AUO - Audit Report / Information 2020

Stock Code:2409

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Financial Statements

With Independent Auditors’ Report For the Years Ended December 31, 2020 and 2019

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

Representation Letter

The entities that are required to be included in the combined financial statements of AU Optronics Corp. as of and for the year ended December 31, 2020 under the Criteria Governing Preparation of Affiliation Reports, Consolidated Business Reports, and Consolidated Financial Statements of Affiliated Enterprises are the same as those included in the consolidated financial statements prepared in conformity with the International Financial Reporting Standard No. 10, “ Consolidated Financial Statements” endorsed by the Financial Supervisory Commission of the Republic of China. In addition, the information required to be disclosed in the combined financial statements is included in the consolidated financial statements. Consequently, AU Optronics Corp. and Subsidiaries do not prepare a separate set of combined financial statements.

Hereby declare

Company name: AU Optronics Corp. Chairman: Shuang-Lang (Paul) Peng Date: February 3, 2021

Independent Auditors’ Report

To the Board of Directors of AU Optronics Corp.:

Opinion

We have audited the consolidated financial statements of AU Optronics Corp. and its subsidiaries (“ the Company” ), which comprise the consolidated balance sheets as of December 31, 2020 and 2019, the consolidated statements of comprehensive income, consolidated statements of changes in equity, and consolidated statements of cash flows for the years ended December 31, 2020 and 2019, and notes to the consolidated financial statements including a summary of significant accounting policies.

In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the consolidated financial position of the Company as of December 31, 2020 and 2019, and its consolidated financial performance and its consolidated cash flows for each of the years then ended, in accordance with the Regulations Governing the Preparation of Financial Reports by Securities Issuers and with the International Financial Reporting Standards (“IFRS”), International Accounting Standards (“IAS”), Interpretations developed by the International Financial Reporting Interpretations Committee (“IFRIC”) or the former Standing Interpretations Committee (“SIC”) endorsed and issued into effect by the Financial Supervisory Commission of the Republic of China.

Basis for Opinion

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

Key Audit Matters

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

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

Refer to Note 4(14) “ Impairment – non-financial assets” , Note 5(1) and Note 5(2) “ 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 consolidated financial statements.

Description of key audit matter:

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

How the matter was addressed in our audit:

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

2. Revenue recognition

Refer to Note 4(17) “Revenue from contracts with customers” and Note 6(19) “Revenue from contracts with customers” to the consolidated financial statements.

Description of key audit matter:

Revenue is recognized when the control over a product has been transferred to the customer as specified in each individual contract with customers. The Company recognizes revenue depending on the various sales terms in each individual contract with customers to ensure the performance obligation has been satisfied by transferring control over a product to a customer. In addition, the Company operates in an industry in which 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.

Other Matters

AU Optronics Corp. has additionally prepared its parent-company-only financial statements as of and for the years ended December 31, 2020 and 2019, on which we have issued an unmodified audit opinion and an unmodified audit opinion with the paragraph on emphasis of matter, respectively.

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

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

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

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

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

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

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

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

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

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

The engagement partners on the audit resulting in this independent auditors’ report are Wei, Shing-Hai and Lu, Chien-Hui.

KPMG

Hsinchu, Taiwan (Republic of China) February 3, 2021

Notes to Readers

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

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

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in thousands of New Taiwan dollars)

Assets Current assets: 1100 Cash and cash equivalents (Note 6(1)) 1110 Financial assets at fair value through profit or loss`－`current (Note 6(2)) 1170 Notes and accounts receivable, net (Note 6(4)) 1180 Accounts receivable from related parties, net (Notes 6(4)&7) 1210 Other receivables from related parties (Note 7) 1220 Current tax assets 130X Inventories (Note 6(5)) 1476 Other current financial assets (Notes 6(4)&8) 1479 Other current assets (Note 6(12)) Noncurrent assets: 1517 Financial assets at fair value through other comprehensive income`－` noncurrent (Note 6(3)) 1550 Investments in equity-accounted investees (Note 6(6)) 1600 Property, plant and equipment (Notes 6(8),7&8) 1755 Right-of-use assets (Note 6(9)) 1760 Investment property (Note 6(10)) 1780 Intangible assets (Notes 6(7)&(11)) 1840 Deferred tax assets (Note 6(23)) 1900 Other noncurrent assets (Notes 6(12),(16)&8) Total Assets	December 31, 2020 Amount % $ 90,274,687 22 668,058 - 44,718,800 11 2,076,156 - 21,929 - 60,541 - 26,753,401 7 564,222 - 3,179,879 1 168,317,673 41 622,824 - 19,464,078 5 185,480,116 46 11,277,353 3 1,522,391 - 12,801,358 3 6,005,346 2 1,779,156 - 238,952,622 59 $ 407,270,295 100	December 31, 2019 Amount % 80,449,772 20 1,521,406 - 30,308,675 8 1,778,499 - 3,956 - 79,886 - 23,460,072 6 2,302,383 1 3,295,562 1 143,200,211 36 7,545,171 2 5,999,479 2 206,734,543 52 12,207,768 3 1,555,130 - 12,808,326 3 5,181,617 1 2,405,346 1 254,437,380 64 397,637,591 100 Liabilities and Equity Current liabilities: 2100 Short-term borrowings (Note 6(13)) 2120 Financial liabilities at fair value through profit or loss`－`current (Note 6(2)) 2170 Accounts payable 2180 Accounts payable to related parties (Note 7) 2213 Equipment and construction payable (Note 7) 2220 Other payables to related parties (Note 7) 2230 Current tax liabilities 2250 Provisions`－`current (Note 6(15)) 2280 Lease liabilities`－`current (Note 6(9)) 2399 Other current liabilities 2322 Current installments of long-term borrowings (Notes 6(14)&8) Noncurrent liabilities: 2540 Long-term borrowings, excluding current installments (Notes 6(14)&8) 2550 Provisions`－`noncurrent (Note 6(15)) 2570 Deferred tax liabilities (Note 6(23)) 2580 Lease liabilities`－`noncurrent (Note 6(9)) 2600 Other noncurrent liabilities (Note 6(16)) Total liabilities Equity(Note 6(17)): Equity attributable to shareholders of AU Optronics Corp. : 3100 Common stock 3200 Capital surplus 3300 Retained earnings 3400 Other components of equity 3500 Treasury shares Non-controlling interests 36XX Non-controlling interests Total equity Total Liabilities and Equity	December 31, 2020		December 31, 2019 Amount % 1,725,602 - 18,859 - 44,307,437 11 6,950,828 2 6,316,902 2 40,584 - 1,523,879 - 708,268 - 682,367 - 18,718,165 5 9,535,198 3 90,528,089 23 102,433,194 26 1,053,290 - 3,264,100 1 10,408,710 3 1,973,459 - 119,132,753 30 209,660,842 53 96,242,451 24 60,544,474 15 22,903,722 6 (2,005,384) (1) (1,013,423) - 176,671,840 44 11,304,909 3 187,976,749 47 397,637,591 100

See accompanying notes to consolidated financial statements.

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

4110 Revenue 4190 Less: sales return and discount Net revenue(Notes 6(19)&7) 5000 Cost of sales(Notes 6(5),(9),(16),(20),(21)&7) Gross profit Operating expenses(Notes 6(7),(9),(16),(20),(21)&7): 6100 Selling and distribution expenses 6200 General and administrative expenses 6300 Research and development expenses Total operating expenses Profit (loss) from operations Non-operating income and expenses: 7100 Interest income (Note 6(22)) 7010 Other income (Notes 6(22)&7) 7020 Other gains and losses (Notes 6(8),(9),(22)&7) 7050 Finance costs (Notes 6(8),(9)&(22)) 7060 Share of profit of equity-accounted investees (Note 6(6)) Total non-operating income and expenses 7900 Profit (loss) before income tax 7950 Less: income tax expense (benefit)(Note 6(23)) 8200 Profit (loss) for the year 8300 Other comprehensive income(Notes 6(6),(16)&(23)): 8310 Items that will never be reclassified to profit or loss 8311 Remeasurement of defined benefit obligations 8316 Unrealized gain on equity investments at fair value through other comprehensive income 8320 Equity-accounted investees – share of other comprehensive income 8349 Related tax 8360 Items that are or may be reclassified subsequently to profit or loss 8361 Foreign operations – foreign currency translation differences 8370 Equity-accounted investees – share of other comprehensive income 8399 Related tax 8300 Other comprehensive income (loss), net of tax 8500 Total comprehensive income (loss) for the year Profit (loss) attributable to: 8610 Shareholders of AU Optronics Corp. 8620 Non-controlling interests Total comprehensive income (loss) attributable to: 8710 Shareholders of AU Optronics Corp. 8720 Non-controlling interests Earnings (loss) per share(NT$, Note 6(24)) 9750 Basic earnings (loss) per share 9850 Diluted earnings (loss) per share	2020	% 100 - 100 92 8 1 2 4 7 1 - 1 - (1) - - 1 - 1 - 1 - - 1 - - - - 1 2 1 - 1 2 - 2 0.36 0.35	2019 Amount 270,794,105 2,002,411 268,791,694 268,335,751 455,943 3,751,070 7,363,234 9,809,587 20,923,891 (20,467,948) 885,520 4,434,751 (1,595,614) (3,251,370) 149,907 623,194 (19,844,754) 1,754,662 (21,599,416) 188,110 519,100 3,288 (37,622) 672,876 (2,505,864) (38,512) 459,729 (2,084,647) (1,411,771) (23,011,187) (19,185,258) (2,414,158) (21,599,416) (20,192,454) (2,818,733) (23,011,187)	% 101 1 100 100 - 1 3 3 7 (7) - 2 (1) (1) - - (7) 1 (8) - - - - - (1) - - (1) (1) (9) (7) (1) (8) (8) (1) (9) (2.00) (2.00)
	Amount $ 271,821,226 865,845 270,955,381 248,190,042 22,765,339 3,499,116 6,897,103 10,286,078 20,682,297 2,083,042 533,052 3,758,856 (761,143) (2,943,872) 117,736 704,629 2,787,671 (119,756) 2,907,427 140,218 2,676,706 3,686 (28,043) 2,792,567 137,051 (49,783) (16,855) 70,413 2,862,980 $ 5,770,407 $ 3,376,324 (468,897) $ 2,907,427 $ 6,089,641 (319,234) $ 5,770,407 $ $

See accompanying notes to consolidated financial statements.

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

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan dollars)

		Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.	Equity Attributable to Shareholders of AU Optronics Corp.
Capital Surplus 60,622,043 - - - - - - 547 (40,085) - (22,282) (15,749) - 60,544,474 - - - - 1,073 42,137 - - 60,587,684		Retained Earnings		Subtotal 46,845,991 - - (4,812,122) (19,185,258) 150,418 (19,034,840) - - - - (95,307) - 22,903,722 - 3,376,324 113,073 3,489,397 - - - 3,865,163 30,258,282	Other	Components of Equity Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income Subtotal 602,140 (847,770) - - - - - - - - 522,458 (1,157,614) 522,458 (1,157,614) - - - - - - - - - - - - 1,124,598 (2,005,384) - - - - 2,676,782 2,600,244 2,676,782 2,600,244 - - - - - - (3,865,163) (3,865,163) (63,783) (3,270,303)	Treasury Shares - - - - - - - - - (1,013,423) - - - (1,013,423) - - - - - - - - (1,013,423)
					Cumulative Translation Differences (1,449,910) - - - - (1,680,072) (1,680,072) - - - - - - (3,129,982) - - (76,538) (76,538) - - - - (3,206,520)	Unrealized Gains (Losses) on Financial Assets at Fair Value through Other Comprehensive Income 602,140 - - - - 522,458 522,458 - - - - - - 1,124,598 - - 2,676,782 2,676,782 - - - (3,865,163) (63,783)
	Legal Reserve 6,675,628 1,016,060 - - - - - - - - - - - 7,691,688 - - - - - - - - 7,691,688	Special Reserve - - 847,770 - - - - - - - - - - 847,770 1,157,614 - - - - - - - 2,005,384	Unappropriated Earnings 40,170,363 (1,016,060) (847,770) (4,812,122) (19,185,258) 150,418 (19,034,840) - - - - (95,307) - 14,364,264 (1,157,614) 3,376,324 113,073 3,489,397 - - - 3,865,163 20,561,210

See accompanying notes to consolidated financial statements.

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan dollars)

2020
Cash flows from operating activities:
Profit (loss) before income tax
$ 2,787,671
Adjustments for:
- depreciation
35,130,348
- amortization
267,182
- losses (gains) on financial instruments at fair value through profit
or loss
41,899
- interest expense
2,866,787
- interest income
(533,052)
- dividend income
(261,382)
- share of profit of equity-accounted investees
(117,736)
- gains on disposals of property, plant and equipment, net
(58,558)
- losses (gains) on disposals of investments and financial assets, net
(159)
- impairment losses on assets
396,339
- unrealized foreign currency exchange gains
(18,470)
- others
74,020
Changes in operating assets and liabilities:
- notes and accounts receivable
(14,799,026)
- receivables from related parties
(315,630)
- inventories
(3,403,782)
- other current assets
1,818,984
- accounts payable
3,568,142
- payables to related parties
333,481
- net defined benefit liability
(548,058)
- provisions
46,388
- other current liabilities
1,078,610
Cash generated from operations
28,353,998
Cash received from interest income
567,081
Cash received from dividends
603,621
Cash paid for interest
(2,829,307)
Cash paid for income taxes
(948,435)
Net cash provided by operating activities
25,746,958

2019
(19,844,754)
35,693,033
564,686
(41,065)
3,251,370
(885,520)
(295,575)
(149,907)
(106,546)
13,154
2,298,646
(430,183)
26,468
13,685,703
984,744
2,794,115
(926,326)
(5,014,990)
(1,197,773)
(89,422)
(759,948)
(4,906,788)
24,663,122
919,840
568,871
(3,417,833)
(2,003,361)
20,730,639
(Continued)

See accompanying notes to consolidated financial statements.

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

Consolidated Statements of Cash Flows (Continued)

For the years ended December 31, 2020 and 2019 (Expressed in thousands of New Taiwan dollars)

2020
Cash flows from investing activities:
Acquisitions of financial assets at fair value through profit or loss
(2,428,945)
Disposals of financial assets at fair value through profit or loss
3,360,324
Acquisitions of financial assets at fair value through other
comprehensive income
(659,826)
Disposals of financial assets at fair value through other comprehensive
income
24,119
Acquisitions of equity-accounted investees
(3,453,288)
Disposals of equity-accounted investees
937,411
Acquisitions of property, plant and equipment
(15,600,564)
Disposals of property, plant and equipment
123,383
Decrease in refundable deposits
230,007
Acquisitions of intangible assets
-
Decrease in other financial assets
6,189
Net cash outflow arising from acquisition of business
(246,956)
Net cash used in investing activities
(17,708,146)
Cash flows from financing activities:
Proceeds from short-term borrowings
3,931,161
Repayments of short-term borrowings
(5,475,763)
Proceeds from long-term borrowings
18,139,350
Repayments of long-term borrowings
(13,348,277)
Payment of lease liabilities
(597,221)
Guarantee deposits received (refunded)
53,268
Cash dividends
-
Repurchase of treasury shares
-
Net change of non-controlling interests and others
1,072
Net cash provided by financing activities
2,703,590
Effect of exchange rate change on cash and cash equivalents
(917,487)
Net increase in cash and cash equivalents
9,824,915
Cash and cash equivalents at January 1
80,449,772
Cash and cash equivalents at December 31
$
90,274,687

2019
(3,668,175)
3,970,809
(47,182)
-
-
904,050
(29,546,642)
170,880
49,670
(1,711)
55,945
-
(28,112,356)
2,576,584
(1,388,334)
79,880,000
(53,378,766)
(694,922)
(1,828)
(4,812,122)
(1,013,423)
(425,122)
20,742,067
(2,073,874)
11,286,476
69,163,296
80,449,772

See accompanying notes to consolidated financial statements.

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

Notes to Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

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

1. Organization

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

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

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

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

2. The Authorization of Financial Statements

These consolidated financial statements were approved and authorized for issue by the Board of Directors of AUO on February 3, 2021.

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

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

The Company has adopted the amendments to the International Financial Reporting Standards, International Accounting Standards, IFRIC Interpretations, and SIC Interpretations (collectively, “IFRSs”) with effective date from January 1, 2020. The adoption does not have a material impact on the Company’s consolidated financial statements.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(2) Impact of the IFRSs endorsed by the FSC but not yet effective

The Company assesses that the adoption of the following amendments to the IFRSs, effective for annual period beginning on January 1, 2021, would not have a material impact on its consolidated financial statements.

●Amendments to IFRS 4, Extension of the Temporary Exemption from Applying IFRS 9
－
●Amendments to IFRS 9, IAS39, IFRS7, IFRS 4 and IFRS 16, Interest Rate Benchmark Reform Phase 2
(3) The IFRSs issued by International Accounting Standards Board (“IASB”) but not yet endorsed by the FSC

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

●Annual Improvements to IFRSs 2018–2020
●Amendments to IFRS 3, Reference to the Conceptual Framework
●Amendments to IFRS 10 and IAS 28, Sale or Contribution of Assets between an Investor and its Associate or Joint Venture
●IFRS 17, Insurance Contracts and amendments to IFRS 17, Insurance Contracts
●Amendments to IAS 1, Classification of Liabilities as Current or Non-current
－
●Amendments to IAS 16, Property, Plant and Equipment Proceeds before Intended Use
－
●Amendments to IAS 37, Onerous Contracts Cost of Fulfilling a Contract

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

4. Summary of Significant Accounting Policies

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

(1) Statement of compliance

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(2) Basis of preparation

a. Basis of measurement

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

(i) Financial instruments at fair value through profit or loss (including derivative financial instruments) (Note 6(2));
(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 each individual consolidated entity is determined based on the primary economic environment in which the entity operates. The Company’ s consolidated financial statements are presented in New Taiwan Dollar (“ NTD” ), which is also AUO’ s functional currency. All financial information presented in NTD has been rounded to the nearest thousand, unless otherwise noted.

(3) Basis of consolidation

a. Principle of preparation of the consolidated financial statements

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

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

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

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

Name of Investor	Name of Subsidiary	Main Activities and Location	Percentage of Ownership (%)
			December 31, 2020 December 31, 2019
AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO and ADCM AUO, Konly and Ronly Konly ADHLD ADSG	AU Optronics (L) Corp. (AULB) Konly Venture Corp. (Konly) Ronly Venture Corp. (Ronly) Space Money Inc. (SMI) U-Fresh Technology Inc. (UTI) ComQi Ltd. (CQIL) AU Optronics Europe B.V. (AUNL) AUO Crystal Corp. (ACTW) AUO Display Plus Corporation (ADP) Da Ping Green Energy Corporation (DPGE) AUO Health Corporation (AHTW) AUO Digitech (CAYMAN) Limited (ADCM) AUO Digitech Holding Limited (ADHLD) Darwin Precisions Corporation (DPTW) AUO Education Service Corp. (AUES) AU Digitech Pte. Ltd. (ADSG) AUO Digitech (Suzhou) Co., Ltd. (ADSZ)	Holding company (Malaysia) Investment (Taiwan ROC) Investment (Taiwan ROC) Sales and leasing activities (Taiwan ROC) Construction project and related project management (Taiwan ROC) Holding company (Israel) Sales and sales support activities (Netherlands) Manufacturing and sales company (Taiwan ROC) Research and development and sales activities (Taiwan ROC) Renewable energy power generation (Taiwan ROC) Manufacturing, development and sales company (Taiwan ROC) Holding company (Samoa) Holding company (Samoa) Manufacturing and sales company (Taiwan ROC) Leasing and service company (Taiwan ROC) Holding company (Singapore) Management consulting (PRC)	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 (1) - 100.00 (1) - 100.00 (1) - 100.00 (1) - 100.00 (1) - 41.05 (2) 41.05 (2) 100.00 (1) - 100.00 (1) - 100.00 (1) -

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location	Percentage of Ownership (%)
			December 31, 2020 December 31, 2019
ACTW ACTW SDMC AULB AULB AULB AULB AULB AULB AULB AULB AULB AULB AULB AULB AULB AULB and DPTW AUSG AUSG ADPNL ADPNL AUXM	Sanda Materials Corporation (SDMC) AUO Crystal (Malaysia) Sdn. Bhd. (ACMK) M.Setek Co., Ltd. (M.Setek) AU Optronics Corporation America (AUUS) AU Optronics Corporation Japan (AUJP) AU Optronics Korea Ltd. (AUKR) AU Optronics Singapore Pte. Ltd. (AUSG) AU Optronics (Czech) s.r.o. (AUCZ)(3) AU Optronics (Shanghai) Co., Ltd. (AUSH) AU Optronics (Xiamen) Corp. (AUXM) AU Optronics (Suzhou) Corp., Ltd. (AUSZ) AU Optronics Manufacturing (Shanghai) Corp. (AUSJ) AU Optronics (Slovakia) s.r.o. (AUSK) AFPD Pte., Ltd. (AUST) AU Optronics (Kunshan) Co., Ltd. (AUKS) a.u. Vista Inc. (AUVI) BriView (L) Corp. (BVLB) AUO Green Energy America Corp. (AEUS) AUO Display Plus Netherlands B.V. (ADPNL, formerly AUO Green Energy Europe B.V. (AENL)) AUO Display Plus America Corp. (ADPUS) AUO Display Plus Japan Corp. (ADPJP) BriView (Xiamen) Corp. (BVXM)	Holding company (Taiwan ROC) Manufacturing and sales company (Malaysia) Manufacturing and sales company (Japan) Sales and sales support activities (United States) Sales support activities (Japan) Sales support activities (South Korea) Holding company and sales support activities (Singapore) Assembly activities (Czech Republic) Sales support activities (PRC) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing and leasing activities (PRC) Repairing activities (Slovakia Republic) Manufacturing company (Singapore) Manufacturing and sales company (PRC) Research and development and IP related business (United States) Holding company (Malaysia) Sales support activities (United States) Holding and manufacturing company and sales support activities (Netherlands) Sales and sales support activities (United States) Sales support activities (Japan) Manufacturing and sales company (PRC)	100.00 100.00 100.00 100.00 99.9991 99.9991 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 51.00 51.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 (1) - 100.00 (1) - 100.00 100.00

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location	Percentage of Ownership (%)
			December 31, 2020 December 31, 2019
AUSH AUSH AUSH AUSH UFSZ CQIL CQHLD CQHLD CQHLD CQUS CQUS DPTW DPTW DPTW FHVI FHVI FHVI FFMI FTMI FWSA and FTMI PMSA	AUO Care Information Tech. (Suzhou) Co., Ltd. (A-Care) U-Fresh Technology (Suzhou) Co., Ltd. (UFSZ) Edgetech Data Technologies (Suzhou) Corp., Ltd. (EDT) Mega Insight Smart Manufacturing (Suzhou) Corp., Ltd. (MIS) U-Fresh Environmental Technology (Shandong) Co., Ltd. (UFSD) ComQi Holdings Ltd. (CQHLD) ComQi UK Ltd. (CQUK) ComQi Inc. (CQUS) ComQi Canada Inc. (CQCA) JohnRyan Limited (JRUK) JohnRyan Inc. (JRUS) Darwin Precisions (L) Corp. (DPLB) Forhouse International Holding Ltd. (FHVI) Forefront Corporation (FFMI) Fortech International Corp. (FTMI) Forward Optronics International Corp. (FWSA) Prime Forward International Ltd. (PMSA) Forhouse Electronics (Suzhou) Co., Ltd. (FHWJ) Fortech Electronics (Suzhou) Co., Ltd. (FTWJ) Suzhou Forplax Optronics Co., Ltd. (FPWJ) Fortech Electronics (Kunshan) Co., Ltd. (FTKS)	Intelligent health care services (PRC) Construction project and related project management (PRC) Integration service of software and hardware (PRC) Development and licensing of software (PRC) Construction project and related project management (PRC) Holding company (United Kingdom) Sales support activities (United Kingdom) Sales company (United States) Research and development activities (Canada) Development and sales activities (United Kingdom) Development and sales activities (United States) Holding company (Malaysia) Holding company (BVI) Holding company (Mauritius) Holding company (Mauritius) Holding company (Samoa) Holding company (Samoa) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing, sales and trading company (PRC) Manufacturing and sales company (PRC)	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of Investor	Name of Subsidiary	Main Activities and Location	Percentage of Ownership (%)
			December 31, 2020 December 31, 2019
DPLB DPLB DPHK DPHK BVLB	Darwin Precisions (Hong Kong) Limited (DPHK) Darwin Precisions (Slovakia) s.r.o. (DPSK) Darwin Precisions (Suzhou) Corp. (DPSZ) Darwin Precisions (Xiamen) Corp. (DPXM) BriView (Hefei) Co., Ltd. (BVHF)	Holding company (Hong Kong) Manufacturing and sales company (Slovakia Republic) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC) Manufacturing and sales company (PRC)	100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00 100.00

Note 1: ADP was incorporated in May 2020. DPGE, ADCM and ADHLD were incorporated in August 2020. AHTW was incorporated in September 2020. ADSG and ADPUS were incorporated in October 2020. ADPJP was incorporated in November 2020. AUES and ADSZ were incorporated in December 2020.
Note 2: Although the Company did not own more than 50% of the DPTW’s ownership interests, it was considered to have de facto control over the main operating policies of DPTW. As a result, DPTW was accounted for as a subsidiary of the Company.

Note 3: As of December 31, 2020, the liquidation of AUCZ is still in process.

(4) Foreign currency transactions and operations
a. Transactions in foreign currencies are translated to the respective functional currencies of the individual entities of the Company at exchange rates at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies at the reporting date are retranslated to the functional currency at the exchange rate at that date and the resulting exchange differences are included in profit or loss for the year. Non-monetary assets and liabilities denominated in foreign currencies that are measured at fair value are retranslated to the functional currency at the exchange rate at the date when the fair value was determined. The resulting exchange differences are included in profit or loss for the year except for those arising from the retranslation of non-monetary items in respect of which gains and losses are recognized directly in other comprehensive income, in which case, the exchange differences are also recognized directly in other comprehensive income. Non-monetary items in foreign currencies that are measured at historical cost are translated using the exchange rate at the date of the transaction.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

An asset is classified as current when:

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

All other assets are classified as non-current.

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

All other liabilities are classified as non-current.

(6) Cash and cash equivalents

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(7) Financial instruments

a. Financial assets

(i) Classification of financial assets

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

(a) Financial assets at amortized cost

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

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

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

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

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

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

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

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

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

(iii) De-recognition of financial assets

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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.

(b) Other financial liabilities

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

(ii) De-recognition of financial liabilities

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

c.
Offsetting of financial assets and liabilities

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(8) Inventories

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

(9) Investments in associates and joint ventures

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

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

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

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated 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 consolidated financial statements only to the extent of interests in the associate or joint venture that are not related to the Company.

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

(10) Investment property

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(11) Property, plant and equipment
a. Recognition and measurement

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

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

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

b. Subsequent costs

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

c. Depreciation

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

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

Except for land, which is not depreciated, the estimated useful lives of the assets are as follows:

(i) Buildings: 20~50 years
(ii) Machinery and equipment: 3~10 years
(iii) Other equipment: 3~6 years

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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.

(12) Leases
a. Identifying a lease

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

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

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

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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.

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

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

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

As a lessor

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

(13) Intangible assets
a. Goodwill

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

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

b. Research and development

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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
(vi) its ability to measure reliably the expenditure attributable to the intangible asset during its development.

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

c.
Other intangible assets

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

d. Subsequent expenditure

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

Amortization

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(14) Impairment – non-financial assets

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

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

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

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

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

(15) Provisions

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

a. Warranties

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. Decommissioning obligation

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

c. Litigation

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

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

(16) Treasury shares

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

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

(17) Revenue from contracts with customers

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

a. Sales of goods

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

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

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

The Company provides standard warranties for goods sold and has obligation to refund payments for defective goods, in which the Company has recognized provisions for warranties to fulfill the obligation. Refer to Note 4(15) for further details.

b. Construction contracts

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

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

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

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Company provides standard warranties for construction contracts and has recognized provisions for warranties to fulfill the obligation. Refer to Note 4(15) 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.

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

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

b. Grants related to the purchase of assets

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

c. Other grants

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

(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.

b. Defined benefit plans

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

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

c. Short-term employee benefits

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

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

(20) Share-based payment arrangements

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

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

(21) Income taxes

Income tax expense comprises current and deferred taxes.

a. Current taxes

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. Deferred taxes

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

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

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

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

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

(22) Business combinations

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

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

(23) Earnings (loss) per share

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

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

(24) Operating segments

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

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

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

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

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

(2) Impairment of goodwill

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

(3) Recognition of deferred tax assets

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

(4) Valuation of inventories

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

6. Description of Significant Accounts

(1) Cash and Cash Equivalents

Cash on hand, demand deposits and checking accounts Time deposits Government bonds with reverse repurchase agreements	December 31, 2020 $ 43,921,304 46,353,383 - $ 90,274,687	December 31, 2019
		46,290,722 34,124,011 35,039
		80,449,772

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Refer to Note 6(27) for the disclosure of credit risk, currency risk and sensitivity analysis of the financial instruments of the Company.

As at December 31, 2020 and 2019, no cash and cash equivalents were pledged with banks as collaterals.

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

Financial assets mandatorily measured at FVTPL: Foreign currency forward contracts Structured deposits Financial liabilities held for trading: Foreign currency forward contracts	December 31, 2020 $ 112,319 555,739 $ 668,058 $ 170,956	December 31, 2019
		42,815 1,478,591
		1,521,406
		18,859

The Company entered into derivative contracts to manage the exposure to currency risk arising from operating activities. Refer to Note 6(27) for the disclosure of the Company’s credit and currency risks related to financial instruments.

As at December 31, 2020 and 2019, the Company’s outstanding foreign currency forward contracts were as follows:

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

	December 31, 2019
Contract item Sell USD / Buy NTD Sell USD / Buy JPY Sell USD / Buy CNY Sell USD / Buy SGD Sell USD / Buy MYR	Maturity date Contract amount Jan. 2020 USD 176,600 / NTD 5,319,611 Jan. 2020~Apr. 2020 USD 47,292 / JPY 5,150,510 Jan. 2020~Jun. 2020 USD 61,500 / CNY 432,823 Jan. 2020~Feb. 2020 USD 39,276 / SGD 53,372 Jan. 2020~Mar. 2020 USD 703 / MYR 2,905

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

	December 31, 2019
Contract item Sell CNY / Buy USD Sell EUR / Buy JPY Sell HKD / Buy USD	Maturity date Contract amount Feb. 2020~Mar. 2020 CNY 1,935,305 / USD 276,672 Jan. 2020~Feb. 2020 EUR 23,000 / JPY 2,788,285 Jan. 2020 HKD 60,177 / USD 7,721

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

Investments in equity instruments at FVTOCI: Equity securities – listed stocks Equity securities – non-listed stocks	December 31, 2020 $ 294,668 328,156 $ 622,824	December 31, 2019
		7,356,501 188,670
		7,545,171

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

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

If the value of these equity securities appreciates or depreciates by 10% at the reporting date, other comprehensive income would increase or decrease by $62,282 thousand and $754,517 thousand for the years ended December 31, 2020 and 2019, respectively.

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

Notes receivable Accounts receivable Less: loss allowance Notes and accounts receivable, net Accounts receivable from related parties, net	December 31, 2020 $ 179,411 46,635,061 (19,516) $ 46,794,956 $ 44,718,800 $ 2,076,156	December 31, 2019 128,666 31,976,246 (17,738) 32,087,174 30,308,675 1,778,499

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

December 31, 2020	December 31, 2020
Carrying amount of notes and accounts receivable Weighted- average loss rate $ 45,814,603 0.00% 961,549 0.01% 17,189 0.00% 4,176 56.54% $ 46,797,517 December 31, 2019		Loss allowance for lifetime expected credit losses
		88 112 - 2,361
		2,561

Carrying amount of notes and accounts receivable $ 31,061,173 1,010,918 15,233 $ 32,087,324	Weighted- average loss rate 0.00% 0.00% 0.95%	Loss allowance for lifetime expected credit losses
		1 4 145
		150

In addition, there was objective evidence indicating that, under reasonable expectation, some of the notes and accounts receivable would not be recovered in total; therefore, the Company recognized a loss allowance of $16,955 thousand and $17,588 thousand as of December 31, 2020 and 2019, respectively.

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

Balance at beginning of the year Provisions (reversals) charged to (against) expense Write-offs Effect of changes in foreign currency exchange rates Balance at end of the year	For the years ended December 31, 2020 2019 $ 17,738 50,853 2,333 (14,543) (663) (18,404) 108 (168) $ 19,516 17,738
	2020 $ 17,738 2,333 (663) 108 $ 19,516

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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Information about the Company’s exposure to credit risk is included in Note 6(27).

As at December 31, 2020, 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:

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 (in thousands) Principal terms NTD 500,000 See Notes(a)~(d) NTD 1,500,000 See Notes(a)~(d) NTD 1,520,000 See Notes(a)~(d) USD 14,000 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 1.07% to 2.44%.
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

Finished goods Work-in-progress Raw materials	December 31, 2020 $ 8,903,882 11,259,938 6,589,581 $ 26,753,401	December 31, 2019 9,005,001 9,537,700 4,917,371
		23,460,072

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

For the years ended December 31, 2020 and 2019, the amounts recognized as cost of sales in relation to inventories were $248,190,042 thousand and $268,335,751 thousand, respectively. The net of provisions (reversals) for inventories written down (increased) to net realizable value, which were also included in cost of sales, amounted to $(1,952,186) thousand and $33,451 thousand for the years ended December 31, 2020 and 2019, respectively.

As at December 31, 2020 and 2019, none of the Company’s inventories was pledged as collateral.

(6) Investments in Equity-accounted Investees

Associates Joint ventures	December 31, 2020 $ 19,180,565 283,513 $ 19,464,078	December 31, 2019
		5,820,759 178,720
		5,999,479

a.	Associates Name of associate Qisda Lextar Electronics Corp. (“Lextar”) ADLINK Technology Inc. (“ADLINK”) Star Shining Energy Corporation. (“SSEC”) Raydium Semiconductor Corporation (“Raydium”) Daxin Materials Corp. (“Daxin”) Star River Energy Corp. (“SREC”) Others	Principal activities Manufacturing and sales of LCD products and projectors; providing medical services Design, manufacturing, and sales of InGaN epi wafers and chips, and light emitting diode packages and modules Manufacturing and sales of hardware, software and peripheral devices of industrial computers Investment IC design Research, manufacturing, and sales of display related chemicals Investment	Principal December 31, 2020 place of business Amount Ownership interest % Taiwan ROC $ 10,220,729 18 Taiwan ROC 2,853,386 28 Taiwan ROC 2,336,445 20 Taiwan ROC 1,689,192 33 Taiwan ROC 809,137 17 Taiwan ROC 717,953 25 Taiwan ROC 447,171 34 106,552 $ 19,180,565	December 31, 2019
				Amount Ownership interest % - - 2,909,521 27 - - 1,015,512 33 740,504 17 688,813 25 444,550 34 21,859 5,820,759

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated 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.

associates.
The Company’s share of associates’: Profit Other comprehensive income (loss) Total comprehensive income (loss)	For the years ended December 31, 2020 2019 $ 122,248 195,865 (46,097) (35,224) $ 76,151 160,641
	2020 $ 122,248 (46,097) $ 76,151

On February 5, 2020, AUO’ s Board of Directors resolved to acquire common shares of ADLINK through tender offer. As of December 31, 2020, the Company holds a total of 43,501 thousand common shares of ADLINK for totaling of 20% equity interest in ADLINK.

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

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

b. Joint ventures

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

The Company’s share of joint ventures’: Loss Other comprehensive income (loss) Total comprehensive income (loss)	For the years ended December 31, 2020 2019 $ (4,512) (45,958) - - $ (4,512) (45,958)
	2020 $ (4,512) - $ (4,512)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As at December 31, 2020 and 2019, none of the Company’ s investments in equity-accounted investees was pledged as collateral.

(7) Acquisition of Business

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

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

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

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

a. Consideration transferred (translated at the exchange rates on the balance sheet date)

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

As of December 31, 2020, there were no changes to the amount of contingent consideration recognized, the range of estimation results and the assumptions used to estimate the contingent consideration.

b. Identifiable assets acquired and liabilities assumed

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

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

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

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

The Company will continue to review the aforesaid matters during the measurement period. If new information obtained within one year from the acquisition date about facts and circumstances that existed at the acquisition date which leads to an adjustment to the above provisional amounts, or any additional provisions as at the acquisition date, then the accounting for the acquisition will be revised.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(8) Property, Plant and Equipment

For theyear ended December 31, 2020 Balance, Beginning of Year Additions (deductions) Disposal or write off Reclassification, effect of change in exchange rate and others Cost: Land $ 8,858,648 - - (481) Buildings 119,697,249 (18,363) (272) 428,586 Machinery and equipment 841,581,837 1,352,493 (16,215,872) 8,137,263 Other equipment 35,834,437 4,778,970 (3,519,978) 1,066,449 1,005,972,171 6,113,100 (19,736,122) 9,631,817 Accumulated depreciation and impairment loss: Buildings 39,170,748 2,932,678 (272) (75,198) Machinery and equipment 737,292,828 25,696,536 (16,158,158) (868,809) Other equipment 27,646,410 6,123,266 (3,515,871) (187,827) 804,109,986 34,752,480 (19,674,301) (1,131,834) Prepayments for purchase of land and equipment, and construction in progress 4,872,358 6,859,277 (3,004) (10,173,150) Net carrying amounts $ 206,734,543 For theyear ended December 31, 2019 Balance, Beginning of Year Adjustments on initial application of new standards Additions Disposal or write off Reclassification, effect of change in exchange rate and others Cost: Land $ 8,859,323 - - - (675) Buildings 121,219,360 - 325,184 (9,075) (1,838,220) Machinery and equipment 835,933,620 - 1,320,958 (9,123,165) 13,450,424 Other equipment 35,129,124 (2,620) 4,910,462 (5,764,497) 1,561,968 1,001,141,427 (2,620) 6,556,604 (14,896,737) 13,173,497 Accumulated depreciation and impairment loss: Buildings 36,031,326 - 4,195,265 (9,021) (1,046,822) Machinery and equipment 721,833,348 - 27,348,497 (9,080,856) (2,808,161) Other equipment 28,090,987 (855) 5,575,376 (5,747,362) (271,736) 785,955,661 (855) 37,119,138 (14,837,239) (4,126,719) Prepayments for purchase of land and equipment, and construction in progress 6,400,709 - 18,469,787 (4,837) (19,993,301) Net carrying amounts $ 221,586,475			For theyear ended December 31, 2020	For theyear ended December 31, 2020	For theyear ended December 31, 2020	For theyear ended December 31, 2020
	Balance, Beginning of Year $ 8,858,648 119,697,249 841,581,837 35,834,437 1,005,972,171 39,170,748 737,292,828 27,646,410 804,109,986 4,872,358 $ 206,734,543		Additions (deductions) Disposal or write off - - (18,363) (272) 1,352,493 (16,215,872) 4,778,970 (3,519,978) 6,113,100 (19,736,122) 2,932,678 (272) 25,696,536 (16,158,158) 6,123,266 (3,515,871) 34,752,480 (19,674,301) 6,859,277 (3,004) For theyear ended December 31, 2019			Reclassification, effect of change in exchange rate and others (481) 428,586 8,137,263 1,066,449 9,631,817 (75,198) (868,809) (187,827) (1,131,834) (10,173,150)	Balance, End of Year 8,858,167 120,107,200 834,855,721 38,159,878
	$ $
							1,001,980,966
							42,027,956 745,962,397 30,065,978
							818,056,331
							1,555,481
							185,480,116

Balance, Beginning of Year		Adjustments on initial application of new standards - - - (2,620) (2,620) - - (855) (855) -		Additions	Disposal or write off - (9,075) (9,123,165) (5,764,497) (14,896,737) (9,021) (9,080,856) (5,747,362) (14,837,239) (4,837)	Reclassification, effect of change in exchange rate and others (675) (1,838,220) 13,450,424 1,561,968 13,173,497 (1,046,822) (2,808,161) (271,736) (4,126,719) (19,993,301)	Balance, End of Year
				- 325,184 1,320,958 4,910,462			8,858,648 119,697,249 841,581,837 35,834,437
				6,556,604			1,005,972,171
				4,195,265 27,348,497 5,575,376			39,170,748 737,292,828 27,646,410
				37,119,138			804,109,986
				18,469,787			4,872,358
							206,734,543

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As of December 31, 2020 and 2019, 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 2020 and 2019, the Company wrote down certain long-term assets with extremely low capacity utilization associated with its display segment and recognized impairment losses of $396,308 thousand and $52,829 thousand, respectively.

In 2020 and 2019, the Company wrote down certain long-term assets with extremely low capacity utilization associated with its energy segment and recognized impairment losses of $31 thousand and $14,949 thousand, respectively.

In recent years, the sharp fluctuations in solar industry have led to an oversupply capacity worldwide, which in turn made ACTW’ s overall capacity utilization being low. Therefore, the management performed an impairment assessment of ACTW and its subsidiaries, as a CGU, over its long-term assets with recoverable amount determined based on the value in use. Based on the assessment performed as at December 31, 2019, the carrying amount of the CGU was determined to be higher than its estimated recoverable amount; consequently, an impairment loss of $2,232,739 thousand was recognized. The estimated recoverable amount of 2019 was calculated by pre-tax discount rate of 10.63%.

Impairment losses as mentioned above were recognized in non-operating income and expenses in the consolidated statements of comprehensive income.

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

Capitalized borrowing costs The interest rates applied for the capitalization	For the years ended December 31,	For the years ended December 31,
	2020 $ 38,171 0.80%~ 1.77%	2019
		141,966
		1.07%~ 5.71%

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(9) Lease Arrangements

a. Lessee

(i) Right-of-use assets

Carrying amount of right-of-use assets Land Buildings Other equipment Additions to right-of-use assets Depreciation charge for right-of-use assets Land Buildings Other equipment	December 31, 2020 December 31, 2019 $ 10,891,245 11,595,815 364,442 575,724 21,666 36,229 $ 11,277,353 12,207,768 For the years ended December 31,	December 31, 2019
		11,595,815 575,724 36,229
		12,207,768
		2019
		192,655
		566,982 238,969 66,590
		872,541

(ii) Lease liabilities

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

December 31, 2019	December 31, 2019
Future minimum lease payments $ 879,518 2,874,682 9,588,087 $ 13,342,287	Interests Present value of minimum lease payments 197,151 682,367 678,576 2,196,106 1,375,483 8,212,604 2,251,210 11,091,077 $ 682,367 $ 10,408,710	Present value of minimum lease payments
		682,367 2,196,106 8,212,604
		11,091,077

(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 2020 and 2019, AUO modified some of its lease contracts due to the decrease of the scope of the lease, and therefore, the carrying amounts of the right-of-use assets were reduced by $147,371 thousand and $1,064,094 thousand, respectively. The difference between the remeasurement of the lease liability and the reduction of the right-of-use asset was recognized in profit or loss.

(iv) Sublease of right-of-use assets

The Company subleased part of its right-of-use assets under operating leases. In 2020 and 2019, income from sublease were $6,136 thousand and $8,199 thousand, respectively. Right-of-use assets that meet the definition of investment properties are reclassified to investment properties. Refer to Note 6(10) for further information on investment properties.

(v) Additional lease information

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

Expenses relating to short-term leases Expenses relating to leases of low-value assets, excluding short-term leases of low-value assets Variable lease payments not included in the measurement of the lease liability COVID-19-related rent concessions (recognized as deduction of rent expense)	For the years ended December 31,	For the years ended December 31,
	2020 $ 9,551 $ 533 $ 4,694 $ 35,167	2019
		15,832
		315
		(9)
		-

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Total cash outflow for the Company’s leases in which it acts as a lessee for the years ended December 31, 2020 and 2019 were $794,918 thousand and $920,666 thousand, respectively.

b. Lessor

The Company leased out its investment properties and part of its land, buildings and equipment and did not transfer substantially all the risks and rewards incidental to their ownership to the lessee, therefore, those leases were recognized as operating leases. Refer to Note 6(22) for the information of rental income from operating leases. In addition, the direct costs relating to the aforementioned operating leases for the years ended December 31, 2020 and 2019 were $1,739 thousand and $3,007 thousand, respectively.

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

Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 onwards Total undiscounted operating lease receivable	December 31, 2020 $ 120,354 108,492 108,211 105,765 105,765 1,973,885 $ 2,522,472	December 31, 2019 110,905 110,316 110,025 106,272 105,721 2,079,849 2,623,088

(10) Investment Property

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

For the year ended December 31, 2019

Cost: Land Buildings Right-of-use assets Accumulated depreciation: Buildings Right-of-use assets Net carrying amounts Fair Value	Balance, Beginning of Year $ 730,306 - - $ 730,306 $ - - $ - $ 730,306 $ 2,252,170	Additions - - - - 7,363 302 7,665	Reclassification and effect of change in exchange rate (667) 1,418,652 28,570 1,446,555 612,618 1,448 614,066	Balance, End of Year
				729,639 1,418,652 28,570
				2,176,861
				619,981 1,750
				621,731
				1,555,130
				4,057,848

In order to enhance the utilization of the Company’s assets and to increase its working capital, AUSJ leased its buildings and right-of-use assets to third party in 2019, and reclassified the aforementioned assets totaling $832,886 thousand from property, plant and equipment and right-of-use assets to investment property.

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

The fair value measurement was categorized as a level 3 fair value based on the inputs in the valuation techniques used. Income approach determines the fair value of the investment property based on the projected cash flows from the Company’ s estimated future rentals collected and discounted using the capitalization rate of the property. Sales comparison approach is through comparison, analysis, adjustment and other means of value for comparable properties to estimate the value of the investment property. Land development analysis approach determine the fair value of investment property based on the value prior to development or construction, after deducting the direct cost, indirect cost, capital interest and profit during the development period, and also consider total sales price of properties after completion of development or construction. It also incorporates the possibility of changes in utility of land through development or improvement in accordance with legal use and density of the land. The overall capital interest rate and the rate of return used in the valuation were 2.53% and 15%, respectively. The capitalization rate was ranging from 8.00% to 12.00%.

As at December 31, 2020 and 2019, there was no investment property that was pledged as collateral.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(11) Intangible Assets

For the year ended December 31, 2020

	For the year ended December 31, 2020	For the year ended December 31, 2020	For the year ended December 31, 2020	20
Cost: Goodwill Patent and technology fee Others Accumulated amortization and impairment loss: Goodwill Patent and technology fee Others Net carrying amounts Cost: Goodwill Patent and technology fee Others Accumulated amortization and impairment loss: Goodwill Patent and technology fee Others Net carrying amounts	Balance, Beginning of Year Additions Effect of change in exchange rate Balance, End of Year $ 12,056,500 135,972 102 12,192,574 12,266,313 - 2,131 12,268,444 150,436 122,273 8 272,717 24,473,249 258,245 2,241 24,733,735 175,581 - - 175,581 11,338,906 256,996 636 11,596,538 150,436 10,186 (364) 160,258 11,664,923 267,182 272 11,932,377 $ 12,808,326 12,801,358 For the year ended December 31, 2019			Balance, End of Year
				12,192,574 12,268,444 272,717
				24,733,735
				175,581 11,596,538 160,258
				11,932,377
				12,801,358
		Additions - 1,711 - 1,711 - 436,815 127,871 564,686	Effect of change in exchange rate - (7,140) - (7,140) - (1,178) - (1,178)	Balance, End of Year
				12,056,500 12,266,313 150,436
				24,473,249
				175,581 11,338,906 150,436
				11,664,923
				12,808,326

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

The Company acquired goodwill and other intangible assets from the acquisition of business in February 2020. See Note 6(7) for further details.

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

Display business	December 31, 2020 $ 12,016,993	December 31, 2019
		11,880,919

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, 2020 and 2019 were 13.63% and 12.25%, respectively, based on industry weighted average cost of capital. The cash flow projections were determined based on the financial budgets approved by management covering the future five-year period and extrapolated with a steady annual terminal growth rate for subsequent years, which were negative 1% and negative 0.5% for the years ended December 31, 2020 and 2019, 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, 2020 and 2019, no impairment losses were recognized as the recoverable amount of the CGU was higher than its carrying value.

(12) Other Current Assets and Other Noncurrent Assets

Refundable and overpaid tax Refundable deposits Prepayments for equipment Prepayments for purchases Long-term receivables Others Less: current Noncurrent	December 31, 2020 December 31, 2019 $ 1,051,994 1,458,170 432,202 663,911 458,707 453,300 145,468 158,521 1,274 5,812 2,869,390 2,961,194 4,959,035 5,700,908 (3,179,879) (3,295,562) $ 1,779,156 2,405,346

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(13) Short-term Borrowings

Unsecured borrowings Unused credit facilities Interest rate range	December 31, 2020 $ 200,000 $ 29,045,922 0.97%~ 1.40%	December 31, 2019
		1,725,602
		37,982,721
		1.20%~ 4.35%

(14) Long-term Borrowings

Bank or agent bank Bank of Taiwan and others Bank of Taiwan and others Bank of Taiwan and others Bank of China and others Unsecured loans Secured loans Less: transaction costs Less: current portion Unused credit facilities Interest rate range	Durations From Feb. 2019 to Feb. 2024 From Mar. 2019 to Apr. 2023 From May 2017 to May 2022 From Nov. 2015 to Nov. 2023 From Apr. 2017 to Oct. 2025 From Apr. 2017 to Apr. 2032	December 31, 2020 $ 42,000,000 23,000,000 6,000,000 15,988,750 11,004,462 18,915,341 116,908,553 (313,584) 116,594,969 (16,771,441) $ 99,823,528 $ 54,131,575 0.75%~ 5.15%	December 31, 2019 42,000,000 23,000,000 10,000,000 21,500,826 8,050,310 7,671,932
			112,223,068 (254,676)
			111,968,392 (9,535,198)
			102,433,194
			32,265,575
			1.00%~ 5.43%

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, 2020.

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, 2020 and 2019, the Company complied with all financial covenants required under each of the loan agreements.

Refer to Note 6(27) for detailed information of exposures to interest rate, currency, and liquidity risks. Refer to Note 8 for assets pledged as collateral to secure the aforementioned long-term borrowings.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(15) Provisions

Balance at January 1, 2020 Additions (Reversals) Usage Effect of change in exchange rate Balance at December 31, 2020 Less: current Noncurrent Balance at January 1, 2019 Additions (Reversals) Usage Effect of change in exchange rate Balance at December 31, 2019 Less: current Noncurrent	Warranties(i) $ 1,292,246 347,491 (264,558) 148 1,375,327 (568,411) $ 806,916 $ 1,463,869 251,512 (422,976) (159) 1,292,246 (486,517) $ 805,729	Litigation, claims and others 469,312 (2,553) (33,992) (22,338) 410,429 (176,243) 234,186 1,074,180 (368,302) (220,182) (16,384) 469,312 (221,751) 247,561	Total 1,761,558 344,938 (298,550) (22,190) 1,785,756 (744,654) 1,041,102 2,538,049 (116,790) (643,158) (16,543) 1,761,558 (708,268) 1,053,290

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

(16) Employee Benefits

a. Defined benefit plans

Pursuant to the ROC Labor Standards Act, AUO 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 sixmonth period before the employee’s retirement. The funding of this retirement plan by AUO is contributed monthly based on a certain percentage of employees’ total salaries and wages. The fund is deposited with Bank of Taiwan.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

(i) Reconciliation for AUO’s and M.Setek’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 asset (liability)	December 31, 2020 $ (181,758) 256,878 $ 75,120	December 31, 2019 (3,155,988) 2,542,831 (613,157)

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

Present value of defined benefit obligation 2020 2019 $ (3,155,988) (3,257,962) (3,898) (4,104) (27,477) (39,337) 458,854 - - - 427,479 (43,441) - 89,851 (10,652) (206,995) 68,531 228,466 - - 57,879 111,322 - - 2,488,803 33,936 69 157 2,488,872 34,093 $ (181,758) (3,155,988)	Fair value of	Net defined benefit asset (liability) 2020 2019 (613,157) (890,689) (3,898) (4,104) (27,477) (39,337) 458,854 - 22,377 28,880 449,856 (14,561) - 89,851 (10,652) (206,995) 68,531 228,466 82,339 76,788 140,218 188,110 96,996 101,019 1,138 2,807 69 157 98,203 103,983 75,120 (613,157)	Net defined benefit asset (liability) 2020 2019 (613,157) (890,689) (3,898) (4,104) (27,477) (39,337) 458,854 - 22,377 28,880 449,856 (14,561) - 89,851 (10,652) (206,995) 68,531 228,466 82,339 76,788 140,218 188,110 96,996 101,019 1,138 2,807 69 157 98,203 103,983 75,120 (613,157)
2020 $ (3,155,988) (3,898) (27,477) 458,854 - 427,479 - (10,652) 68,531 - 57,879 - 2,488,803 69 2,488,872 $ (181,758)	2020 2,542,831 - - - 22,377 22,377 - - - 82,339 82,339 96,996 (2,487,665) - (2,390,669) 256,878	2020 (613,157) (3,898) (27,477) 458,854 22,377 449,856 - (10,652) 68,531 82,339 140,218 96,996 1,138 69 98,203 75,120
			(4,104) (39,337) - 28,880
			(14,561)
			89,851 (206,995) 228,466 76,788
			188,110
			101,019 2,807 157
			103,983
			(613,157)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iii) Plan assets

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

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

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

Discount rate Rate of increase in future salary	December 31, 2020 December 31, 2019 0.39%~0.50% 0.18%~0.88% 0.77%~4.49% 0.77%~4.49%

The Company expects to make no contribution to the defined benefit plans in the next year starting from January 1, 2021.

As at December 31, 2020, the weighted-average duration of the defined benefit obligation was between 5 years to 16 years.

b) Sensitivity analysis

Reasonably possible changes at December 31, 2020 and 2019 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, 2020 Changes in assumptions + 0.25% -0.25% $ (6,031) 6,328 $ 6,128 (5,870)	December 31, 2019 Changes in assumptions +0.25% -0.25% (150,970) 159,425 156,774 (148,385)
	+ 0.25% $ (6,031) $ 6,128	+0.25% (150,970) 156,774

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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, AUO and its subsidiaries located in the ROC contribute monthly at a rate of no less than six percent of the employees’ monthly salaries and wages to the employee’s individual pension fund account at the ROC Bureau of Labor Insurance. The Company’s foreign subsidiaries have set up their retirement plans, if necessary, based on their respective local government regulations.

AUO and its subsidiaries in the ROC have set up defined contribution plans in accordance with the Act. For the years ended December 31, 2020 and 2019, these companies set aside, $939,727 thousand and $977,908 thousand, respectively, of the pension costs under the pension plan to the ROC Bureau of Labor Insurance. Except for the aforementioned companies, other foreign subsidiaries recognized pension expenses of $569,187 thousand and $784,169 thousand for the years ended December 31, 2020 and 2019, respectively, for the defined contribution plans based on their respective local government regulations.

(17) Capital and Other Components of Equity

a. Common stock

AUO’ s authorized common stock, with par value of $10 per share, both amounted to $100,000,000 thousand as at December 31, 2020 and 2019.

AUO’s issued common stock, with par value of $10 per share, both amounted to $96,242,451 thousand as at December 31, 2020 and 2019.

On September 9, 2019, AUO’s Board of Directors approved the delisting of ADSs from the NYSE and trading on the OTC market. On and from October 1, 2019, AUO’s ADSs has begun trading on the OTC market. As of December 31, 2020, AUO has issued 28,060 thousand ADSs, which represented 280,599 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, 2020 $ 52,756,091 6,049,862 1,781,731 $ 60,587,684	December 31, 2019
		52,756,091 6,049,862 1,738,521
		60,544,474
		(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

c.

Retained earnings and dividend policy

In accordance with AUO’ s Articles of Incorporation, after payment of income taxes and offsetting accumulated deficits, the legal reserve shall be set aside until the accumulated legal reserve equals AUO’ s paid-in capital. In addition, a special reserve in accordance with applicable laws and regulations shall also be set aside or reversed. The remaining current-year earnings together with accumulated undistributed earnings from preceding years can be distributed according to relevant laws and AUO’s Articles of Incorporation.

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

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

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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AUO’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	Appropriation of earnings Dividends per share (NT$) $ 1,016,060 847,770 4,812,122 0.50 $ 6,675,952

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

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

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

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

d. Treasury shares

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

For the year ended December 31, 2020

For the yearended December 31, 2020	For the yearended December 31, 2020	For the yearended December 31, 2020	For the yearended December 31, 2020
Reason for reacquisition Number of shares, Beginning of Year Additions Reductions Number of shares, End of Year Transferring to employees 125,000 - - 125,000 For the yearended December 31, 2019
Reason for reacquisition Transferring to employees	Number of shares, Beginning of Year -	Additions 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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

e. Other components of equity

Balance at January 1, 2020 Foreign operations – foreign currency translation differences Net change in fair value of financial assets at FVTOCI Equity-accounted investees – share of other comprehensive income Cumulative unrealized gain of equity instruments transferred to retained earnings due to disposal Related tax Balance at December 31, 2020 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 Realized gain on sales of securities reclassified to profit or loss Related tax Balance at December 31, 2019	Cumulative translation differences $ (3,129,982) (26,626) - (49,783) - (129) $ (3,206,520) $ (1,449,910) (2,043,931) - (38,512) (9,098) 411,469 $ (3,129,982)	Unrealized gains (losses) on financial assets at FVTOCI 1,124,598 - 2,673,994 2,788 (3,865,163) - (63,783) 602,140 - 519,100 3,358 - - 1,124,598	Total (2,005,384) (26,626) 2,673,994 (46,995) (3,865,163) (129) (3,270,303) (847,770) (2,043,931) 519,100 (35,154) (9,098) 411,469 (2,005,384)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

f. Non-controlling interests, net of tax

Balance at beginning of the year Equity attributable to non-controlling interests: Loss for the year Adjustment of changes in ownership of investees Foreign currency translation differences, net of tax Unrealized gain on financial assets at FVTOCI Effect of acquisition of non-controlling interests Proceeds from subsidiaries capital increase and others Balance at end of the year	For the years ended December 31, 2020 2019 $ 11,304,909 14,415,973 (468,897) (2,414,158) - 111,056 146,951 (404,575) 2,712 - - (389,430) (1) (13,957) $ 10,985,674 11,304,909
	2020 $ 11,304,909 (468,897) - 146,951 2,712 - (1) $ 10,985,674

(18) Share-based Payments

ACTW Option Plan

(i) The key terms and conditions related to the grants under ACTW’ s employee stock option plan were disclosed as follows:

Plan 2014 Employee stock option plan	Grant date Sep. 1, 2014	Total number of options issued (units in thousands) 20	Contractual life of options Sep.1, 2014 – Aug. 31, 2019	Exercisable period Exercise price (per share) After Aug. 31, 2016 10

(ii) The related employee benefit expenses and capital surplus recognized on ACTW’s employee stock options both were nil for the year ended December 31, 2019.
(iii) The fair value of the employee stock options granted by ACTW was measured at the date of grant using the Binomial option pricing model. The valuation information was as follows:

Expected volatility Risk-free interest rate Expected duration Fair value at the grant date	2014 Employee Stock Option Plan
	38.88% 1.1648% 5 years 0.20 /per share

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iv) Information about ACTW’s stock options is as follows:

Outstanding at January 1 Options exercised Options expired Outstanding at December 31 Exercisable at December 31	For the year ended December 31, 2019 Weighted- average exercise price (per share) Number of options (shares) $ 10 13,291,000 10 (11,995,000) - (1,296,000) - - -
	Weighted- average exercise price (per share) $ 10 10 - -

(19) Revenue from Contracts with Customers

	For	the years ended December 31,	the years ended December 31,	the years ended December 31,
	2020	Total segments 90,143,926 89,841,727 41,955,508 19,724,027 29,290,193 270,955,381 70,477,336 41,888,242 77,422,244 22,784,935 35,350,178 23,032,446 270,955,381 33,213,909 237,741,472 270,955,381		2019
Display segment $ 89,796,921 84,666,944 41,955,024 19,218,501 26,166,171 $ 261,803,561 $ 70,477,336 41,888,242 77,422,244 22,784,935 35,350,178 13,880,626 $ 261,803,561 $ 33,213,909 228,589,652 $ 261,803,561	Energy segment 347,005 5,174,783 484 505,526 3,124,022 9,151,820 - - - - - 9,151,820 9,151,820 - 9,151,820 9,151,820		Display segment 97,084,436 78,394,325 38,526,625 19,877,671 22,784,165 256,667,222 74,896,756 39,522,268 69,305,509 28,848,032 33,491,154 10,603,503 256,667,222 33,142,985 223,524,237 256,667,222	Energy segment 1,277,799 4,835,269 7,666 1,046,332 4,957,406 12,124,472 - - - - - 12,124,472 12,124,472 - 12,124,472 12,124,472	Total segments
					98,362,235 83,229,594 38,534,291 20,924,003 27,741,571
					268,791,694
					74,896,756 39,522,268 69,305,509 28,848,032 33,491,154 22,727,975
					268,791,694
					33,142,985 235,648,709
					268,791,694

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(i) Displays for public information that previously included in products for televisions were reclassified to products for PID and general display.
(ii) Including displays for public information and general utilization.
(iii) Including sales of solar-related products, raw materials and components and from products for other applications and service charges.
(20) Remuneration to Employees and Directors

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

AUO did not accrue remuneration to employees and directors due to the loss making position for the year ended December 31, 2019. AUO accrued remuneration to employees based on the profit before income tax excluding the remuneration to employees and directors for the period, multiplied by the percentage resolved by Board of Directors. For the year ended December 31, 2020, AUO estimated the remuneration to employees amounting to $253,493 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 consolidated financial statements are authorized for issue, the differences are accounted for as a change in accounting estimate and adjusted prospectively to next year’s profit or loss.

Remuneration to employees and directors for 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.

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(21) Additional Information of Expenses by Nature

Employee benefits expenses: Salaries and wages Labor and health insurances Retirement benefits Other employee benefits Depreciation Amortization		For the years ended December 31,	For the years ended December 31,	For the years ended December 31,	For the years ended December 31,
		2020	Total 30,381,740 1,723,693 1,059,058 3,790,437 35,130,348 267,182		2019
	Recognized in cost of sales $22,698,460 1,274,706 829,019 3,234,404 30,371,202 256,996	Recognized in operating expenses 7,683,280 448,987 230,039 556,033 4,759,146 10,186		Recognized in cost of sales 23,538,794 1,439,339 1,399,297 3,075,827 31,599,910 436,815	Recognized in operating expenses Total 7,286,093 30,824,887 477,905 1,917,244 377,341 1,776,638 559,544 3,635,371 4,093,123 35,693,033 127,871 564,686

(22) Non-Operating Income and Expenses
a. Interest income

Interest income on bank deposits Interest income on government bonds with reverse repurchase agreements and others b. Other income	For the years ended December 31,	For the years ended December 31,
	2020 $ 522,158 10,894 $ 533,052	2019
		879,053 6,467
		885,520

Rental income, net Dividend income Grants Others	For the years ended December 31,	For the years ended December 31,
	2020 $ 494,348 261,382 2,349,464 653,662 $ 3,758,856	2019
		488,811 295,575 2,734,987 915,378
		4,434,751

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

c. Other gains and losses

Foreign exchange losses, net Gains on valuation of financial instruments at FVTPL, net Gains (losses) on disposals of investments and financial assets, 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, 2020 2019 $ (584,821) (168,499) 312,561 381,620 159 (13,154) 58,558 106,546 (396,339) (2,298,646) (151,261) 396,519 $ (761,143) (1,595,614)
	2020 $ (584,821) 312,561 159 58,558 (396,339) (151,261) $ (761,143)

d. Finance costs

nterest expense on bank borrowings nterest expense on lease liabilities Finance expense and other interest expense	For the years ended December 31,	For the years ended December 31,
	2020 $ 2,597,055 182,919 163,898 $ 2,943,872	2019
		2,714,080 209,607 327,683
		3,251,370

(23) Income Taxes

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

a. Income tax expense (benefit)

The components of income tax expense (benefit) for the years ended December 31, 2020 and 2019 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	For the years ended December 31, 2020 2019 $ 712,966 745,844 96,592 (258,671) 809,558 487,173 (1,086,248) 584,559 156,934 682,930 (929,314) 1,267,489 $ (119,756) 1,754,662
	2020 $ 712,966 96,592 809,558 (1,086,248) 156,934 (929,314) $ (119,756)

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Income taxes expense (benefit) recognized directly in other comprehensive income for the years ended December 31, 2020 and 2019 were as follows:

Items that will never be reclassified to profit or loss: Remeasurement of defined benefit obligations Items that are or may be reclassified subsequently to profit or loss: Foreign operations – foreign currency translation differences	For the years ended December 31, 2020 2019 $ 28,043 37,622 $ 16,855 (459,729)
	2020 $ 28,043 $ 16,855

Reconciliation of the expected income tax expense (benefit) calculated based on the ROC statutory income tax rate compared with the actual income tax expense as reported in the consolidated statements of comprehensive income for the years ended December 31, 2020 and 2019, was as follows:

Income tax expense (benefit) at AUO’s statutory tax rate Tax on undistributed earnings, net Effect of different subsidiaries income tax rate Share of profit (loss) of equity-accounted subsidiaries Net of non-taxable income and non-deductible expense Change of unrecognized deductible temporary differences Adjustments to prior year Others Income tax expense (benefit)	For the years ended December 31,	For the years ended December 31,
	2020 $ 557,534 - 384,919 736,608 (636,962) (1,232,902) 96,592 (25,545) $ (119,756)	2019
		(3,968,951) 690 38,756 (75,209) 43,202 5,947,778 (258,672) 27,068
		1,754,662

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

b. Deferred tax assets and liabilities

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

Deductible temporary differences Unused investment tax credits Unused tax losses carryforwards	December 31, 2020 $ 1,598,886 1,063,294 31,289,400 $ 33,951,580	December 31, 2019
		739,370 981,360 32,445,130
		34,165,860

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As of December 31, 2020, the unused investment tax credits include $1,053,681 thousand and $2,422 thousand from AUST and ACMK, respectively, with no expiration and $6,671 thousand and $520 thousand from domestic subsidiaries, DPTW and UTI, respectively.

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

As of December 31, 2020, the expiration period for abovementioned unrecognized deferred tax assets of unused tax losses carryforwards were as follows:

Year of assessment 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020	Unrecognized deferred tax assets Expiration in year $ 804,946 2020 ~ 2021 11,008,509 2021(i) 1,745,579 2022 ~ 2023 2,341,225 2023 ~ 2024 1,976,954 2020 ~ 2025 4,128,958 2020 ~ 2026 2,365,769 2021(i) 1,247,916 2023(i) 5,309,786 2023(i) 359,758 2023 ~ 2030 $ 31,289,400

(i) As of December 31, 2020, the unrecognized deferred tax assets of unused tax losses carryforwards include $3,462 thousand with no expiration.

As of December 31, 2020 and 2019, the aggregate taxable temporary differences associated with investments in subsidiaries not recognized as deferred tax liabilities amounted to $832,350 thousand and $277,670 thousand, respectively.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

Investment tax credits Tax losses carryforwards Unrealized loss and expenses Inventories write- down Foreign investment gains under the equity method Accumulated amortization of goodwill in accordance with local tax laws Remeasurement of defined benefit plans Foreign operations – foreign currency translation differences Others	Deferred tax assets December 31, 2020 December 31, 2019 $ 228,056 385,728 2,209,244 2,223,440 298,553 166,393 559,809 879,267 - - - - 129,173 157,216 869,207 886,062 1,711,304 483,511 $ 6,005,346 5,181,617	Deferred tax liabilities December 31, 2020 December 31, 2019 - - - - (64,590) (5,321) - - (869,124) (1,043,486) (2,213,429) (2,213,429) - - - - (66,183) (1,864) (3,213,326) (3,264,100)	Total December 31, 2020 December 31, 2019 228,056 385,728 2,209,244 2,223,440 233,963 161,072 559,809 879,267 (869,124) (1,043,486) (2,213,429) (2,213,429) 129,173 157,216 869,207 886,062 1,645,121 481,647 2,792,020 1,917,517
	December 31, 2020 $ 228,056 2,209,244 298,553 559,809 - - 129,173 869,207 1,711,304 $ 6,005,346	December 31, 2020 - - (64,590) - (869,124) (2,213,429) - - (66,183) (3,213,326)	December 31, 2020 228,056 2,209,244 233,963 559,809 (869,124) (2,213,429) 129,173 869,207 1,645,121 2,792,020

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

January 1, 2019 Deferred tax assets (liabilities): Investment tax credits $ 542,115 Tax losses carryforwards 2,760,163 Unrealized loss and expenses 304,636 Inventories write- down 1,027,680 Foreign investment losses (gains) under the equity method (1,049,091) Accumulated amortization of goodwill in accordance with local tax laws (2,213,429) Remeasurement of defined benefit plans 194,838 Foreign operations – foreign currency translation differences 426,333 Others 793,830 $ 2,787,075	Recognized in profit or loss	Recognized in other comprehensive income	Effect of change in consolidated entities, exchange rate and others	December 31, 2019	Recognized in profit or loss	Recognized in other comprehensive income	Effect of change in consolidated entities, exchange rate and others	December 31, 2020
	(148,453) (534,477) (143,534) (148,035) 5,605 - - - (298,595)	- - - - - - (37,622) 459,729 -	(7,934) (2,246) (30) (378) - - - - (13,588)	385,728 2,223,440 161,072 879,267 (1,043,486) (2,213,429) 157,216 886,062 481,647	(141,931) (15,003) 72,823 (319,514) 174,362 - - - 1,158,577	- - - - - - (28,043) (16,855) -	(15,741) 807 68 56 - - - - 4,897 (9,913)	228,056 2,209,244 233,963 559,809 (869,124) (2,213,429) 129,173 869,207 1,645,121
	(1,267,489)	422,107	(24,176)	1,917,517	929,314	(44,898)		2,792,020

c. Assessments by the tax authorities

As of December 31, 2020, the tax authorities have completed the examination of income tax returns of AUO through 2018.

(24) Earnings (loss) per Share

Basic earnings (loss) per share Profit (loss) attributable to AUO’s shareholders Weighted-average number of common shares outstanding during the year Basic earnings (loss) per share (NT$)	For the years ended December 31, 2020 2019 $ 3,376,324 (19,185,258) 9,499,245 9,597,268 $ 0.36 (2.00)
	2020 $ 3,376,324 9,499,245 $ 0.36

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Diluted earnings (loss) per share Profit (loss) attributable to AUO’s 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, 2020 2019 $ 3,376,324 (19,185,258) 9,499,245 9,597,268 18,107 - 9,517,352 9,597,268 $ 0.35 (2.00)
	2020 $ 3,376,324 9,499,245 18,107 9,517,352 $ 0.35

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

(25) Cash Flow Information

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

Balance at January 1, 2020 Cash flows Non-cash changes: Addition (decrease) of leases Changes in lease payments Changes in exchange rate Amortization on transaction costs Balance at December 31, 2020 Balance at January 1, 2019 Cash flows Non-cash changes: Addition (decrease) of leases Changes in exchange rate Amortization on transaction costs Balance at December 31, 2019	Long-term borrowings (including current installments) $ 111,968,392 4,791,073 - - (236,441) 71,945 $ 116,594,969 $ 86,305,318 26,501,234 - (1,059,445) 221,285 $ 111,968,392	Short-term borrowings 1,725,602 (1,544,602) - - 19,000 - 200,000 546,472 1,188,250 - (9,120) - 1,725,602	Guarantee deposits 785,456 53,268 - - 26,144 - 864,868 816,512 (1,828) - (29,228) - 785,456	Lease liabilities 11,091,077 (597,221) (137,015) (35,167) (24,402) - 10,297,272 12,689,526 (694,922) (872,224) (31,303) - 11,091,077	Total liabilities from financing activities 125,570,527 2,702,518 (137,015) (35,167) (215,699) 71,945
					127,957,109
					100,357,828 26,992,734 (872,224) (1,129,096) 221,285
					125,570,527

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

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

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, 2020 and 2019 were as follows:

Financial assets: Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL Financial assets at FVTOCI Financial assets at amortized cost: Long-term receivables Refundable deposits Financial liabilities: Financial liabilities at FVTPL: Financial liabilities held for trading Financial liabilities at amortized cost: Long-term borrowings (including current installments) Guarantee deposits Long-term payables (including current installments)	December 31, 2020 Carrying Amount Fair Value $ 668,058 668,058 622,824 622,824 1,274 1,274 432,202 432,202 170,956 170,956 116,594,969 116,594,969 864,868 864,868 309,900 309,900	December 31, 2019
	Carrying Amount $ 668,058 622,824 1,274 432,202 170,956 116,594,969 864,868 309,900	Carrying Amount Fair Value 1,521,406 1,521,406 7,545,171 7,545,171 5,812 5,812 663,911 663,911 18,859 18,859 111,968,392 111,968,392 785,456 785,456 464,910 464,910

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. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

Fair value of long-term receivable (payable) is determined by discounting the expected cash flows at a market interest rate.

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

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

c.
Fair value measurements recognized in the consolidated balance sheets

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

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

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

December 31, 2020 Financial assets at FVTPL: Financial assets mandatorily measured at FVTPL Financial assets at FVTOCI Financial assets at amortized cost: Long-term receivables Financial liabilities at FVTPL: Financial liabilities held for trading Financial liabilities at amortized cost: Long-term payables (including current installments)	Level 1 $ - 294,668 - - -	Level 2 668,058 - 1,274 170,956 309,900	Level 3 Total - 668,058 328,156 622,824 - 1,274 - 170,956 - 309,900

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

			Level 1	Level 2	Level 3	Total	Total
December 31, 2019
Financial assets at FVTPL:
Financial assets mandatorily		$	-	1,521,406	-	1,521,406
	measured at FVTPL
Financial assets at FVTOCI			7,356,501	-	188,670	7,545,171
Financial assets at amortized cost:
Long-term receivables			-	5,812	-	5,812
Financial liabilities at FVTPL:
Financial liabilities held for trading			-	18,859	-	18,859
Financial liabilities at amortized cost:
Long-term payables (including			-	464,910	-	464,910
	current installments)
There were no transfers between Level 1			and 2 for	the years ended	December 31, 2020		and
2019.

d. Reconciliation for fair value measurements categorized within Level 3

Financial assets at FVTOCI`－`equity instruments without active market Balance at beginning of the year Net gains (losses) included in other comprehensive income Purchases Disposals Reclassification Effect of exchange rate change Balance at end of the year	For the years ended December 31 2020 2019 $ 188,670 176,025 4,600 (33,501) 173,036 47,182 (18,568) - (20,000) - 418 (1,036) $ 328,156 188,670
	2020 $ 188,670 4,600 173,036 (18,568) (20,000) 418 $ 328,156

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Item Financial assets at FVTOCI–equity instruments without active market	Valuation technique Market approach	Significant unobservable inputs Inter-relationship between significant unobservable inputs and fair value measurement `•`Price-Book ratio (December 31, 2020 at 1.01~2.64 and December 31, 2019 at 0.7~2.95) `•`Price-Earnings ratio (December 31, 2020 at 12.95~24.99 and December 31, 2019 at 7.85~31.28) `•`Discount for lack of marketability (December 31, 2020 at 20%~30% and December 31, 2019 at 20%~28%) `•`The higher the price- book ratio is, the higher the fair value is. `•`The higher the price- earnings ratio is, the higher the fair value is. `•`The greater degree of lack of marketability is, the lower the fair value is.

(27) Financial Risk Management
a. Risk management framework

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

b. Financial risk information

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

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

(i) Credit risk

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

The majority of the Company’ s customers are in high technology industries. Management continuously evaluates and controls the credit quality, credit limit and financial strength of its customers to ensure any overdue receivables are taken necessary procedures. The Company also flexibly makes use of 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, 2020 and 2019, the Company’s five largest customers accounted for 40.8% and 38.7%, respectively, of the Company’ s consolidated 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, 2020.

(ii) Liquidity risk

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

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

Contractual cash flows December 31, 2020 Non-derivative financial liabilities Short-term borrowings $ 200,000 Long-term borrowings (including current installments) 121,514,089 Guarantee deposits 864,868 Long-term payables (including current installments) 309,900 Derivative financial instruments Foreign currency forward contracts`－`inflows (19,440,746) Foreign currency forward contracts`－`outflows 19,507,927 $ 122,956,038 Contractual cash flows December 31, 2019 Non-derivative financial liabilities Short-term borrowings $ 1,725,602 Long-term borrowings (including current installments) 119,185,207 Guarantee deposits 785,456 Long-term payables (including current installments) 464,910 Derivative financial instruments Foreign currency forward contracts`－`inflows (8,731,109) Foreign currency forward contracts`－`outflows 8,727,770 $ 122,157,836	2021.1.1~ 2021.12.31 200,000 18,953,264 39,348 154,950 (19,440,746) 19,507,927 19,414,743 2020.1.1~ 2020.12.31 1,725,602 12,149,855 23,510 155,010 (8,731,109) 8,727,770 14,050,638	2022.1.1~ 2023.12.31 - 75,716,835 3,619 154,950 - - 75,875,404 2021.1.1~ 2022.12.31 - 55,120,591 11,187 309,900 - - 55,441,678	2024.1.1~ 2025.12.31 - 25,473,429 - - - - 25,473,429 2023.1.1~ 2024.12.31 - 50,630,751 - - - - 50,630,751	2026 and thereafter
				- 1,370,561 821,901 - - -
				2,192,462
				2025 and thereafter
				- 1,284,010 750,759 - - -
				2,034,769

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

As at December 31, 2020, the management believes the Company’ s existing unused credit facilities under its existing loan agreements, together with net cash flows expected to be generated from its operating activities, will be sufficient for the Company to fulfill its payment obligations. Therefore, management believes that the Company does not have significant liquidity risk.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(iii) Market risk

Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates and equity prices, which will affect the Company’s income or the value of its holdings of financial instruments. The objective of market risk management is to manage and control market risk exposures within acceptable range, 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 one year, and do not meet the criteria for hedge accounting.

I. Exposure of currency risk

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

December 31, 2020 Foreign currency amounts Exchange rate NTD Financial assets Monetary items USD $ 2,380,316 28.5070 67,855,668 JPY 11,404,938 0.2763 3,151,184 EUR 32,931 35.0494 1,154,212 Non-monetary items USD 6,657 28.5070 189,771 Financial liabilities Monetary items USD 1,620,121 28.5070 46,184,789 JPY 20,631,647 0.2763 5,700,524 EUR 51 35.0494 1,788	December 31, 2019	December 31, 2019
	Foreign currency amounts 1,499,405 22,122,120 46,595 1,726 1,515,582 22,187,729 239	Exchange rate NTD 30.1350 45,184,570 0.2768 6,123,403 33.7422 1,572,218 30.1350 52,013 30.1350 45,672,064 0.2768 6,141,563 33.7422 8,064

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

II. Sensitivity analysis

The Company’ s exposure to foreign currency risk arises mainly from the translation of the foreign currency exchange gains and losses on cash and cash equivalents, trade receivables, loans and borrowings and trade payables that are denominated in foreign currency. Depreciation or appreciation of the NTD by 1% against the USD, EUR and JPY at December 31, 2020 and 2019, while all other variables were remained constant, would have increased or decreased the net profit before tax for the years ended December 31, 2020 and 2019 as follows:

1% of depreciation 1% of appreciation	For the years ended December 31, 2020 2019 $ 202,740 10,585 (202,740) (10,585)

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, 2020 and 2019 were $584,821 thousand and $168,499 thousand, respectively.

(b) Interest rate risk

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

Assuming the amount of floating-rate debts at the end of the reporting period had been outstanding for the entire year and all other variables were remained constant, an increase or a decrease in the interest rate by 0.25% would have resulted in a decrease or an increase in the net profit before tax for the years ended December 31, 2020 and 2019 by $292,271 thousand and $280,558 thousand, respectively.

(c) Equity price risk

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(28) Capital Management

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

Short-term borrowings Long-term borrowings (including current installments) Total liabilities Total equity Debt-to-equity ratio Net debt-to-equity ratio(i)	December 31,
	2020 2019 $ 200,000 1,725,602 116,594,969 111,968,392 213,479,930 209,660,842 193,790,365 187,976,749 % 110 % 112 % 14 % 18

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

7. Related-party Transactions

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

(1) Name and relationship of related parties

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

Name of related party	Relationship with the Company
Lextar Electronics Corporation (“Lextar”)	Associate
Lextar Electronics (Suzhou) Co., Ltd. (“LESZ”)	Subsidiary of Lextar
Lextar Electronics (Xiamen) Co., Ltd. (“LEXM”)	Subsidiary of Lextar
Lextar Electronics (Chuzhou) Corp. (“LEXCZ”)	Subsidiary of Lextar
Wellybond Corporation (“WBC”)	Subsidiary of Lextar
TRENDYLITE CORPORATION (“TRENDYLITE”)	Subsidiary of Lextar
Raydium Semiconductor Corporation (“Raydium”)	Associate
Raydium Semiconductor (Kunshan) Co., Ltd. (“RKS”)	Subsidiary of Raydium
Star River Energy Corp. (“SREC”)	Associate
Sungen Power Corporation (“SGPC”)	Subsidiary of SREC
Evergen Power Corporation (“EGPC”)	Subsidiary of SREC
Star Shining Energy Corporation (“SSEC”)	Associate

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of related party Relationship with the Company Fargen Power Corporation (“FGPC”) Subsidiary of SSEC Sheng Li Energy Corporation (“SLEC”) Subsidiary of SSEC ChampionGen Power Corporation (“CGPC”) Subsidiary of SSEC TronGen Power Corporation (“TGPC”) Subsidiary of SSEC Ri Ji Power Corporation (“RJPC”) Subsidiary of SSEC Ri Jing Power Corporation (“RGPC”) Subsidiary of SSEC Mao Zheng Energy Corporation (“MZEC”) Subsidiary of SSEC Mao Xin Energy Corporation (“MXEC”) Subsidiary of SSEC Sheng Feng Power Corporation (“SFPC”) Subsidiary of SSEC WishMobile, Inc. (“WMI”) Associate Daxin Materials Corp. (“Daxin”) Associate Darwin Summit Corporation Ltd. (“DSC”) Associate Ubitech Inc. (“Ubitech”) Associate ADLINK Technology Inc. (“ADLINK”) Associate ADLINK Technology (China) Co., Ltd. (“ADLINKCN”) Subsidiary of ADLINK IRIS Optronics Co., Ltd. (“IOC”) Associate BVCH Optronics (Sichuan) Corp. (“BVCH”) Joint venture[(i)] Evonik Forhouse Optical Polymers Corp. (“EFOP”) Joint venture ToYou Display (Suzhou) Co., Ltd. (“TYSZ”) Joint venture WiBASE Industrial Solutions Inc. (“WIS”) DPTW represented as a director of WIS Qisda Corporation (“Qisda”) Associate[(ii)] Qisda Vietnam Co., Ltd (“QVH”) Subsidiary of Qisda BenQ Corporation (“BenQ”) Subsidiary of Qisda BenQ Materials Corp. (“BMC”) Subsidiary of Qisda Qisda (Suzhou) Co., Ltd. (“QCSZ”) Subsidiary of Qisda Qisda Electronics (Suzhou) Co., Ltd. (“QCES”) Subsidiary of Qisda Qisda Optronics (Suzhou) Co., Ltd. (“QCOS”) Subsidiary of Qisda Qisda Precision Industry (Suzhou) Co., Ltd. (“QCPS”) Subsidiary of Qisda Qisda Japan Co., Ltd. (“QJTO”) Subsidiary of Qisda BenQ Europe B.V. (“BQE”) Subsidiary of Qisda BenQ Asia Pacific Corp. (“BQP”) Subsidiary of Qisda BenQ America Corporation (“BQA”) Subsidiary of Qisda Mainteq Europe B.V. (“MQE”) Subsidiary of Qisda BenQ Co., Ltd. (“BQC”) Subsidiary of Qisda BenQ Technology (Shanghai) Co., Ltd. (“BQls”) Subsidiary of Qisda Guru Systems (Suzhou) Co., Ltd. (“GSS”) Subsidiary of Qisda BenQ GURU Corp. (“GST”) Subsidiary of Qisda BenQ Material (Suzhou) Co., Ltd. (“BMS”) Subsidiary of Qisda

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Name of related party	Relationship with the Company
Suzhou BenQ Hospital Co., Ltd. (“QCHS”)	Subsidiary of Qisda
DFI Inc. (“DFI”)	Subsidiary of Qisda
Data Image Corporation (“DIC”)	Subsidiary of Qisda
Data Image (Suzhou) Corporation (“DICSZ”)	Subsidiary of Qisda
Partner Tech Corp. (“PTT”)	Subsidiary of Qisda
Sysage Technology Co., Ltd. (“Sysage”)	Subsidiary of Qisda
ACE Pillar Co., Ltd. (“ACE”)	Subsidiary of Qisda
Tianjin ACE Pillar Co., Ltd. (“ACETJ”)	Subsidiary of Qisda
Golden Spirit Co., Ltd. (“GSC”)	Subsidiary of Qisda
BenQ Foundation	Substantive related party
AUO Foundation	Substantive related party

(i) BVCH was liquidated in December 2019.
(ii) The Company has accounted for the investment in Qisda using the equity method since December 31, 2020. Qisda and its subsidiaries are changed as the Company’s associates from the same date while previously they are categorized as other related parties. See Note 6(6) for the relevant information.
(2) Compensation to key management personnel

Key management personnel’s compensation comprised:

Short-term employee benefits Post-employment benefits	For the years ended December 31,	For the years ended December 31,
	2020 $ 222,373 2,032 $ 224,405	2019
		243,203 2,633
		245,836

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

Associates Joint ventures Others	Sales For the years ended December 31, 2020 2019 $ 845,339 1,227,987 7,571 - 11,048,561 10,347,963 $ 11,901,471 11,575,950	Accounts receivable from related parties December 31, 2020 2019 2,076,045 280,009 111 - - 1,498,490 2,076,156 1,778,499	Accounts receivable from related parties December 31, 2020 2019 2,076,045 280,009 111 - - 1,498,490 2,076,156 1,778,499
	2020 $ 845,339 7,571 11,048,561 $ 11,901,471		2019 280,009 - 1,498,490
			1,778,499

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

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

b. Purchases

Associates Joint ventures Others	Purchases For the years ended December 31, 2020 2019 $ 8,168,972 8,664,439 900,612 1,027,147 16,518,558 17,077,497 $ 25,588,142 26,769,083	Accounts payable to related parties December 31, 2020 2019 7,297,560 2,825,292 5,232 72,942 - 4,052,594 7,302,792 6,950,828	Accounts payable to related parties December 31, 2020 2019 7,297,560 2,825,292 5,232 72,942 - 4,052,594 7,302,792 6,950,828
	2020 $ 8,168,972 900,612 16,518,558 $ 25,588,142		2019 2,825,292 72,942 4,052,594
			6,950,828

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

c. Acquisition of property, plant and equipment

Associates Others	Acquisition prices	Acquisition prices
	For the years ended December 31,
	2020 $ 8,814 13,576 $ 22,390	2019
		6,555 17,436
		23,991

d. Disposal of property, plant and equipment and others

Proceeds from disposal For the years ended December 31, 2020 2019 $ 35,117 - 4,083 835 $ 39,200 835	Gains on disposal	Gains on disposal
	For the years ended December 31,
2020 $ 35,117 4,083 $ 39,200	2020 29,541 3,197 32,738	2019 - 72
		72

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

e. Other related party transactions

Type of related Transaction type party Other receivables due from related parties Associates Joint ventures Others Other payables due to related parties, Associates including payables for equipment Others Transaction Type of type related party Rental income Associates Joint ventures Others: BMC Others Administration and other Associates income Joint ventures Others Other expenses Associates Joint ventures Others	December 31,	December 31,
	2020 2019 $ 7,053 2,727 4,502 - 10,374 1,229 $ 21,929 3,956 $ 24,254 13,980 66 35,991 $ 24,320 49,971 For the years ended December 31,	2019
		2,727 - 1,229
		3,956
		13,980 35,991
		49,971
		2019
Associates Joint ventures Others: BMC Others Associates Joint ventures Others Associates Joint ventures Others		52,227 6,611 83,477 24,110
		166,425
		17,980 223 7,996
		26,199
		20,157 36 59,287
		79,480

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, 2020 and 2019, the Company had received cash dividends from related parties of $603,621 thousand and $566,865 thousand, respectively.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated 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 buildings Machinery and equipment	Pledged to secure Customs duties and guarantee for warranties Long-term borrowings limit Long-term borrowings limit	December 31,	December 31,
		2020 $ 28,345 48,286,874 45,407,718 $ 93,722,937	2019
			35,809 28,423,642 42,968,184
			71,427,635

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

9. Significant Contingent Liabilities and Unrecognized Commitments

The significant commitments and contingencies of the Company as of December 31, 2020, in addition to those disclosed in other notes to the consolidated financial statements, were as follows:

(1) Outstanding letters of credit

As at December 31, 2020, the Company had the following outstanding letters of credit for the purpose of purchasing machinery and equipment and materials:

		December 31,
		2020
	Currency	(in thousands)
USD		457
JPY		1,767,270

(2) Technology licensing agreements

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

(3) Purchase commitments

Starting from 2006, DPTW has entered into a long-term materials supply agreement with Evonik Forhouse Optical Polymers Corp. (“EFOP”), a joint venture of the Company. Under the agreement, DPTW and EFOP agreed on the supply of certain optical-grade molding compounds at agreed prices and quantities.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As at December 31, 2020, significant outstanding purchase commitments for construction in progress, property, plant and equipment totaled $6,998,155 thousand.

(4) Litigation

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.

As of February 3, 2021, 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.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

10. Significant Disaster Losses: None

11. Subsequent Event: None

12. Others

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

13. Additional Disclosures

(1) Information on significant transactions:

Following are the additional disclosures required by the Regulations for the Company for the year ended December 31, 2020.

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 paidin 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).
j. Business relationship and significant intercompany transactions: Please see Table 7 attached.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(2) Information on investees (excluding information on investment in Mainland China): Please see Table 8 attached.
(3) Information on investment in Mainland China:
a. The related information on investment in Mainland China: Please see Table 9.1 and 9.2 attached.
b. Upper limit on investment in Mainland China: Please see Table 9.1 and 9.2 attached.
c. Significant transactions:

Significant direct or indirect transactions with the investees in Mainland China for the year ended December 31, 2020, for which intercompany transactions were eliminated upon consolidation, are disclosed in Note 13(1) “Information on significant transactions”.

(4) Major shareholders:

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

14. Segment Information

(1) Operating segment information

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

Segment results are excluding non-operating income and expenses and income tax expense (benefit). There are no differences between the consolidated financial statements for the years ended December 31, 2020 and 2019 with the financial results received by the Company’s chief operating decision maker. The accounting policies for the operating segments are the same as those used in preparation of the consolidated financial statements of the Company. The Company uses the net revenue, profit (loss) from operations and segment profit (loss) excluding depreciation and amortization as the basis of segment performance assessment.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Net revenue from external customers
Segment profit (loss)
Net non-operating income and expenses
Consolidated net profit (loss) before income tax
Segment profit (loss) excluding depreciation and
amortization
Segment assets
Net revenue from external customers
Segment profit (loss)
Net non-operating income and expenses
Consolidated profit (loss) before income tax
Segment profit (loss) excluding depreciation and
amortization
Segment assets

For the year ended December 31, 2020
Display
segment
Energy
segment
Total
segments
$ 261,803,561
9,151,820
270,955,381
$
1,853,753
229,289
2,083,042
704,629
$
2,787,671
$
36,677,320
803,252
37,480,572
$ 407,270,295
For the year ended December 31, 2019
Display
segment
Energy
segment
Total
segments
$ 256,667,222
12,124,472
268,791,694
$ (19,484,401)
(983,547)
(20,467,948)
623,194
$ (19,844,754)
$
15,753,181
36,590
15,789,771
$ 397,637,591

(2) Geographic information

a. Net revenue from external customers: See Note 6(19).
b. Consolidated noncurrent assets[(i)]

Region Taiwan PRC (including Hong Kong) Others	December 31, 2020 $ 158,001,599 50,113,912 4,634,540 $ 212,750,051	December 31, 2019
		174,518,271 54,890,846 6,301,996
		235,711,113

(i) Noncurrent assets are not inclusive of financial instruments, deferred tax assets and prepaid pension.

(3) Major customer and product information: See Note 6(19).

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Financings Provided

For the year ended December 31, 2020

(Amount in thousands of New Taiwan Dollars)

Table 1

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
0	AUO	ACTW	Other	Yes	3,500,000	2,000,000	1,000,000	Markup rate on	Needs for	-	Operating	-	-	-	18,280,469	73,121,876
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
0	AUO	AUKS	Other	Yes	1,300,920	-	-	Markup rate on	Needs for	-	Operating	-	-	-	18,280,469	73,121,876
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
0	AUO	SMI	Other	Yes	30,000	30,000	-	Markup rate on	Needs for	-	Operating	-	-	-	18,280,469	73,121,876
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
0	AUO	UTI	Other	Yes	200,000	200,000	-	Markup rate on	Needs for	-	Operating	-	-	-	18,280,469	73,121,876
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
1	AULB	AUKS	Other	Yes	13,792,960	13,585,440	6,135,360	Markup rate on	Needs for	-	Operating	-	-	-	22,363,769	22,363,769
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
2	AUXM	AUKS	Other	Yes	5,254,560	4,382,400	1,972,080	Markup rate on	Needs for	-	Operating	-	-	-	5,797,418	5,797,418
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
3	BVXM	AUKS	Other	Yes	438,240	438,240	438,240	Markup rate on	Needs for	-	Operating	-	-	-	523,838	523,838
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties

(Continued)

No.	Financing Company	Borrowing Company	Financial Statement Account	Related Party	Maximum Balance for the Period (Note 3)	Ending Balance (Notes 1 and 2)	Amount Actually Drawn Down (Notes 1 and 4)	Interest Rate	Nature of Financing	Transaction Amounts	Reason for Financing	Allowance for Bad Debt	Collateral	Collateral	Financing Limits for Each Borrowing Company (Notes 1 and 5)	Limits on Financing Company’s Total Financing Amount (Notes 1 and 5)
													Item	Value
4	AUSJ	AUKS	Other	Yes	1,446,192	1,446,192	788,832	Markup rate on	Needs for	-	Operating	-	-	-	1,587,158	1,587,158
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
4	AUSJ	UFSD	Other	Yes	219,120	219,120	-	Markup rate on	Needs for	-	Operating	-	-	-	3,967,894	3,967,894
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
4	AUSJ	UFSZ	Other	Yes	173,104	87,648	35,497	Markup rate on	Needs for	-	Operating	-	-	-	3,967,894	3,967,894
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
4	AUSJ	A-Care	Other	Yes	86,552	43,824	4,382	Markup rate on	Needs for	-	Operating	-	-	-	3,967,894	3,967,894
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
5	AUSZ	AUKS	Other	Yes	6,135,360	6,135,360	3,067,680	Markup rate on	Needs for	-	Operating	-	-	-	6,547,160	6,547,160
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
6	BVHF	AUKS	Other	Yes	306,768	306,768	306,768	Markup rate on	Needs for	-	Operating	-	-	-	327,745	327,745
			receivables					short-term	short-term		capital
			from related					financing cost	financing
			parties
7	DPSZ	AUKS	Other	Yes	438,240	438,240	438,240	Adjusted by	Needs for	-	Operating	-	-	-	523,662	523,662
			receivables					base lending	short-term		capital
			from related					rate of People’s	financing
			parties					Bank of China
8	DPTW	DPSK	Other	Yes	52,863	52,574	29,441	Adjusted by short-term average lending rate	Needs for short-term financing	-	Operating	-	-	-	2,482,061	3,971,298
			receivables								capital
			from related
			parties
9	FTKS	AUKS	Other	Yes	433,640	-	-	Adjusted by	Needs for	-	Operating	-	-	-	558,230	558,230
			receivables					base lending	short-term		capital
			from related					rate of People’s	financing
			parties					Bank of China
10	FTWJ	FHWJ	Other	Yes	65,046	43,824	43,824	Adjusted by	Needs for	-	Operating	-	-	-	1,830,825	1,830,825
			receivables					base lending	short-term		capital
			from related					rate of People’s	financing
			parties					Bank of China

(Continued)

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.

Note 5: The policy for the limit on total financing amount and the financing limit for any individual entity are prescribed as follows:

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Endorsements/Guarantees Provided

For the year ended December 31, 2020

(Amount in thousands of New Taiwan Dollars)

Table 2

No.	Endorser/ Guarantor	Guaranteed Party	Guaranteed Party	Limits on Endorsement/ Guarantee Amount Provided for Each Party (Notes 4 and 5)	Maximum Endorsement/ Guarantee Balance for the Period (Note 2)	Ending Balance (Notes 3 and 4)	Amount Actually Drawn Down (Note 4)	Amount of Endorsement/ Guarantee Collateralized by Properties	Ratio of Accumulated Endorsement/ Guarantee to Net Worth per Latest Financial Statements	Maximum Endorsement/ Guarantee Amount Allowable (Notes 4 and 5)	Endorsement/ Guarantee Provided by Parent Company to Subsidiary	Endorsement/ Guarantee Provided by Subsidiary to Parent Company	Endorsement/ Guarantee Provided to Subsidiaries in Mainland China
		Name	Nature of Relationship (Note 1)
0	AUO	AUKS	2	91,402,346	15,391,064	14,373,073	8,654,361	-	7.86%	182,804,691	Yes	No	Yes
1	AUXM	AUO	3	14,493,546	6,354,480	6,354,480	-	-	43.84%	14,493,546	No	Yes	No
2	AUSZ	AUO	3	16,367,899	4,470,048	4,470,048	-	-	27.31%	16,367,899	No	Yes	No
3	DPXM	DPTW	3	1,739,404	438,240	438,240	-	-	10.08%	1,739,404	No	No	No

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

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

Note 2: The maximum endorsement/guarantee balance for the period represents the highest amount in New Taiwan 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 financial statement. The aggregate amount of endorsement/guarantee provided to each guaranteed party shall not exceed 50% of AUO’s net worth as stated in its latest financial statement.
b. AUSZ and AUXM: The total endorsement/guarantee amount provided and the aggregate amount of endorsement/guarantee provided to each guaranteed party both shall not exceed the net worth of the endorser/guarantor as stated in its latest financial statement.
c. DPXM: The total endorsement/guarantee amount provided and the aggregate amount of endorsement/guarantee provided to each guaranteed party both shall not exceed 40% of DPXM’s net worth as stated in its latest financial statement.

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

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

December 31, 2020

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

Table 3

Name of Holder	Type and Name of Marketable Securities	Relationship with the Securities Issuer	Financial Statement Account		December 31, 2020	December 31, 2020		Maximum Shareholding in the Interim
				Shares	Carrying Amount	Percentage of Ownership	Fair Value
AUO	BenQ ESCO Corp.’s stock	Related party	Financial assets at FVTPL－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－current Financial assets at FVTPL－current Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTOCI－noncurrent Financial assets at FVTPL－noncurrent	1,700	-	17.00%	-	17.00%
AULB	Abakus Solar AG’s stock	-		3	-	2.22%	-	2.22%
AUSH	T-powertek Optronics Co., Ltd.’s	-		1,293	CNY 6,250	1.66%	CNY 6,250	2.16%
	stock
FPWJ	Structured deposit	-		-	CNY 54,227	-	CNY 54,227	-
FTKS	Structured deposit	-		-	CNY 72,585	-	CNY 72,585	-
Konly	PlayNitride Inc.’s stock	-		967	113,640	2.26%	113,640	2.34%
Konly	SnapBizz CloudTech Pte. Ltd.’s	-		13	-	4.74%	-	5.33%
	stock
Konly	Azotek Co., Ltd.’s stock	-		2,407	7,345	4.00%	7,345	4.01%
Konly	ChenFeng Optronics Corporation’s	-		1,500	-	2.35%	-	2.63%
	stock
Konly	Epistar Corporation’s stock	-		7,037	294,668	0.65%	294,668	0.65%
Konly	a2peak power Co., Ltd.’s stock	-		4,000	-	10.87%	-	10.87%
DPTW	D8AI Holdings Corporation’s	-		7,000	8,649	4.59%	8,649	4.59%
	stock
DPTW	Disign Incorporated’s stock	-		2	10,714	19.89%	10,714	19.89%
DPTW	Evertrust Technology Ltd.’s stock	-		150	1,500	16.13%	1,500	16.13%
DPTW	HUAI I Precision Technology Co.,	-		2,914	34,968	10.00%	34,968	10.00%
	Ltd.’s stock
DPTW	WiBASE Industrial Solutions Inc.’s	Related party		3,536	42,432	9.11%	42,432	12.11%
	stock
Ronly	PlayNitride Inc.’s stock	-		359	71,517	0.84%	71,517	0.87%
Ronly	Exploit Technology Co., Ltd.’s	-		41	-	0.49%	-	0.49%
	stock
Ronly	Profet AI Technology Co., Ltd.’s stock	-	Financial assets at FVTOCI－noncurrent	511	10,002	10.16%	10,002	10.16%

(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, 2020

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

Table 4

Company Name	Type and Name of Marketable Securities	Financial Statement Account	Counterparty	Relationship	Beginning Balance	Beginning Balance	Acquisition	Acquisition		Disposal	Disposal		Ending Balance	Ending Balance	Note
					Shares	Amount	Shares	Amount	Shares	Amount	Carrying Amount	Gain/Loss on Disposal	Shares	Amount
AUO	CQIL’s stock ADLINK’s stock SSEC’s stock CQUS’s stock CQHLD’s stock Structured deposit Structured deposit	Investments in	-	-	39,974	576,111	-	305,963	-	-	-	-	39,974	881,300	2 1 2 2 2 3 3
		equity-accounted
		investees
AUO		Investments in equity-accounted investees Investments in equity-accounted investees Investments in equity-accounted investees Investments in equity-accounted investees	-	-	-	-	42,310	2,411,693	-	-	-	-	42,310	2,311,727

AUO			-	-	93,000	953,966	62,000	620,000	-	-	-	-	155,000	1,586,817

CQHLD			-	-	11	USD 3,863	2	USD 10,250	-	-	-	-	13	USD 14,126

CQIL			-	-	635,709	USD 18,491	21	USD 10,250	-	-	-	-	635,730	USD 29,097

DPSZ		Financial assets	-	-	-	CNY 70,488	-	-	-	CNY 71,372	CNY 71,372	-	-	-
		at FVTPL－
		current
FPWJ		Financial assets	-	-	-	CNY 100,642	-	CNY 105,750	-	CNY 154,403	CNY 154,403	-	-	CNY 54,227
		at FVTPL－
		current
FTKS	Structured deposit	Financial assets	-	-	-	CNY 171,493	-	CNY 448,500	-	CNY 553,777	CNY 553,777	-	-	CNY 72,585
		at FVTPL－
		current

Note 1: a. The acquisition amount refers to the tender offer consideration for acquiring part of ADLINK’s shares. See Note 6(6) for the relevant information.

b. The ending balance includes the recognition of investment gain (loss) and foreign currency translation differences under the equity method.

Note 2: The acquisition amount refers to the participation in the investees’ capital increase. The ending balance includes the recognition of investment gain (loss) and foreign currency translation differences under the equity method.

Note 3: 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, 2020

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

Table 5

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO AUO	AUKS AUSK AUST AUSZ AUXM Qisda BMC Raydium Daxin DPTW AUNL AUSZ AUUS AUXM DICSZ QCOS QCSZ	Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Associate Subsidiary of Qisda Associate Associate Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of Qisda Subsidiary of Qisda Subsidiary of Qisda	Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Purchases Sales Sales Sales Sales Sales Sales Sales	20,126,829 116,806 4,574,857 35,317,575 24,270,146 8,412,978 3,951,995 874,933 2,310,181 3,527,426 (1,354,682) (1,399,835) (269,837) (948,058) (216,863) (333,463) (7,192,754)	11%	EOM 30 days EOM 45 days EOM 45 days EOM 45 days EOM 45 days EOM 45 days EOM 90 days EOM 120 days EOM 120 days EOM 60 days EOM 45 days EOM 45 days EOM 75 days EOM 45 days EOM 45 days EOM 55 days EOM 55 days	- - - - - - - - - - - - - - - - -		(3,728,045) (16,849) (676,280) (11,760,985) (9,153,218) (1,622,435) (1,119,694) (326,321) (787,616) (698,675) 184,233 - 63,767 - 38,126 59,166 1,103,551	(7)%
					-					-
					2%					(1)%
					19%					(22)%
					13%					(17)%
					5%					(3)%
					2%					(2)%
					-					(1)%
					1%					(1)%
					2%					(1)%
					(1)%					-
					(1)%					-
					-					-
					-					-
					-					-
					-					-
					(3)%					3%
AUO	RJPC	Subsidiary of SSEC	Sales	(254,572)	-	EOM 25 days	-		96,436	-

(Continued)

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUO AUO AUO AUO ACMK AUKS AUKS AUKS AUKS AUNL AUSH AUSK AUST AUSZ AUSZ AUSZ AUSZ AUSZ AUSZ AUSZ AUUS AUUS AUXM	BenQ SLEC DPTW FGPC ACTW AUO AUSZ Qisda AUO AUO AUO AUO AUO AUO Qisda BMC Raydium DPTW AUO AUKS AUO AUO AUO	Subsidiary of Qisda Subsidiary of SSEC Subsidiary of AUO Subsidiary of SSEC Subsidiary of AUO Ultimate parent company Subsidiary of AUO Associate Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Ultimate parent company Associate Subsidiary of Qisda Associate Subsidiary of AUO Ultimate parent company Subsidiary of AUO Ultimate parent company Ultimate parent company Ultimate parent company	Sales Sales Sales Sales Purchases Purchases Purchases Purchases Sales Purchases Sales Sales Sales Purchases Purchases Purchases Purchases Purchases Sales Sales Purchases Sales Purchases	(2,962,512) (221,114) (186,407) (121,267) USD 20,085 CNY 47,732 CNY 181,415 CNY 26,786 CNY (4,777,267) EUR 42,597 CNY (36,314) EUR (3,850) USD (154,779) CNY 395,440 CNY 513,274 CNY 253,846 CNY 591,588 CNY 204,540 CNY (8,393,763) CNY (181,390) USD 8,104 USD (5,649) CNY 200,895	(1)%	EOM 55 days Payment in advance EOM 45 days EOM 25 days OA 45 days EOM 45 days EOM 60 days EOM 120 days EOM 30 days EOM 45 days End of quarter 25 days EOM 45 days EOM 45 days EOM 45 days EOM 120 days EOM 90 days EOM 120 days EOM 120 days EOM 45 days EOM 60 days EOM 75 days EOM 30 days EOM 45 days	- - - - - - - - - - - - - - - - - - - - - - -		630,668 - 15,384 22,130 USD (944) CNY (3,557) CNY (57,359) CNY (14,258) CNY 857,238 EUR (5,245) - EUR 888 USD 23,723 - CNY (181,382) CNY (69,087) CNY (212,094) CNY (63,420) CNY 2,693,520 CNY 57,359 USD (2,235) - -	1%
					-					-
					-					-
					-					-
					95%					(98)%
					2%					-
					7%					(7)%
					1%					(2)%
					(100)%					100%
					100%					(100)%
					(99)%					-

					(83)%					83%
					(100)%					100%
					5%					-
					7%					(7)%
					3%					(3)%
					8%					(8)%
					3%					(2)%
					(94)%					97%
					(2)%					2%
					100%					(100)%
					(38)%					-
					4%					-
AUXM	DPXM	Subsidiary of AUO	Purchases	CNY 24,024	-	EOM 120 days	-		CNY (10,098)	(1)%

(Continued)

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
AUXM AUXM AUXM AUXM AUXM BVXM DPSZ DPXM DPXM DPXM DPXM DPXM FPWJ FTWJ FTWJ FTWJ M.Setek ACTW ACTW DPTW DPTW DPTW DPTW	BMC Raydium DPTW AUO BVXM AUXM DPTW DPTW Lextar AUXM DPSZ DPTW DPTW DPTW Lextar DPTW ACTW M.Setek ACMK AUO DPSZ DPXM FTWJ	Subsidiary of Qisda Associate Subsidiary of AUO Ultimate parent company Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Associate Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Associate Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Ultimate parent company Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO	Purchases Purchases Purchases Sales Sales Purchases Sales Purchases Purchases Sales Sales Sales Purchases Purchases Purchases Sales Sales Purchases Sales Purchases Purchases Purchases Purchases	CNY 165,621 CNY 416,679 CNY 198,904 CNY (5,750,142) CNY (74,146) CNY 74,146 CNY (121,527) CNY 37,633 CNY 37,521 CNY (24,006) CNY (24,190) CNY (618,831) CNY 92,417 CNY 51,684 CNY 63,749 CNY (847,131) JPY (3,856,705) 1,068,693 (625,854) 185,387 516,782 2,636,646 3,613,971	3%	EOM 90 days EOM 120 days EOM 120 days EOM 45 days EOM 45 days EOM 45 days EOM 90 days EOM 60 days EOM 120 days EOM 120 days EOM 120 days EOM 90 days EOM 60 days EOM 60 days EOM 120 days EOM 90 days EOM 45 days EOM 45 days OA 45 days EOM 45 days EOM 90 days EOM 90 days EOM 90 days	- - - - - - - - - - - - - - - - - - - - - - -		CNY (50,157) CNY (183,374) CNY (80,964) CNY 2,098,691 - - CNY 45,615 CNY (28,412) CNY (14,937) CNY 10,098 CNY 15,743 CNY 287,335 CNY (30,239) CNY (243,989) CNY (23,544) CNY 623,056 JPY 1,198,928 (331,171) 26,908 (15,215) (199,291) (1,007,440) (1,152,320)	(3)%
					8%					(9)%
					4%					(4)%
					(91)%					95%
					(1)%					-
					100%					-
					(72)%					78%
					3%					(6)%
					3%					(3)%
					(1)%					2%
					(1)%					3%
					(38)%					58%
					93%					(100)%
					9%					(52)%
					11%					(5)%
					(96)%					100%
					(99)%					99%
					46%					(67)%
					(16)%					5%
					2%					(1)%
					5%					(7)%
					27%					(37)%
					37%					(42)%
DPTW	EFOP	Joint Venture	Purchases	900,611	9%	Payment in advance	-		-	-

(Continued)

Company Name	Counterparty	Relationship	Transaction Details	Transaction Details	Transaction Details		Transactions with Terms Different from Others	Transactions with Terms Different from Others	Notes/Accounts Receivable (Payable)	Notes/Accounts Receivable (Payable)
			Purchases /Sales	Amount (Note 2)	Percentage of Total Purchases /Sales	Credit Terms	Unit Price (Note 1)	Credit Terms (Note 1)	Ending Balance (Note 2)	Percentage of Total Notes /Accounts Receivable (Payable)
DPTW DPTW DPTW DPTW DPTW DPTW	AUO AUSZ AUXM DPXM FPWJ FTWJ	Ultimate parent company Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO Subsidiary of AUO	Sales Sales Sales Sales Sales Sales	(3,668,313) (867,826) (849,740) (161,790) (391,979) (220,845)	(36)%	EOM 60 days EOM 120 days EOM 120 days EOM 60 days EOM 60 days EOM 60 days	- - - - - -		657,251 277,080 353,730 61,385 132,114 30,096	28%
					(9)%					12%
					(8)%					15%
					(2)%					3%
					(4)%					6%
					(2)%					1%
DPTW	QCES	Subsidiary of Qisda	Sales	(179,294)	(2)%	EOM 120 days	-		63,267	3%

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, 2020

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

Table 6

Table 6
					Overdue Receivables		Amounts
Company			Ending Balance of	Turnover	Amount	Action Taken	Received in	Allowance
	Counterparty	Relationship	Receivables				Subsequent	for Bad
Name				Rate
			(Note 3)				Period	Debts
							(Note 1)
AUO	AUNL QCSZ ACTW BenQ AUO AUKS AUKS AUO AUO AUKS AUO AUKS AUKS AUKS AUKS DPTW DPTW DPTW	Subsidiary of AUO	184,233	8.46	62	Collected in subsequent period	115,652	-
AUO		Subsidiary of Qisda	1,103,551	7.07	339	Will be collected in next period	-	-
AUO		Subsidiary of AUO	1,001,440	(Note 2)	-	-	-	-
AUO		Subsidiary of Qisda	630,668	5.75	30	Will be collected in next period	-	-
AUKS		Ultimate parent company	CNY 857,238	7.03	CNY 17,285	Collected in subsequent period	CNY 470,258	-
AULB		Subsidiary of AUO	USD 220,489	(Note 2)	-	-	-	-
AUSJ		Subsidiary of AUO	CNY 183,146	(Note 2)	-	-	-	-
AUST		Ultimate parent company	USD 33,525	(Note 2)	USD 20	Will be collected in next period	-	-
AUSZ		Ultimate parent company	CNY 2,693,520	3.43	CNY 39,752	Collected in subsequent period	CNY 1,541,995	-
AUSZ		Subsidiary of AUO	CNY 769,017	(Note 2)	CNY 13,861	Collected in subsequent period	CNY 17,381	-
AUXM		Ultimate parent company	CNY 2,098,693	(Note 2)	CNY 47,660	Collected in subsequent period	CNY 1,469,960	-
AUXM		Subsidiary of AUO	CNY 459,274	(Note 2)	-	-	-	-
BVHF		Subsidiary of AUO	CNY 70,591	(Note 2)	-	-	-	-
BVXM		Subsidiary of AUO	CNY 102,936	(Note 2)	-	-	-	-
DPSZ		Subsidiary of AUO	CNY 104,956	(Note 2)	-	-	-	-
DPSZ		Subsidiary of AUO	CNY 45,615	2.97	CNY 6,072	Will be collected in next period	-	-
DPXM		Subsidiary of AUO	CNY 287,342	(Note 2)	-	-	-	-
FTWJ		Subsidiary of AUO	CNY 623,056	1.44	-	-	CNY 123,973	-
M.Setek	ACTW	Subsidiary of AUO	JPY 1,198,975	(Note 2)	JPY 246,932	Will be collected in next period	-	-

(Continued)

					Overdue Receivables	Overdue Receivables	Amounts
Company			Ending Balance of	Turnover	Amount	Action Taken	Received in	Allowance
	Counterparty	Relationship	Receivables				Subsequent	for Bad
Name				Rate
			(Note 3)				Period	Debts
							(Note 1)
ACTW	M.Setek AUO AUSZ AUXM DPXM FPWJ	Subsidiary of AUO	239,156	(Note 2)	-	-	-	-
DPTW		Ultimate parent company	659,144	(Note 2)	14,382	Will be collected in next period	-	-
DPTW		Subsidiary of AUO	277,080	3.06	-	-	-	-
DPTW		Subsidiary of AUO	353,730	1.99	-	-	-	-
DPTW		Subsidiary of AUO	124,129	(Note 2)	533	Will be collected in next period	-	-
DPTW		Subsidiary of AUO	132,114	5.93	58,861	Will be collected in next period	-	-
DPTW	FTWJ	Subsidiary of AUO	1,073,393	(Note 2)	-	-	413,975	-

Note 1: Until the end of January 2021.

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

Business Relationship and Significant Intercompany Transactions For the year ended December 31, 2020

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

Table 7

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

0	AUKS	AUO	Subsidiary to parent	Net revenue	CNY 4,777,267	The prices of inter-company sales are not comparable with	8%
						those of third parties. The credit term is EOM 30 days
0	AUKS	AUO	Subsidiary to parent	Receivables from	CNY 857,238	-	1%
				related parties
1	AULB	AUKS	Subsidiary to subsidiary	Receivables from	USD 220,489	-	2%
				related parties
2	AUST	AUO	Subsidiary to parent	Net revenue	USD 154,779	The prices of inter-company sales are not comparable with	2%
						those of third parties. The credit term is EOM 45 days
3	AUSZ	AUO	Subsidiary to parent	Net revenue	CNY 8,393,763	The prices of inter-company sales are not comparable with	13%
						those of third parties. The credit term is EOM 45 days
3	AUSZ	AUO	Subsidiary to parent	Receivables from	CNY 2,693,520	-	3%
				related parties
3	AUSZ	AUKS	Subsidiary to subsidiary	Receivables from	CNY 769,017	-	1%
				related parties
4	AUXM	AUO	Subsidiary to parent	Net revenue	CNY 5,750,142	The prices of inter-company sales are not comparable with	9%
						those of third parties. The credit term is EOM 45 days
4	AUXM	AUO	Subsidiary to parent	Receivables from	CNY 2,098,693	-	2%
				related parties
5	DPXM	DPTW	Subsidiary to subsidiary	Net revenue	CNY 618,831	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 90 days
6	FTWJ	DPTW	Subsidiary to subsidiary	Net revenue	CNY 847,131	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 90 days

(Continued)

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

6	FTWJ	DPTW	Subsidiary to subsidiary	Receivables from	CNY 623,056	-	1%
				related parties
7	AUO	AUSZ	Parent to subsidiary	Net revenue	1,399,835	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 45 days
8	DPTW	AUO	Subsidiary to parent	Net revenue	3,668,313	The prices of inter-company sales are not comparable with	1%
						those of third parties. The credit term is EOM 60 days

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

(Continued)

AU OPTRONICS CORP. AND SUBSIDIARIES

Information on Investees (Excluding Information on Investment in Mainland China) For the year ended December 31, 2020

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

Table 8

				Original Investment Amount	Original Investment Amount	December 31, 2020	December 31, 2020	December 31, 2020	Maximum		Investor’s Share
										Net Income
Investor Coman	Investee Coman						Percentage	Carrying	Shareholding		of Profit (Loss) of Investee
		Location	Main Activities	December 31,	December 31,					(Loss) of		Note
py	py			2020	2019	Shares	of Ownership	Amount (Notes 1 and 2)	in the Interim	Investee	(Notes 1 and 2)

AUO	AULB	Malaysia	Holding company	59,058,698	59,058,698	1,882,189	100.00%	55,909,421	100.00%	2,789,496	2,789,496	Subsidiary
AUO	AUNL	Netherlands	Sales and sales support of TFT-	24,275	24,275	50	100.00%	66,537	100.00%	26,306	26,306	Subsidiary
			LCD panels
AUO	Konly	Taiwan ROC	Investment	4,227,070	4,227,070	299,764	100.00%	5,471,340	100.00%	132,133	132,133	Subsidiary
AUO	Ronly	Taiwan ROC	Investment	2,078,682	1,778,692	185,576	100.00%	2,277,770	100.00%	(76,865)	(76,865)	Subsidiary
AUO	DPTW	Taiwan ROC	Design, manufacturing, and sales	3,569,155	3,569,155	190,108	28.56%	2,835,886	28.56%	(1,240,799)	(354,420)	Subsidiary
			of TFT-LCD modules, backlight
			modules, TV set and related
			parts
AUO	ACTW	Taiwan ROC	Manufacturing and sales of	15,687,921	15,687,921	418,583	100.00%	2,686,843	100.00%	(91,475)	(91,475)	Subsidiary
			ingots and solar wafers
AUO	SREC	Taiwan ROC	Investment	379,040	379,040	37,904	32.01%	427,157	32.01%	107,060	34,274	Associate
AUO	Lextar	Taiwan ROC	Design, manufacturing, and sales	889,227	881,076	78,781	15.30%	1,549,703	15.30%	(629,358)	(95,746)	Associate
			of InGaN epi wafers and chips,
			and light emitting diode
			packages and modules
AUO	Qisda	Taiwan ROC	Manufacturing and sales of LCD products and projectors; providing medical services	9,505,477	-	335,231	17.04%	9,704,923	17.04%	-	-	Associate
												(Note 7)

AUO	SMI	Taiwan ROC	Sales and leasing of content	30,000	30,000	3,000	100.00%	14,235	100.00%	(4,012)	(4,012)	Subsidiary
			management system and
			hardware
AUO	UTI	Taiwan ROC	Planning, design and	200,000	100,000	20,000	100.00%	132,024	100.00%	(56,882)	(56,882)	Subsidiary
			development of construction for
			environmental protection and
			related project management
AUO	SSEC	Taiwan ROC	Investment	1,550,000	930,000	155,000	31.00%	1,586,817	31.00%	107,523	33,332	Associate
AUO	CQIL	Israel	Holding company	1,182,621	876,659	39,974	100.00%	881,300	100.00%	(42,400)	(42,400)	Subsidiary

(Continued)

				Original Investment Amount	Original Investment Amount	December 31, 2020	December 31, 2020	December 31, 2020	Maximum		Investor’s Share
										Net Income
Investor Coman	Investee Coman						Percentage	Carrying	Shareholding		of Profit (Loss) of Investee
		Location	Main Activities	December 31,	December 31,					(Loss) of		Note
py	py			2020	2019	Shares	of Ownership	Amount (Notes 1 and 2)	in the Interim	Investee	(Notes 1 and 2)

AUO	ADLINK	Taiwan ROC	Manufacturing and sales of	2,411,693	-	42,310	19.45%	2,311,727	19.45%	243,665	(20,893)	Associate
			hardware, software and
			peripheral devices of industrial
			computers
AUO AUO AUO AUO	DPGE ADHLD ADCM AHTW	Taiwan ROC Cayman Cayman Taiwan ROC	Renewable energy power generation Holding company Holding company Manufacturing, development and sales of medical equipment	7,000	-	700	100.00%	6,985	100.00%	(15)	(15)	Subsidiary

				-	-	-	70.00%	-	70.005%	-	-	Subsidiary
												(Note 5)
				-	-	-	100.00%	-	100.00%	-	-	Subsidiary
												(Note 5)
				5,000	-	500	100.00%	4,985	100.00%	(15)	(15)	Subsidiary

AUO	ADP	Taiwan ROC	Research, development and sales	1,000	-	100	100.00%	375	100.00%	(625)	(625)	Subsidiary
			of TFT-LCD panels
Konly	DPTW	Taiwan ROC	Design, manufacturing, and sales	703,795	703,795	42,598	6.40%	635,446	6.40%	(1,240,799)	(79,416)	Subsidiary
			of TFT-LCD modules, backlight
			modules, TV set and related
			parts
Konly	SREC	Taiwan ROC	Investment	17,760	17,760	1,776	1.50%	20,015	1.50%	107,060	1,606	Associate
Konly	Raydium	Taiwan ROC	IC Design	175,857	175,857	11,454	17.11%	809,137	17.11%	854,600	146,206	Associate
Konly	Daxin	Taiwan ROC	Research, manufacturing and	154,748	154,748	19,114	18.61%	539,718	18.61%	631,304	117,475	Associate
			sales of display related
			chemicals
Konly	Lextar	Taiwan ROC	Design, manufacturing, and sales	565,616	450,674	31,182	6.06%	628,659	6.06%	(629,358)	(32,417)	Associate
			of InGaN epi wafers and chips,
			and light emitting diode
			packages and modules
Konly	Qisda Ubitech Inc. SSEC WishMobile , Inc.	Taiwan ROC Taiwan ROC Taiwan ROC Taiwan ROC	Manufacturing and sales of LCD products and projectors; providing medical services Development and sales of software for POS system Investment Developing and providing CRM APP	437,875	-	17,817	0.91%	515,805	0.91%	-	-	Associate
												(Note 7)

Konly				27,000	27,000	357	24.41%	1,308	26.31%	(7,435)	(1,904)	Associate

Konly				100,000	60,000	10,000	2.00%	102,375	2.00%	107,523	2,150	Associate
Konly				15,000	15,000	5,625	12.50%	5,844	12.50%	1,991	249	Associate

Konly	SkyREC Ltd.	BVI	Data consulting service for retail	46,016	46,016	188	16.12%	2,097	16.12%	(14,423)	(2,326)	Associate

(Continued)

				Original Investment Amount	Original Investment Amount	December 31, 2020	December 31, 2020	December 31, 2020	Maximum		Investor’s Share
										Net Income
Investor Coman	Investee Coman						Percentage	Carrying	Shareholding		of Profit (Loss) of Investee
		Location	Main Activities	December 31,	December 31,					(Loss) of		Note
py	py			2020	2019	Shares	of Ownership	Amount (Notes 1 and 2)	in the Interim	Investee	(Notes 1 and 2)

Konly	ADLINK AUES IOC DPTW	Taiwan ROC Taiwan ROC Taiwan ROC Taiwan ROC	Manufacturing and sales of hardware, software and peripheral devices of industrial computers Services related to educational activities and site rental R&D and design of flexible electronics technology and processing equipment development Design, manufacturing, and sales of TFT-LCD modules, backlight modules, TV set and related parts	80,542	-	1,191	0.55%	24,718	0.55%	243,665	(55,704)	Associate

Konly				4,000	-	400	100.00%	4,000	100.00%	-	-	Subsidiary

Konly				20,000	-	1,000	5.00%	19,483	5.00%	(37,211)	(517)	Associate

Ronly				845,510	845,510	40,509	6.09%	604,283	6.09%	(1,240,799)	(75,521)	Subsidiary

Ronly	Daxin	Taiwan ROC	Research, manufacturing and	70,021	70,021	6,312	6.15%	178,235	6.15%	631,304	38,795	Associate
			sales of display related
			chemicals
Ronly	Lextar	Taiwan ROC	Design, manufacturing, and sales	323,431	323,431	34,338	6.67%	675,025	6.67%	(629,358)	(41,909)	Associate
			of InGaN epi wafers and chips,
			and light emitting diode
			packages and modules
Ronly	IOC	Taiwan ROC	R&D and design of flexible electronics technology and processing equipment development	68,400	-	3,420	17.10%	66,634	17.10%	(37,211)	(1,766)	Associate

DPTW	BVLB	Malaysia	Holding company	1,051,289	1,051,289	36,000	29.71%	243,885	29.71%	(9,160)	(2,721)	Subsidiary
DPTW	DPLB	Malaysia	Holding company	4,362,627	4,362,627	92,267	100.00%	5,595,202	100.00%	(256,864)	(237,730)	Subsidiary
DPTW	FHVI	BVI	Holding company	2,362,321	2,362,321	22,006	100.00%	3,846,168	100.00%	(216,776)	(220,204)	Subsidiary
DPTW	FFMI	Mauritius	Holding company	274,700	274,700	653	100.00%	101,001	100.00%	6,826	6,656	Subsidiary
DPTW	EFOP	Taiwan ROC	Manufacturing and sales of	338,729	338,729	33,873	49.00%	185,735	49.00%	14,318	7,016	Joint
			polymer plasticized raw									Venture
			materials
DPTW	Darwin	Thailand	International trade	3,740	3,740	40	40.00%	11,185	40.00%	3,357	1,343	Associate
	Summit
	Corporation
	Ltd.
ACTW	ACMK	Malaysia	Manufacturing and sales of solar	449,975	449,975	46,196	100.00%	393,218	100.00%	(75,081)	(75,081)	Subsidiary
			wafers

(Continued)

				Original Investment Amount	Original Investment Amount	December 31, 2020	December 31, 2020	December 31, 2020	Maximum		Investor’s Share
										Net Income
Investor Coman	Investee Coman						Percentage	Carrying	Shareholding		of Profit (Loss) of Investee
		Location	Main Activities	December 31,	December 31,					(Loss) of		Note
py	py			2020	2019	Shares	of Ownership	Amount (Notes 1 and 2)	in the Interim	Investee	(Notes 1 and 2)

ACTW	SDMC	Taiwan ROC	Holding company	1,988,488	1,988,488	116,836	100.0000%	1,945,204	100.0000%	134,827	166,521	Subsidiary
SDMC	M.Setek	Japan	Manufacturing and sales of	23,596,398	23,596,398	11,404,184	99.9991%	1,907,607	99.9991%	154,333	154,332	Subsidiary
			ingots
ADCM	ADHLD	Cayman	Holding company	-	-	-	30.00%	-	30.00%	-	-	Subsidiary
												(Note 5)
ADHLD	ADSG	Singapore	Holding company	-	-	-	100.00%	-	100.00%	-	-	Subsidiary
												(Note 6)
AULB	AUUS	United States	Sales and sales support of TFT-	USD 1,000	USD 1,000	1,000	100.00%	USD 2,741	100.00%	USD 678	USD 678	Subsidiary
			LCD panels
AULB	AUJP	Japan	Sales support of TFT-LCD	USD 276	USD 276	1	100.00%	USD 1,943	100.00%	USD 78	USD 78	Subsidiary
			panels
AULB	AUKR	South Korea	Sales support of TFT-LCD	USD 155	USD 155	-	100.00%	USD 1,026	100.00%	USD (50)	USD (50)	Subsidiary
			panels
AULB	AUCZ	Czech	Assembly of solar modules	USD 20,531	USD 20,531	-	100.00%	USD 11,275	100.00%	USD 60	USD 60	Subsidiary
		Republic
AULB	AUSK	Slovakia	Repairing of TFT-LCD modules	USD 1,359	USD 1,359	-	100.00%	USD 25,415	100.00%	USD 272	USD 272	Subsidiary
		Republic
AULB	AUST	Singapore	Manufacturing TFT-LCD panels	USD 241,487	USD 276,543	907,114	100.00%	USD 89,224	100.00%	USD 4,917	USD 4,917	Subsidiary
			based on low temperature
			polysilicon technology
AULB	AUVI	United States	Research and development and	USD 5,000	USD 5,000	5,000	100.00%	USD 6,001	100.00%	USD 127	USD 127	Subsidiary
			IP related business
AULB	BVLB	Malaysia	Holding company	USD 85,171	USD 85,171	85,171	70.29%	USD 20,241	70.29%	USD (310)	USD (218)	Subsidiary
AULB	AUSG	Singapore	Holding company and sales	USD 9,958	USD 48,321	266,268	100.00%	USD 6,870	100.00%	USD 2,322	USD 2,322	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 3,088	100.00%	USD 2,274	USD 2,274	Subsidiary
			products
AUSG	ADPNL	Netherlands	Sales support of solar-related products; sales and sales support of TFT-LCD panels; holding company	USD 3,245	USD 45	-	100.00%	USD 3,398	100.00%	USD (76)	USD (76)	Subsidiary

DPLB	DPHK	Hong Kong	Holding company	USD 103,785	USD 103,785	10	100.00%	USD 198,466	100.00%	USD (6,892)	USD (6,892)	Subsidiary
												(Note 4)
DPLB	DPSK	Slovakia	Manufacturing and sales of	USD 4,216	USD 4,216	-	100.00%	USD 864	100.00%	USD (1,795)	USD (1,795)	Subsidiary
		Republic	automotive parts
FHVI	FTMI	Mauritius	Holding company	USD 6,503	USD 6,503	6,503	100.00%	USD 72,121	100.00%	USD (8,706)	USD (8,706)	Subsidiary
FHVI	FWSA	Samoa	Holding company	USD 19,000	USD 19,000	19,000	100.00%	USD 16,015	100.00%	USD 586	USD 586	Subsidiary

(Continued)

				Original Investment Amount	Original Investment Amount	December 31, 2020	December 31, 2020	December 31, 2020	Maximum		Investor’s Share
										Net Income
Investor Coman	Investee Coman						Percentage	Carrying	Shareholding		of Profit (Loss) of Investee
		Location	Main Activities	December 31,	December 31,					(Loss) of		Note
py	py			2020	2019	Shares	of Ownership	Amount (Notes 1 and 2)	in the Interim	Investee	(Notes 1 and 2)

FHVI	PMSA	Samoa	Holding company	USD 39,673	USD 39,673	31,993	100.00%	USD 48,956	100.00%	USD 789	USD 789	Subsidiary
M.Setek	Ichijo	Japan	Manufacturing of semiconductor	JPY 5,000	JPY 5,000	-	38.46%	-	38.46%	-	-	Associate
	Seisakusyo		equipment and related parts									(Note 3)
	Co., Ltd.
ADPNL	ADPUS	United States	Sales and sales support of TFT-	EUR 1,241	-	1	100.00%	EUR 1,220	100.00%	-	-	Subsidiary
			LCD panels
ADPNL	ADPJP	Japan	Sales support of TFT-LCD	EUR 414	-	1	100.00%	EUR 394	100.00%	-	-	Subsidiary
			panels
CQIL	CQHLD	United	Holding company	USD 29,118	USD 18,868	635,730	100.00%	USD 29,097	100.00%	USD (26)	USD (26)	Subsidiary
		Kingdom
CQHLD	CQUK	United	Sales and sales support of	GBP 1,874	GBP 1,874	-	100.00%	USD 139	100.00%	USD 4	USD 4	Subsidiary
		Kingdom	content management system
CQHLD	CQUS	United States	Sales of content management	USD 25,857	USD 15,607	13	100.00%	USD 14,126	100.00%	USD (1,474)	USD (1,474)	Subsidiary
			system and hardware
CQHLD	CQCA	Canada	Research and development of	CAD 1,310	CAD 1,310	-	100.00%	USD 660	100.00%	USD 123	USD 123	Subsidiary
			content management system
CQUS	JRUK	United	Development and sales of	USD 1,500	-	1	100.00%	USD 1,526	100.00%	USD 57	USD 57	Subsidiary
		Kingdom	content management system and
			sales of related hardware
CQUS	JRUS	United States	Development and sales of	USD 8,000	-	18	100.00%	USD 7,856	100.00%	USD (145)	USD (145)	Subsidiary
			content management system and
			sales of related hardware

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

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

Note 3: The carrying amount includes accumulated impairment loss.

Note 4: The registration of the alteration of DPHK’s common stock has not been completed.

Note 5: ADCM and ADHLD are new subsidiaries incorporated in August 2020. As of the end of December 2020, no capital injection has been made for these companies. Note 6: ADSG is a new subsidiary incorporated in October 2020. As of the end of December 2020, no capital injection has been made for this company.

Note 7: On and from December 31, 2020, the investment in Qisda has been accounted for using the equity method. See Note 6(6) for the relevant information.

(Continued)

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

For the year ended December 31, 2020

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

Table 9

1. AUO `：`

(1) Related information on investment in Mainland China

					Investment	Investment	Accumulated				’	Carrying
				Accumulated									Accumulated
					Flows		Outflow of		%			Amount of
		Total Amount		Outflow of			Investment	Net Income	Ownership	Maximum	Investors	the	Inward
				Investment									Remittance
Investee		f ii									Share of
	i Aiii	o Pad-n	Method of	f i			from Taiwan	(Loss) of	through	Shareholding	fi	Investment	of Earnings	Note
Company	Man ctvtes	Capital	Investment	rom Tawan			as of	Investee	Direct or	in the	Prot (Loss)	as of
		(Note 2)		as of January	Outflow	Inflow	December	(Notes 4 and 5)	Indirect	Interim	of Investee	December 31,	as of
				1, 2020 (Note 2)			31, 2020		Investment		(Notes 4 and 5)	2020	December 31, 2020
							(Note 2)					(Note 2)

A-Care	Design, development and sales	65,736	(Note 1)	-	-	-	-	(20,503)	100%	100%	(20,503)	19,209	-
	of software and hardware for
	health care industry
AUKS	Manufacturing and sales of TFT-	27,395,227	(Note 1)	13,971,566	-	-	13,971,566	535,802	51%	51%	273,259	5,342,537	-
	LCD panels
AUSH	Sales support of TFT-LCD	85,521	(Note 1)	28,507	-	-	28,507	(79,696)	100%	100%	(79,696)	342,049	-
	panels
AUSJ	Manufacturing and assembly of	3,078,756	(Note 1)	2,280,560	-	-	2,280,560	122,802	100%	100%	122,802	3,967,894	-
	TFTLCD modules; leasing
AUSZ	Manufacturing, assembly and	7,924,946	(Note 1)	5,701,400	-	-	5,701,400	1,392,835	100%	100%	1,392,835	16,367,899	-
	sales of TFT-LCD modules
AUXM	Manufacturing, assembly and	7,126,750	(Note 1)	7,126,750	-	-	7,126,750	867,929	100%	100%	867,929	14,493,546	-
	sales of TFT-LCD modules
BVHF	Manufacturing and sales of	2,093,839	(Note 1)	-	-	-	-	(8,870)	100%	100%	(8,870)	819,362	-	Note 6
	liquid crystal products and
	related parts
BVXM	Manufacturing and sales of	2,629,440	(Note 1)	-	-	-	-	16,506	100%	100%	16,506	1,309,594	-
	liquid crystal products and
	related parts
EDT	Design and sales of software and	21,912	(Note 1)	-	-	-	-	(8,955)	100%	100%	(8,955)	7,971	-
	hardware integration system and
	equipment relating to intelligent
	manufacturing
MIS	Development and licensing of	87,648	(Note 1)	-	-	-	-	(40,387)	100%	100%	(40,387)	33,252	-
	software relating to intelligent
	manufacturing, and related
	consultingservices

(Continued)

					Investment	Investment	Accumulated					Carrying
				Accumulated									Accumulated
					Flows		Outflow of		%			Amount of
				Outflow of							I’		Inward
		Total Amount					Investment	Net Income	Ownership	Maximum	nvestors	the
				Investment									Remittance
Investee		f Pii									Share of
	Main Activities	o ad-n	Method of	from Taiwan			from Taiwan	(Loss) of	through	Shareholding	Profit (Loss)	Investment	of Earnings	Note
Company		Capital	Investment	f			as of	Investee	Direct or	in the	f	as of	as of
		(Note 2)		as o January	Outflow	Inflow	December	(Notes 4 and 5)	Indirect	Interim	o Investee	December 31,
				1, 2020 (Note 2)			31, 2020		Investment		(Notes 4 and 5)	2020	December 31, 2020
							(Note 2)					(Note 2)

TYSZ	Design, manufacturing and sales	219,120	(Note 1)	-	-	-	-	(23,057)	50%	50%	(11,528)	97,778	-
	of large-size touch LCD
	modules
UFSD	Planning, design and	8,765	(Note 1)	-	-	-	-	(3,396)	100%	100%	(3,396)	2,420	-
	development of construction for
	environmental protection and
	related project management
UFSZ	Planning, design and	52,589	(Note 1)	-	-	-	-	(12,956)	100%	100%	(12,956)	31,846	-
	development of construction for
	environmental protection and
	related project management
ADSZ	Management consulting	-	(Note 1)	-	-	-	-	-	100%	100%	-	-	-	Note 7

(2) Upper limit on investment in Mainland China

(2) Upper limit on investment in Mainland China
Accumulated Investment in Mainland China as of December 31, 2020 (Note 2)	Investment Amounts Authorized by the Investment Commission, MOEA (Note 2)	Upper Limit on Investment Stipulated by the Investment Commission, MOEA (Note 3)
29,108,783 (USD 1,021,110)	38,534,120 (USD 1,344,003 and HKD 60,000)	116,274,219

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 TYSZ.
Note 5: Amounts denominated in foreign currencies are translated into New Taiwan Dollars using the average exchange rates for the year of 2020. Note 6: BVHF is 100% owned by BVLB, a jointly-owned subsidiary of AUO and DPTW.
Note 7: ADSZ is a new subsidiary incorporated in December 2020. As of the end of December 2020, no capital injection has been made for this company.

(Continued)

2. DPTW:

(1) Related information on investment in Mainland China

	Main Activities	Ttl At			Investment	Investment	Accumulated			Maximum	Investor’s	Carrying		Note
				Accumulated Outflow of									Accumulated Inward
					Flows		Outflow of		%			Amount of
Investee		oa moun of Paid-in Caital	Method of	Investment from Taiwan			Investment from Taiwan	Net Income (Loss) of	Ownership through	Shareholding	Share of Profit (Loss)	the Investment	Remittance of Earnings as of
Company		p (Note 4)	Investment	as of January 1, 2020	Outflow (Note 4)	Inflow (Note 4)	as of December 31, 2020	Investee (Notes 2 and 6)	Direct or Indirect I	in the Interim	of Investee (Notes 2 and 6)	as of December 31 2020	December 31, 2020
				(Note 4)			(Note 4)		nvestment			, (Note 4)	(Note 4)

BVHF	Manufacturing and sales of	2,093,839	(Note 1)	456,112	-	-	456,112	(8,870)	29.71%	29.71%	(8,870)	819,362	-	Note 5
	liquid crystal products and
	related parts
DPSZ	Manufacturing and sales of	712,675	(Note 1)	427,605	-	-	427,605	(58,256)	100%	100%	(58,256)	1,309,155	1,309,439	Note 9
	backlight modules and related
	parts
DPXM	Manufacturing and sales of	1,995,490	(Note 1)	1,995,490	-	-	1,995,490	(139,536)	100%	100%	(139,536)	4,348,510	1,475,238
	backlight modules and related
	parts
FHWJ	Manufacturing and sales of	185,296	(Note 1)	233,757	-	-	233,757	6,826	100%	100%	6,826	50,955	-
	backlight modules and related
	parts
FPWJ	Manufacturing, sales and trading of precision plastic parts	826,703	(Note 1)	541,633	-	-	541,633	26,431	100%	100%	26,431	681,619	-	Note 8

FTKS	Manufacturing and sales of	1,026,252	(Note 1)	1,026,252	-	-	1,026,252	23,320	100%	100%	23,320	1,395,576	-
	backlight modules and related
	parts
FTWJ	Manufacturing and sales of	997,745	(Note 1)	185,296	-	-	185,296	(266,528)	100%	100%	(266,528)	1,830,825	401,223	Note 7
	backlight modules and related
	parts

(2) Upper limit on investment in Mainland China

Accumulated Investment in Mainland China as of December 31, 2020 (Note 4)	Investment Amounts Authorized by the Investment Commission, MOEA (Note 4)	Upper Limit on Investment Stipulated by the Investment Commission, MOEA (Note 3)
4,866,145 (USD 170,700)	5,008,252 (USD 175,685)	5,956,947

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.

(Continued)

100

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, 2020 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 2020.
Note 7: The amount of paid-in capital includes the capitalization of retained earnings amounting to USD28,500 thousand for the years from 2005 to 2007.
Note 8: The amount of paid-in capital includes the capital injection of USD10,000 thousand from the offshore holding company, which was originally from FTWJ’s appropriation of earnings.
Note 9: The amount of paid-in capital includes the capital injection of USD1,000 thousand from DPLB in 2010 and the capitalization of retained earnings of USD9,000 thousand from DPSZ in 2012.

AI assistant

AUO — Audit Report / Information 2020

52062_rns_2020-12-29_b957fcdd-c404-4843-bdf2-c456dd14a524.pdf

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Financial Statements

Representation Letter

Independent Auditors’ Report

Opinion

Basis for Opinion

Key Audit Matters

Description of key audit matter:

How the matter was addressed in our audit:

2. Revenue recognition

Description of key audit matter:

How the matter was addressed in our audit:

Other Matters

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

Auditors’ Responsibilities for the Audit of the Consolidated Financial Statements

Notes to Readers

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

AU OPTRONICS CORP. AND SUBSIDIARIES

Consolidated Balance Sheets

December 31, 2020 and 2019

(Expressed in thousands of New Taiwan dollars)

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

Consolidated Statements of Comprehensive Income

For the years ended December 31, 2020 and 2019

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

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

Consolidated Statements of Changes in Equity

For the years ended December 31, 2020 and 2019

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

Consolidated Statements of Cash Flows

For the years ended December 31, 2020 and 2019

(Expressed in thousands of New Taiwan dollars)

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

Consolidated Statements of Cash Flows (Continued)

For the years ended December 31, 2020 and 2019 (Expressed in thousands of New Taiwan dollars)

Notes to Consolidated Financial Statements

For the years ended December 31, 2020 and 2019

1. Organization

2. The Authorization of Financial Statements

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

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

4. Summary of Significant Accounting Policies

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(2) Basis of preparation

(3) Basis of consolidation

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(7) Financial instruments

(i) Classification of financial assets

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(ii) Impairment of financial assets

(iii) De-recognition of financial assets

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

b. Financial liabilities

(i) Classification of financial liabilities

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

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(8) Inventories

(9) Investments in associates and joint ventures

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(10) Investment property

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

c. Depreciation

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

As a lessor

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

Amortization

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

(14) Impairment – non-financial assets

(15) Provisions

a. Warranties

AU OPTRONICS CORP. AND SUBSIDIARIES Notes to Consolidated Financial Statements

AUO Audit Report / Information 2020