Tax Act：

Enforcement Rules of the Income Tax Act<br> Article　46

Content：

The methods of actual cost evaluation stated in Article 44 of the Act are as follows:
1. Where the specific identification method is adopted, the actual cost of the specific inventories serves as the acquisition prices of the inventories.
2. Where the first-in, first-out method is adopted, inventories shall be categorized in light of their nature, where inventories in the same category are separately listed and counted according to the order of the dates when the assets are acquired, with the inventory with the closest date to the year end listed at the forefront. The prices so collected and listed serve as the acquisition prices of the inventories.
3. Where the weighted average method is adopted, inventories shall be categorized in light of their nature, and for those of the same category, in order to come up with the price of each unit, the cost of the inventories of the beginning of the year and of the supplements of the year shall divided by the total quantity.
4. Where the moving average method is adopted, inventories shall be categorized in light of their nature, and, upon acquisition of inventories in the same category each time, the quantity and the acquisition price shall be jointly calculated with the quantity and the acquisition price kept last time in the same category, in order to come up with the average price for each unit. Upon the next time of acquisition, the average price for each unit is calculated according to the same method, using the acquisition price of the unit last acquired and adjusted in the then current year as the acquisition price of the inventories.
5. Where the retail price method is adopted, the price shall be set in advance according to product type, and the cost rate found from the purchasing cost, with the set price for each product times its cost rate to be used as the acquisition price for each unit of the inventories.
Where any of the first-in, first-out method or the moving average method is adopted as the method of inventory evaluation, the continuous inventory system shall be used.