial Statement Account	Relationship with the Securities Issuer Financial Statement Account		December 31, 2019	December 31, 2019
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
Ronly	Stock	-	Financial assets at FVTPL－noncurrent	600	-	1.22% 0.49%	- -
	UniBright
	Chemical Co., Ltd.
Ronly	Stock	-	Financial assets at FVTPL－noncurrent	41	-
	Exploit
	Technology Co.,
	Ltd.

(Continued)

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, 2019

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

Table 4

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Type and Financial Beginning Balance Acquisition Disposal Ending Balance
CompanyName Marketable Securities Name of Statement Account Counterparty Relationship Shares Amount Shares Amount Shares Amount Carrying Amount on DisposalGain/Loss Shares Amount Note
AUO Stock Investments in - - 378,193 5,005,774 40,390 549,393 - - - - 418,583 2,805,441 1
ACTW equity-
accounted
investees
DPSZ Structured Financial assets - - - - - CNY 140,000 - CNY 71,331 CNY 71,331 - - CNY 70,488 2
deposit at FVTPL－
current
FPWJ Structured Financial assets - - - CNY 91,753 - CNY 200,000 - CNY 194,885 CNY 194,885 - - CNY 100,642 2
deposit at FVTPL－
current
FTKS Structured Financial assets - - - CNY 274,091 - CNY 510,000 - CNY 621,552 CNY 621,552 - - CNY 171,493 2
deposit at FVTPL－
current
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Note 1: a. As part of a business restructuring, AUO acquired all shares of ACTW from Konly and other shareholders.

b. The ending balance includes the recognition of investment gain (loss), foreign currency translation differences and capital surplus, etc. under the equity method. Note 2: The ending balance includes the gain/loss on valuation of the financial asset.

(Continued)

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, 2019

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

Table 5

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(Continued)

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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total Notes
Purchases Amount Ending Balance
Total Purchases Credit Terms Price Terms /Accounts
/Sales (Note 2) (Note 2)
/Sales (Note 1) (Note 1) Receivable
(Payable)
AUO BenQ Subsidiary of Qisda Sales (2,571,371) (1)% EOM 55 days - 399,935 1%
AUO AUXM Subsidiary of AUO Sales (989,043) - EOM 45 days - - -
AUO AUUS Subsidiary of AUO Sales (131,140) - EOM 75 days - 36,724 -
AUO AUSZ Subsidiary of AUO Sales (1,036,086) - EOM 45 days - - -
AUO AUNL Subsidiary of AUO Sales (696,101) - EOM 45 days - 136,045 -
AUO RGPC Subsidiary of SSEC Sales (109,168) - EOM 25 days - - -
AUO ACTW Subsidiary of AUO Sales (581,352) - EOM 45 days - 82,862 -
ACMK ACTW Subsidiary of AUO Purchases USD 36,650 93% OA 60 days - USD (5,971) (92)%
AUCZ AUO Ultimate parent company Sales CZK (99,079) (100)% EOM 45 days - - -
AUKS AUSZ Subsidiary of AUO Purchases CNY 130,338 8% EOM 60 days - CNY (42,137) (6)%
AUKS Qisda Corporate shareholder of Purchases CNY 23,017 1% EOM 120 days - CNY (10,475) (2)%
AUO of which accounts for
AUO using the equity
method
AUKS AUO Ultimate parent company Sales CNY (2,770,165) (100)% EOM 30 days - CNY 500,963 100%
AULB AUO Ultimate parent company Sales USD (30,931) (72)% EOM 45 days - USD 8,711 100%
AULB AUSZ Subsidiary of AUO Sales USD (11,445) (11)% EOM 45 days - - -
AULB AUXM Subsidiary of AUO Sales USD (18,769) (17)% EOM 45 days - - -
AUNL AUO Ultimate parent company Purchases EUR 20,734 100% EOM 45 days - EUR (4,009) (100)%
AUSH AUO Ultimate parent company Sales CNY (31,870) (97)% End of quarter - - -
25 days
AUSK AUO Ultimate parent company Sales EUR (4,275) (84)% EOM 45 days - EUR 746 82%
AUST AUO Ultimate parent company Sales USD (184,271) (100)% EOM 45 days - USD 28,995 100%
AUSZ Raydium Associate Purchases CNY 560,109 8% EOM 120 days - CNY (222,287) (10)%
AUSZ Qisda Corporate shareholder of Purchases CNY 569,724 8% EOM 120 days - CNY (235,978) (10)%
AUO of which accounts for
AUO using the equity
method
AUSZ DPTW Subsidiary of AUO Purchases CNY 178,762 3% EOM 120 days - CNY (67,252) (3)%
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(Continued)

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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total Notes
Purchases Amount Ending Balance
Total Purchases Credit Terms Price Terms /Accounts
/Sales (Note 2) (Note 2)
/Sales (Note 1) (Note 1) Receivable
(Payable)
AUSZ AUO Ultimate parent company Purchases CNY 227,034 3% EOM 45 days - - -
AUSZ AULB Subsidiary of AUO Purchases CNY 75,930 1% EOM 45 days - - -
AUSZ BMC Subsidiary of Qisda Purchases CNY 274,748 4% EOM 90 days - CNY (82,462) (4)%
AUSZ AULB Subsidiary of AUO Sales CNY (36,846) - EOM 45 days - - -
AUSZ AUKS Subsidiary of AUO Sales CNY (130,338) (2)% EOM 60 days - CNY 42,137 2%
AUSZ AUO Ultimate parent company Sales CNY (7,869,533) (95)% EOM 45 days - CNY 2,196,988 88%
AUUS AUO Ultimate parent company Purchases USD 4,555 100% EOM 75 days USD (1,215) (100)%
AUUS AUO Ultimate parent company Sales USD (5,539) (56)% EOM 30 days - - -
AUXM Raydium Associate Purchases CNY 377,685 7% EOM 120 days - CNY (130,325) (7)%
AUXM Lextar Associate Purchases CNY 42,203 1% EOM 120 days - CNY (18,499) (1)%
AUXM AULB Subsidiary of AUO Purchases CNY 125,815 2% EOM 45 days - - -
AUXM AUO Ultimate parent company Purchases CNY 194,961 3% EOM 45 days - - -
AUXM BMC Subsidiary of Qisda Purchases CNY 180,358 3% EOM 90 days - CNY (46,691) (2)%
AUXM DPXM Subsidiary of AUO Purchases CNY 43,398 1% EOM 120 days - CNY (13,923) (1)%
AUXM DPTW Subsidiary of AUO Purchases CNY 308,620 5% EOM 120 days - CNY (115,982) (6)%
AUXM AULB Subsidiary of AUO Sales CNY (27,290) - EOM 45 days - - -
AUXM BVXM Subsidiary of AUO Sales CNY (760,742) (12)% EOM 45 days - CNY 183,553 9%
AUXM AUO Ultimate parent company Sales CNY (5,704,904) (88)% EOM 45 days - CNY 1,865,262 91%
BVHF DPTW Subsidiary of AUO Purchases CNY 52,126 21% EOM 60 days - CNY (36,531) (58)%
BVHF Lextar Associate Purchases CNY 30,865 12% EOM 120 days - CNY (5,229) (8)%
BVHF DPTW Subsidiary of AUO Sales CNY (381,196) (100)% EOM 60 days - CNY 88,590 100%
BVXM AUXM Subsidiary of AUO Purchases CNY 759,427 100% EOM 45 days - CNY (182,131) (100)%
DPSZ DPTW Subsidiary of AUO Purchases CNY 24,407 25% EOM 60 days CNY (2,649) (7)%
DPSZ DPTW Subsidiary of AUO Sales CNY (134,962) (76)% EOM 90 days - CNY 36,326 70%
DPXM DPTW Subsidiary of AUO Purchases CNY 24,058 3% EOM 60 days CNY (19,029) (7)%
DPXM AUO Ultimate parent company Purchases CNY 28,887 4% EOM 45 days - CNY (1,936) (1)%
DPXM AUXM Subsidiary of AUO Sales CNY (43,246) (4)% EOM 120 days - CNY 13,923 3%
DPXM DPTW Subsidiary of AUO Sales CNY (1,074,429) (89)% EOM 90 days - CNY 384,021 83%
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Transactions with
Transaction Details Terms Different Notes/Accounts Receivable (Payable)
from Others
Company Counterparty Relationship Percentage of Note
Name Percentage of Unit Credit Total Notes
Purchases Amount Ending Balance
Total Purchases Credit Terms Price Terms /Accounts
/Sales (Note 2) (Note 2)
/Sales (Note 1) (Note 1) Receivable
(Payable)
FTWJ DPTW Subsidiary of AUO Purchases CNY 116,790 21% EOM 60 days - CNY (283,725) (57)%
FTWJ Lextar Associate Purchases CNY 57,349 10% EOM 120 days - CNY (22,443) (5)%
FTWJ DPTW Subsidiary of AUO Sales CNY (765,048) (90)% EOM 90 days - CNY 552,530 91%
M.Setek ACTW Subsidiary of AUO Sales JPY (5,215,104) (99)% EOM 45 days - JPY 1,643,976 100%
ACTW AUO Ultimate parent company Purchases 581,454 17% EOM 45 days - (82,862) (11)%
ACTW M.Setek Subsidiary of AUO Purchases 1,480,568 43% EOM 45 days - (455,053) (62)%
ACTW ACMK Subsidiary of AUO Sales (1,079,766) (22)% OA 60 days - 179,946 22%
UTI AUO Ultimate parent company Sales (150,409) (69)% EOM 60 days - 15,093 89%
DPTW BVHF Subsidiary of AUO Purchases 1,726,072 13% EOM 60 days - (143,375) (5)%
DPTW AUO Ultimate parent company Purchases 410,921 3% EOM 45 days - (43,343) (1)%
DPTW EFOP Joint Venture Purchases 1,027,147 7% EOM 45 days - (72,942) (2)%
DPTW FTWJ Subsidiary of AUO Purchases 3,428,533 25% EOM 90 days - (998,087) (32)%
DPTW DPXM Subsidiary of AUO Purchases 4,819,703 35% EOM 90 days - (1,390,592) (45)%
DPTW DPSZ Subsidiary of AUO Purchases 606,434 4% EOM 90 days - (156,919) (5)%
DPTW DPXM Subsidiary of AUO Sales (107,170) (1)% EOM 60 days - 36,730 1%
DPTW FTWJ Subsidiary of AUO Sales (521,864) (3)% EOM 60 days - 196,827 7%
DPTW DPSZ Subsidiary of AUO Sales (110,489) (1)% EOM 60 days - 11,445 -
DPTW BVHF Subsidiary of AUO Sales (236,590) (2)% EOM 60 days - 9,589 -
DPTW AUXM Subsidiary of AUO Sales (1,379,316) (9)% EOM 120 days - 501,004 18%
DPTW AUO Ultimate parent company Sales (6,456,889) (42)% EOM 60 days - 845,012 31%
DPTW QCES Subsidiary of Qisda Sales (208,913) (1)% EOM 120 days - 80,000 3%
DPTW Darwin Summit Associate Sales (100,201) (1)% EOM 90 days - 42,033 2%
Corporation,
Ltd.
DPTW AUSZ Subsidiary of AUO Sales (797,366) (5)% EOM 120 days - 290,507 11%
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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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Receivables from Related Parties with Amounts Exceeding NT$100 Million or 20% of the Paid-in Capital December 31, 2019

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

Table 6

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Overdue Receivables Amounts
Ending Balance of Received in Allowance
Company Turnover
Counterparty Relationship Receivables Subsequent for Bad
Name Rate Amount Action Taken
(Note 3) Period Debts
(Note 1)
AUO TGPC Subsidiary of SSEC 109,566 2.93 - - - -
AUO ACTW Subsidiary of AUO 1,284,439 (Note 2) - - - -
AUO BenQ Subsidiary of Qisda 399,935 5.52 114 Will be collected in next period - -
AUO AUNL Subsidiary of AUO 136,045 10.23 16 Collected in subsequent period 70,516 -
AUO QCSZ Subsidiary of Qisda 930,165 6.26 935 Will be collected in next period - -
AUKS AUO Ultimate parent company CNY 500,963 5.83 CNY 28,896 Collected in subsequent period CNY 240,556 -
AULB AUO Ultimate parent company USD 9,189 (Note 2) USD 8,711 Will be collected in next period - -
AULB AUKS Subsidiary of AUO USD 95,056 (Note 2) - - - -
AUSJ AUKS Subsidiary of AUO CNY 224,528 (Note 2) - - - -
AUST AUO Ultimate parent company USD 28,995 5.92 - - - -
AUSZ AUKS Subsidiary of AUO CNY 1,016,582 (Note 2) CNY 14,634 Collected in subsequent period CNY 16,118 -
AUSZ AUO Ultimate parent company CNY 2,196,989 (Note 2) CNY 27,024 Collected in subsequent period CNY 1,511,352 -
AUXM BVXM Subsidiary of AUO CNY 183,895 (Note 2) CNY 1,421 Collected in subsequent period CNY 106,300 -
AUXM AUKS Subsidiary of AUO CNY 818,914 (Note 2) CNY 137 Collected in subsequent period CNY 250
AUXM AUO Ultimate parent company CNY 1,865,262 6.10 CNY 93,824 Collected in subsequent period CNY 1,082,848 -
BVHF DPTW Subsidiary of AUO CNY 88,996 (Note 2) CNY 49,549 Will be collected in next period - -
DPSZ DPTW Subsidiary of AUO CNY 36,326 2.55 - - - -
DPXM DPTW Subsidiary of AUO CNY 384,031 (Note 2) - - CNY 24,417 -
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(Continued)

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Note 1: Until the end of January 2020.

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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Information on Investees (Excluding Information on Investment in Mainland China) For the year ended December 31, 2019

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

Table 7

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Original Investment Amount December 31, 2019 Maximum Net Income Investor’s Share
Investor Investee of Profit (Loss)
Company Company Location Main Activities December 31, December 31, Shares Percentage of Carrying Amount Shareholding (Loss) of of Investee Note
2019 2018 Ownership (Notes 1 and 2) in the Interim Investee
(Notes 1 and 2)
AUO AULB Malaysia Holding and trading 59,058,698 59,058,698 1,882,189 100.00% 53,221,601 100.00% 1,367,091 1,481,004 Subsidiary
company
AUO AUNL Netherlands Sales and sales support of 24,275 24,275 50 100.00% 37,774 100.00% 13,707 13,707 Subsidiary
TFT-LCD panels
AUO Konly Taiwan ROC Venture capital investment 4,227,070 4,227,070 284,302 100.00% 5,208,936 100.00% 171,825 171,825 Subsidiary
AUO Ronly Taiwan ROC Venture capital investment 1,778,692 1,778,692 154,757 100.00% 2,049,860 100.00% 9,126 9,126 Subsidiary
AUO DPTW Taiwan ROC Design, manufacturing, and 3,569,155 3,569,155 190,108 28.56% 3,156,574 28.56% (190,141) (54,311) Subsidiary
sales of TFT-LCD modules,
backlight modules, TV set
and related parts
AUO ACTW Taiwan ROC Manufacturing and sales of 15,687,921 15,138,528 418,583 100.00% 2,805,441 100.00% (2,648,071) (2,614,702) Subsidiary
ingots and solar wafers (Note 4)
AUO SREC Taiwan ROC Investment 379,040 379,040 37,904 32.01% 424,653 32.01% 110,266 35,300 Associate
AUO Lextar Taiwan ROC Manufacturing and sales of 881,076 881,076 78,418 15.10% 1,642,746 15.33% (309,651) (46,855) Associate
Light Emitting Diode
AUO SMI Taiwan ROC Sales and leasing of content 30,000 30,000 3,000 100.00% 18,247 100.00% (11,025) (11,025) Subsidiary
management system and
hardware
AUO UTI Taiwan ROC Planning, design and 100,000 50,000 10,000 100.00% 88,906 100.00% (11,183) (11,183) Subsidiary
development of construction
for environmental protection
and related project
management
AUO SSEC Taiwan ROC Investment 930,000 930,000 93,000 31.00% 953,966 31.00% 73,407 22,756 Associate
AUO CQIL Israel Holding company 876,659 821,138 39,974 100.00% 576,111 100.00% (54,995) (182,866) Subsidiary
Konly DPTW Taiwan ROC Design, manufacturing, and 703,795 703,795 42,598 6.40% 707,303 6.40% (190,141) (12,170) Subsidiary
sales of TFT-LCD modules,
backlight modules, TV set
and related parts
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(Continued)

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----- Start of picture text -----

Original Investment Amount December 31, 2019 Maximum Net Income Investor’s Share
Investor Investee of Profit (Loss)
Company Company Location Main Activities December 31, December 31, Shares Percentage of Carrying Amount Shareholding (Loss) of of Investee Note
2019 2018 Ownership (Notes 1 and 2) in the Interim Investee
(Notes 1 and 2)
Konly ACTW Taiwan ROC Manufacturing and sales of - 589,793 - - - 2.50% (2,648,071) (2,381) Subsidiary
ingots and solar wafers (Note 4)
Konly SREC Taiwan ROC Investment 17,760 17,760 1,776 1.50% 19,897 1.50% 110,266 1,654 Associate
Konly Raydium Taiwan ROC IC design 175,857 175,857 11,454 17.10% 740,504 17.63% 674,300 117,334 Associate
Konly Daxin Taiwan ROC Research, manufacturing and 154,748 154,748 19,114 18.61% 517,812 18.61% 650,420 121,032 Associate
sales of display related
chemicals
Konly Lextar Taiwan ROC Manufacturing and sales of 450,674 450,674 26,133 5.03% 547,439 5.11% (309,651) (15,614) Associate
Light Emitting Diode
Konly Ubitech Taiwan ROC Development and sales of 27,000 27,000 357 26.31% 1,262 26.31% (7,584) (16,854) Associate
Inc. software for POS system
Konly SSEC Taiwan ROC Investment 60,000 60,000 6,000 2.00% 61,546 2.00% 73,407 1,468 Associate
Konly WishMobile, Taiwan ROC Developing and providing 15,000 15,000 2,500 12.50% 5,899 12.50% 1,334 (7,932) Associate
Inc. CRM APP
Konly SkyREC BVI Data consulting service for 46,016 46,016 188 16.12% 4,304 16.12% (14,143) (38,982) Associate
Ltd. retail
Ronly DPTW Taiwan ROC Design, manufacturing, and 845,510 845,510 40,509 6.09% 672,617 6.09% (190,141) (11,573) Subsidiary
sales of TFT-LCD modules,
backlight modules, TV set
and related parts
Ronly Daxin Taiwan ROC Research, manufacturing and 70,021 70,021 6,312 6.15% 171,001 6.15% 650,420 39,969 Associate
sales of display related
chemicals
Ronly Lextar Taiwan ROC Manufacturing and sales of 323,431 323,431 34,338 6.61% 719,336 6.71% (309,651) (20,517) Associate
Light Emitting Diode
DPTW BVLB Malaysia Holding company 1,051,289 1,051,289 36,000 29.71% 242,935 29.71% (133,388) (39,630) Subsidiary
DPTW DPLB Malaysia Holding company 4,362,627 4,362,627 92,267 100.00% 6,172,423 100.00% (27,931) (17,834) Subsidiary
DPTW FHVI BVI Holding company 2,362,321 2,362,321 22,006 100.00% 4,008,112 100.00% 96,028 20,304 Subsidiary
DPTW FRVI BVI Holding company - 274,700 - - - 100.00% 6,200 6,029 Subsidiary
(Note 5)
DPTW FFMI Mauritius Holding company 274,700 - 653 100.00% 93,524 100.00% 6,200 - Subsidiary
(Note 5)
DPTW EFOP Taiwan ROC Manufacturing and sales of 338,729 338,729 33,873 49.00% 178,719 49.00% (88,238) (43,237) Joint
polymer plasticized raw Venture
materials
DPTW Darwin Thailand International trade 3,740 3,740 40 40.00% 10,394 40.00% 7,765 3,106 Associate
Summit
Corporation,
Ltd.
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(Continued)

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Original Investment Amount December 31, 2019 Maximum Net Income Investor’s Share
Investor Investee of Profit (Loss)
Company Company Location Main Activities December 31, December 31, Shares Percentage of Carrying Amount Shareholding (Loss) of of Investee Note
2019 2018 Ownership (Notes 1 and 2) in the Interim Investee
(Notes 1 and 2)
ACTW ACMK Malaysia Manufacturing and sales of 449,975 449,975 46,196 100.00% 537,395 100.00% 42,306 42,306 Subsidiary
solar wafers
ACTW SDMC Taiwan ROC Holding company 1,988,488 1,988,488 116,836 100.00% 1,948,642 100.00% 171,314 168,217 Subsidiary
SDMC M.Setek Japan Manufacturing and sales of 23,596,398 23,596,368 11,404,184 99.9991% 1,946,295 99.9991% 188,831 188,830 Subsidiary
ingots
AULB AUUS United States Sales and sales support of USD 1,000 USD 1,000 1,000 100.00% USD 2,063 100.00% USD 161 USD 161 Subsidiary
TFT-LCD panels
AULB AUJP Japan Sales support of TFT-LCD USD 276 USD 276 1 100.00% USD 1,765 100.00% USD 1 USD 1 Subsidiary
panels
AULB AUKR South Korea Sales support of TFT-LCD USD 155 USD 155 - 100.00% USD 1,014 100.00% USD 83 USD 83 Subsidiary
panels
AULB AUCZ Czech Assembly of solar modules USD 20,531 USD 20,531 - 100.00% USD 10,534 100.00% USD (3,607) USD (3,607) Subsidiary
Republic
AULB AUSK Slovakia Repairing of TFT-LCD USD 1,359 USD 54,349 - 100.00% USD 22,879 100.00% USD 246 USD 246 Subsidiary
Republic modules
AULB AUST Singapore Manufacturing TFT-LCD USD 276,543 USD 321,161 907,114 100.00% USD 139,306 100.00% USD 2,120 USD 2,120 Subsidiary
panels based on low
temperature polysilicon
technology
AULB AUVI United States Research and development USD 5,000 USD 5,000 5,000 100.00% USD 5,875 100.00% USD 255 USD 255 Subsidiary
and IP related business
AULB BVLB Malaysia Holding company USD 85,171 USD 85,171 85,171 70.29% USD 19,073 70.29% USD (4,313) USD (3,032) Subsidiary
AULB AUSG Singapore Holding company and sales USD 48,321 USD 86,685 266,268 100.00% USD 34,448 100.00% USD 903 USD 903 Subsidiary
support of TFT-LCD panels
AUSG AEUS United States Sales support of solar-related USD 3,510 USD 3,510 9,510 100.00% USD 814 100.00% USD (1) USD (1) Subsidiary
products
AUSG AENL Netherlands Sales support of solar-related USD 45 USD 45 - 100.00% USD 174 100.00% USD (12) USD (12) Subsidiary
products
DPLB DPHK Hong Kong Holding company USD 103,785 USD 103,785 10 100.00% USD 205,804 100.00% USD (248) USD (248) Subsidiary
(Note 6)
DPLB DPSK Slovakia Manufacturing and sales of USD 4,216 USD 4,216 - 100.00% USD 2,546 100.00% USD (655) USD (655) Subsidiary
Republic automotive parts
FHVI FTMI Mauritius Holding company USD 6,503 USD 6,503 6,503 100.00% USD 75,756 100.00% USD (2,786) USD (2,786) Subsidiary
FHVI FWSA Samoa Holding company USD 19,000 USD 19,000 19,000 100.00% USD 14,364 100.00% USD 146 USD 146 Subsidiary
FHVI PMSA Samoa Holding company USD 39,673 USD 39,673 31,993 100.00% USD 44,825 100.00% USD 1,832 USD 1,832 Subsidiary
FRVI FFMI Mauritius Holding company - USD 8,200 - - - 100.00% USD 200 USD 200 Subsidiary
(Note 5)
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(Continued)

100

==> picture [738 x 235] intentionally omitted <==

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: As part of a business restructuring, AUO acquired all shares of ACTW from Konly and other shareholders. Note 5: FRVI was liquidated in the fourth quarter of 2019. FRVI transferred all of its shareholdings in FFMI to DPTW. Note 6: The registration of the alteration of DPHK’s common stock has not been completed.

(Continued)

101

AU OPTRONICS CORP. AND SUBSIDIARIES

Information on Investment in Mainland China

For the year ended December 31, 2019

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

Table 8

1. AUO `：`

(1) Related information on investment in Mainland China

==> picture [733 x 298] intentionally omitted <==

----- Start of picture text -----

Accumulated Accumulated Carrying
Investment Outflow of % Amount of Accumulated
Outflow of Investor’s
Total Amount Investment Flows Investment Net Income Ownership Maximum Share of Profit the Inward
Investee of Paid-in Method of from Taiwan (Loss) of through Investment Remittance of
Company Main Activities Capital Investment as of Januaryfrom Taiwan as of Investee Direct or in the InterimShareholding (Loss) of Investee as of Earnings as of Note
(Note 2) 1, 2019 Outflow Inflow December (Notes 4 and 5) Indirect (Notes 4 and 5) December December
31, 2019 Investment 31, 2019 31, 2019
(Note 2)
(Note 2) (Note 2)
A-Care Design, development 43,155 (Note 1) - - - - (18,772) 100% 100% (18,772) 17,973 -
and sales of software
and hardware for
health care industry
AETJ Manufacturing and - (Note 1) - - - - 847 - 100% 847 - - Note 8
sales of solar
modules
AUKS Manufacturing and 28,959,735 (Note 1) 14,769,465 - - 14,769,465 (4,634,866) 51% 51% (2,363,782) 4,985,961 -
sales of TFT-LCD
panels
AUSH Sales support of TFT- 90,405 (Note 1) 30,135 - - 30,135 (37,431) 100% 100% (37,431) 417,037 -
LCD panels
AUSJ Manufacturing and 3,254,580 (Note 1) 2,410,800 - - 2,410,800 81,056 100% 100% 152,141 3,783,730 - Note 7
assembly of TFT-
LCD modules;
leasing
AUSZ Manufacturing, 8,377,530 (Note 1) 6,027,000 - - 6,027,000 2,224,611 100% 100% 2,248,227 14,716,233 - Note 7
assembly and sales of
TFT-LCD modules
AUXM Manufacturing, 7,533,750 (Note 1) 7,533,750 - - 7,533,750 781,059 100% 100% 790,751 13,398,777 - Note 7
assembly and sales of
TFT-LCD modules
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(Continued)

102

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Accumulated Accumulated Carrying
Investment Outflow of % Amount of Accumulated
Outflow of Investor’s
Total Amount Flows Investment Net Income Ownership the Inward
Investment Maximum Share of Profit
Investee Main Activities of Paid-in Method of from Taiwan from Taiwan (Loss) of through Shareholding (Loss) of Investment Remittance of Note
Company (Note 2) Capital Investment as of January1, 2019 Outflow Inflow December as of (Notes 4 and 5)Investee Direct or Indirect in the Interim (Notes 4 and 5)Investee Decemberas of Earnings as of December
31, 2019 Investment 31, 2019 31, 2019
(Note 2)
(Note 2) (Note 2)
BVCH Manufacturing and - (Note 1) 225,108 - - 225,108 (14,325) - 19% (2,722) - - Note 8
sales of liquid crystal
products and related
parts
BVHF Manufacturing and 2,213,416 (Note 1) - - - - (133,307) 100% 100% (133,307) 815,781 - Note 6
sales of liquid crystal
products and related
parts
BVXM Manufacturing and 2,589,300 (Note 1) - - - - 36,637 100% 100% 36,637 1,272,990 -
sales of liquid crystal
products and related
parts
EDT Design and sales of 21,578 (Note 1) - - - - (4,886) 100% 100% (4,886) 16,862 -
software and
hardware integration
system and
equipment relating to
intelligent
manufacturing
MIS Development and 21,578 (Note 1) - - - - (13,025) 100% 100% (13,025) 8,659 -
licensing of software
relating to intelligent
manufacturing, and
related consulting
services
UFSZ Planning, design and 25,893 (Note 1) - - - - (7,951) 100% 100% (7,951) 18,506 -
development of
construction project
for environmental
protection and related
project management
UFSD Planning, design and 8,631 (Note 1) - - - - (2,932) 100% 100% (2,932) 5,802 -
development of
construction project
for environmental
protection and related
project management
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(Continued)

103

(2) Upper limit on investment in Mainland China

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Accumulated Investment in Mainland China Investment Amounts Authorized by the Upper Limit on Investment Stipulated by the
as of December 31, 2019 (Note 2) Investment Commission, MOEA (Note 2) Investment Commission, MOEA (Note 3)
30,996,258 (USD 1,028,580 ) 40,462,497 (USD 1,335,003 and HKD 60,000) 112,786,050
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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 except for BVCH.
Note 5: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rates for the year of 2019. Note 6: BVHF is 100% owned by BVLB, a jointly-owned subsidiary of AUO and DPTW.
Note 7: Investor’s share of profit (loss) of investee and the carrying amount of the investment as of December 31, 2019 both include the effect of sidestream transactions.

Note 8: AETJ and BVCH were liquidated in the fourth quarter of 2019.

(Continued)

104

2. DPTW:

(1) Related information on investment in Mainland China

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Accumulated
Total Amount Accumulated Outflow of Investment Flows Investment Outflow of Net Income Ownership % Maximum Investor’s Amount of the Carrying Accumulated Inward
Investment Share of Profit Remittance of
Investee Main Activities of Paid-in Method of from Taiwan as from Taiwan (Loss) of through Shareholding (Loss) of Investment as Earnings as of Note
Company (Note 4) Capital Investment of January 1, 2019 Outflow Inflow December as of (Notes 2 and 6)Investee Direct or Indirect Interim in the (Notes 2 and 6)Investee of December31, 2019 December 31, 2019
(Note 4) (Note 4) 31, 2019 Investment (Note 4)
(Note 4) (Note 4)
(Note 4)
BVHF Manufacturing and 2,213,416 (Note 1) 482,160 - - 482,160 (133,307) 29.71% 29.71% (133,307) 815,781 - Note 5
sales of liquid crystal
products and related
parts
DPSZ Manufacturing and 753,375 (Note 1) 452,025 - - 452,025 1,474 100% 100% 1,474 1,779,351 1,003,989 Note 9
sales of backlight
modules and related
parts
DPXM Manufacturing and 2,109,450 (Note 1) 2,109,450 - - 2,109,450 (9,145) 100% 100% (9,145) 4,422,562 1,559,487
sales of backlight
modules and related
parts
FHWJ Manufacturing of 195,878 (Note 1) 247,107 - - 247,107 6,200 100% 100% 6,200 43,308 -
motorized treadmills
FPWJ Manufacturing and 873,915 (Note 1) 572,565 - - 572,565 6,879 100% 100% 6,879 644,612 - Note 8
sales of precision
plastic parts
FTKS Manufacturing and 1,084,860 (Note 1) 1,084,860 - - 1,084,860 56,654 100% 100% 56,654 1,350,802 -
sales of backlight
modules and related
parts
FTWJ Manufacturing and 1,054,725 (Note 1) 195,878 - - 195,878 (88,537) 100% 100% (88,537) 2,071,120 424,136 Note 7
sales of backlight
modules and related
parts
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(Continued)

105

(2) Upper limit on investment in Mainland China

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Accumulated Investment in Mainland China Investment Amounts Authorized by the Upper Limit on Investment Stipulated by the
as of December 31, 2019 (Note 4) Investment Commission, MOEA (Note 4) Investment Commission, MOEA (Note 3)
5,144,045 (USD 170,700) 5,674,511 (USD 188,303) 6,630,571
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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 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 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, 2019 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 2019.
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.

(Continued)

106

AU OPTRONICS CORP.

Cash and Cash Equivalents

December 31, 2019

(In thousands of New Taiwan Dollars, unless otherwise indicated)

Item Petty cash Cash in Banks	Description Checking accounts Demand deposits Foreign currency deposits (note) USD : 155,001 thousand JPY：19,086,238 thousand EUR：25,505 thousand CNY：691 thousand Time deposits TWD : 11,600 thousand Foreign currency time deposits (note) USD : 71,000 thousand	Amount
		$ 2 26,949 21,343,944 10,817,590 11,600,000 2,139,585 $ 45,928,070

Note ： Exchange rate at balance sheet date was as follows:

USD ： 30.135 JPY ： 0.2768 EUR ： 33.7422 CNY ： 4.3155

107

AU OPTRONICS CORP.

Accounts Receivable

December 31, 2019

(In thousands of New Taiwan Dollars)

Customer Name Customer A Customer B Customer C Customer D Customer E Customer F Others (less than 5% for each customer) Less: Loss allowance	Description From operating activities From operating activities From operating activities From operating activities From operating activities From operating activities From operation activities	Amount Remark $ 3,485,653 3,308,630 3,164,298 1,938,715 1,922,559 1,486,619 11,680,399 (150 ) $ 26,986,723

108

AU OPTRONICS CORP.

Inventories

December 31, 2019

(In thousands of New Taiwan Dollars)

Item Finished goods Work in process Raw materials	Amount Book value (note) Net realizable value $ 7,022,551 9,458,583 8,404,901 10,518,485 1,828,809 1,872,171 $ 17,256,261 21,849,239	Remark
	Book value (note) $ 7,022,551 8,404,901 1,828,809 $ 17,256,261
		The determination of net realizable value, please refer to Note 4(7) to this parent company only financial statements.

Note ： Cost less allowance of inventories written down.

Other Current Assets and Other Non-Current Assets

Please refer to Note 6(12) to this parent company only financial statements for the details.

109

AU OPTRONICS CORP.

Changes in Investments in Equity-accounted Investees

For the year ended December 31, 2019

(In thousands of New Taiwan Dollars, unless otherwise indicated, and shares in thousands)

Investee Name	Beginning balance (note 1)	Beginning balance (note 1)	Addition (Disposal) (note 2)	Addition (Disposal) (note 2)	Share of profit(loss)	Capital surplus	Cash dividend	Cumulative translation differences	Unrealized gains (losses) on financial assets at fair value though other comprehensive income	Other adjustments (note 3)	Ending balance (note 1)	Ending balance (note 1)	Ending balance (note 1)	Market value or net asset value	Market value or net asset value	Guarantee or Pledged
	Shares	Amount	Shares	Amount							Shares	Amount	% of Ownership	Unit price	Totalprice
AULB ACTW Konly DPTW Ronly SMI UTI Lextar SSEC SREC CQIL AUNL	1,882,189 378,193 284,302 190,108 149,412 3,000 5,000 78,418 93,000 37,904 39,974 50	$ 53,565,171 5,005,774 5,296,190 3,369,060 2,076,069 29,272 50,888 1,740,230 942,094 414,978 766,795 25,464 $ 73,281,985	- 40,390 - - 5,345 - 5,000 - - - - -	- 549,393 - - - - 50,000 - - - 55,521 - 654,914	1,481,004 (2,614,702) 171,825 (54,311) 9,126 (11,025) (11,183) (46,855) 22,756 35,300 (182,866) 13,707 (1,187,224 )	- (153,994) 2,750 - (6,754) - - (15,425) - - - - (173,423 )	- - (202,127) (64,637) - - (799) (15,450) (10,884) (25,625) - - (319,522 )	(1,824,574) 18,970 (43,211) (93,538) (29,345) - - (21,500) - - (63,339) (1,397 ) (2,057,934 )	- - (16,463) - 777 - - 1,775 - - - - (13,911 )	- - (28) - (13) - - (29) - - - - (70 )	1,882,189 418,583 284,302 190,108 154,757 3,000 10,000 78,418 93,000 37,904 39,974 50	53,221,601 2,805,441 5,208,936 3,156,574 2,049,860 18,247 88,906 1,642,746 953,966 424,653 576,111 37,774	100.00 100.00 100.00 28.56 100.00 100.00 100.00 15.10 31.00 32.01 100.00 100.00	- - - 15.15 - - - 18.15 - - - -	53,221,601 2,805,441 5,208,936 2,880,136 2,049,860 18,247 88,906 1,423,295 953,966 424,653 576,111 37,774	None None None None None None None None None None None None
												70,184,815

Note 1：The amount is net of accumulated impairment. Note 2：Including: (1) The Company acquired shareholdings in ACTW from Konly and Ronly; (2) The Company received stock dividends from Ronly；(3) The Company joined the capital injuction in UTI and CQIL. Note 3：Including share of actuarial gains (losses) in investees' defined benefits plan and so on.

110

AU OPTRONICS CORP.

Changes in Property, Plant and Equipment

Please refer to Note 6(8) to this parent company only financial statements for the details.

C hanges in Right-of-use Asset

For the year ended December 31, 2019

(In thousands of New Taiwan Dollars)

Item Balance, Beginning of Year Costs: Land $ - Buildings - Other equipment - - Accumulated Depreciation: Land - Buildings - Other equipment - - Net carrying amounts $ -	Adjustments on initial application of new standards 10,692,259 - 96,726 10,788,985 - - - - 10,788,985	Additions 39,171 103,589 642 143,402 431,013 25,552 64,851 521,416 (378,014)	Disposal or write off (1,064,094) - - (1,064,094) - - - - (1,064,094)	Balance, End of Year 9,667,336 103,589 97,368
				9,868,293
				431,013 25,552 64,851
				521,416
				9,346,877

111

AU OPTRONICS CORP.

Intangible Assets

December 31, 2019

Please refer to Note 6(11) to this parent company only financial statements for the details.

Accounts Payable December 31, 2019

(In thousands of New Taiwan Dollars)

Vendor name Company A Company B Company C Company D Company E Others (less than 5% for each vendor)	Description Using in operation Using in operation Using in operation Using in operation Using in operation Using in operation	Amount $ 2,964,269 2,448,898 1,801,739 1,432,966 1,225,773 14,422,770 $ 24,296,415	Remark

112

AU OPTRONICS CORP.

Other Current Liabilities

December 31, 2019

(In thousands of New Taiwan Dollars)

Item Description Amount Accrued payroll and bonus $ 4,286,761 Refund liability 2,036,113 Accrued royalty and others 7,261,596 $ 13,584,470 Equipment and Construction Payable Vendor name Company W Company X Company Y Others (less than 5% for each vendor)		Remark	Remark
		Amount
		$ 305,390 304,518 254,572 3,704,483 $ 4,568,963
			4,568,963

113

AU OPTRONICS CORP.

Long-term Borrowings

December 31, 2019

(In thousands of New Taiwan Dollars, unless otherwise indicated)

Financial institution Limit of credit facility Bank of Taiwan (agent bank of Syndicated loan) $ 10,000,000 Bank of Taiwan (agent bank of Syndicated loan) 42,000,000 Bank of Taiwan (agent bank of Syndicated loan) 23,000,000 O-Bank 1,000,000 ING Bank 1,200,000 Far Eastern Int’l Bank 800,000 Land Bank 6,000,000 First Bank 4,600,000 Taipei Fubon Bank 6,000,000 DBS Bank 2,000,000 Subtotal Less: transaction costs Less: Current installments of long-term borrowings	Amount $ 10,000,000 42,000,000 23,000,000 1,000,000 1,200,000 800,000 600,000 2,600,000 3,000,000 2,000,000 86,200,000 (233,890) (4,000,000) $ 81,966,110	Duration and repayment terms from May 2017 to May 2022 from Feb. 2019 to Feb. 2024 from Mar. 2019 to Apr. 2023 from Aug. 2018 to Aug. 2023 From Mar. 2019 to Mar. 2022 from Oct. 2019 to Oct. 2022 from Nov. 2019 to Nov. 2026 from Dec. 2019 to Dec. 2026 from Dec. 2019 to Dec. 2024 from Dec. 2019 to Dec. 2022	Interest rate 1.0000%~ 1.8822%	Collateral
				Notes 8 Notes 8 Notes 8 Unsecured loans Unsecured loans Unsecured loans Notes 8 Notes 8 Notes 8 Unsecured loans

	$

114

AU OPTRONICS CORP.

Lease Liabilities

December 31, 2019

(In thousands of New Taiwan Dollars, unless otherwise indicated)

Item Land Buildings Other equipment	Durations from Sep. 2001 to Dec. 2045 from Dec. 2018 to Nov. 2024 from Jul. 2005 to Jul. 2020	Discount Rate 1.8203~1.8853% 1.8853% 1.8203%	Amount
			$ 9,313,209 79,552 32,814 $ 9,425,575

Net Revenue

For the year ended December 31, 2019

Item Products ten inches and above in diagonal length Products which are under ten inches in diagonal length Sales of raw material and others Total	Quantity (Panels in thousands) 108,160 131,116 365,379	Amount $ 198,981,031 43,844,572 12,341,573 $255,167,176	Remark

115

AU OPTRONICS CORP.

Cost of Sales

For the year ended December 31, 2019

(In thousands of New Taiwan Dollars)

Item
Raw materials used
Balance, beginning of year (note)
Add：Purchases
Less：Raw materials, end of year (note)
Sale of raw materials
Transferred to other expenses and others
Subtotal
Direct labor
Manufacturing expenses
Manufacturing cost
Work in process, beginning of year (note)
Add：Purchases
Less：Work in process, end of year (note)
Transferred to other expenses and others
Cost of finished goods
Finished goods, beginning of year (note)
Add：Purchases
Less：Finished goods, end of year (note)
Transferred to other expenses and others
Cost of goods sold
Add：Cost of raw materials sold
Other operating cost
Write-downs of inventories
Cost of idle capacity
Cost of Sales
Note：The amounts were stated at cost.

Amount
$ 2,853,559
86,548,105
(2,811,760)
(5,722,744)
(30,864,444
)
50,002,716
9,948,290
110,225,743
170,176,749
11,474,466
74,498,347
(9,862,806)

(8,040,779
)
238,245,977
9,927,850
314,253
(8,893,633)

(1,278,678
)
238,315,769
5,722,744
11,081,848
265,330

2,400,409
$257,786,100

116

AU OPTRONICS CORP.

Selling and Distribution Expenses

For the year ended December 31, 2019

(In thousands of New Taiwan Dollars)

Item Salary expenses Freight expenses Warranty expenses Others (less than 5% for each item)	Description	Amount $ 978,512 939,031 566,517 388,949 $ 2,873,009	Remark

General and Administrative Expenses

Item Salary expenses Professional service fees Depreciation expenses Management fees of the Science Park Administration Repairs and maintenance expenses Others (less than 5% for each item)	Description	Amount $ 1,429,819 555,999 314,215 243,416 229,876 1,471,080 $ 4,244,405	Remark

117

AU OPTRONICS CORP.

Research and Development Expenses

For the year ended December 31, 2019

(In thousands of New Taiwan Dollars)

Item Salary expenses Depreciation expenses Indirect material expenses Others (less than 5% for each item)	Description	Amount $ 2,834,150 2,476,822 1,374,329 1,304,606 $ 7,989,907	Remark

118

AI assistant

AUO — Audit Report / Information 2019

52062_rns_2019-12-30_1f4657a3-d3e1-4a87-9442-c4c1943813e4.pdf

AU OPTRONICS CORP.

For the Years Ended December 31, 2019 and 2018

Independent Auditors’ Report

To the Board of Directors of AU Optronics Corp.:

Opinion

Basis for Opinion

Emphasis of Matter

Key Audit Matters

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

Description of key audit matter:

How the matter was addressed in our audit:

Revenue recognition

Description of key audit matter:

How the matter was addressed in our audit:

Responsibilities of Management and Those Charged with Governance for the Parent Company Only Financial Statements

Auditor’s Responsibilities for the Audit of the Parent Company Only Financial Statements

Notice to Readers

AU OPTRONICS CORP.

Balance Sheets

December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

AU OPTRONICS CORP.

Statements of Comprehensive Income

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars, except for earnings per share)

AU OPTRONICS CORP.

Statements of Changes in Equity

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

AU OPTRONICS CORP.

Statements of Cash Flows

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

AU OPTRONICS CORP.

Statements of Cash Flows (Continued)

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars)

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

For the years ended December 31, 2019 and 2018 (Expressed in thousands of New Taiwan dollars, unless otherwise indicated)

1. Organization

2. The Authorization of Financial Statements

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

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

IFRS 16, Leases

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

4. Summary of Significant Accounting Policies

(1) Statement of compliance

(2) Basis of preparation

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(6) Financial instruments

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(ii) Impairment of financial assets

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(iii) De-recognition of financial assets

b. Financial liabilities

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(b) Other financial liabilities

(ii) De-recognition of financial liabilities

c. Offsetting of financial assets and liabilities

(7) Inventories

(8) Noncurrent assets held for sale

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

AU OPTRONICS CORP.

Notes to Parent Company Only Financial Statements

(10) Investment in subsidiaries

AU OPTRONICS CORP.

AUO Audit Report / Information 2019