Alpine 2008 Annual Report Download - page 21

21
March 31, 2008, 2007 and 2006
ALPINE ELECTRONICS, INC.
1. Basis for Presenting Consolidated Financial Statements
Alpine Electronics, Inc. (“the Company”), a Japanese corporation, is a
subsidiary of Alps Electric Co., Ltd. (40.7% owned), a Japanese listed
company. The accompanying consolidated financial statements have
been prepared in accordance with the provisions set forth in the Japanese
Securities and Exchange Law and its related accounting regulations, and
in conformity with accounting principles generally accepted in Japan,
which are different in certain respects as to application and disclosure
requirements of International Financial Reporting Standards. The accounts
of overseas subsidiaries are based on their accounting records maintained
in conformity with generally accepted accounting principles prevailing in
the respective countries of domicile.
The accompanying consolidated financial statements have been
restructured and translated into English (with some expanded descriptions
and the inclusion of consolidated statements of changes in net assets)
from the consolidated financial statements of the Company prepared in
accordance with Japanese GAAP and filed with the appropriate Local
Finance Bureau of the Ministry of Finance as required by the Securities and
Exchange Law. Some supplementary information included in the statutory
Japanese language consolidated financial statements, but not required
for fair presentation, is not presented in the accompanying consolidated
financial statements.
The accompanying consolidated balance sheets as of March 31, 2008
and 2007 have been prepared in accordance with the new accounting
standard as discussed in Note 2 (21).
Also, as discussed in Note 2 (22), the consolidated statements of
changes in net assets for the year ended March 31, 2008 and 2007 have
been prepared in accordance with the new accounting standard. The
accompanying consolidated statement of stockholders’ equity for the
year ended March 31, 2006 was voluntarily prepared for the purpose
of inclusion in the consolidated financial statements although such
statements was not required to be filed with the Local Finance Bureau.
The translations of the Japanese yen amounts into U.S. dollars are
included solely for the convenience of readers outside Japan, using the
prevailing exchange rate at March 31, 2008, which was ¥100.19 to U.S.$1.
The convenience translations should not be construed as representations
that the Japanese yen amounts have been, could have been, or could
in the future be, converted into U.S. dollars at this or any other rate of
exchange.
2. Summary of Significant Accounting Policies
(1) Consolidation
The consolidated financial statements include the accounts of the
Company and substantially all of its subsidiaries (“the Companies”) which
are controlled through substantial ownership of majority voting rights or
existence of certain conditions. All significant intercompany transactions
and account balances are eliminated in consolidation.
During the fiscal year ended March 31, 2008, one subsidiary was excluded
in consolidation due to the liquidation.
(2) Equity method
Investments in affiliated companies (all companies 20% to 50% owned
and certain others 15% to 20% owned) are accounted for by the equity
method in the consolidated financial statements for 2008, 2007 and
2006.
(3) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand,
readily-available deposits and short-term highly liquid investments with
maturities of not exceeding three months at the time of purchase are
considered to be cash and cash equivalents.
(4) Securities
The intent of holding each security is examined and securities are classified
as (a) securities held for trading purposes (hereafter, “trading securities”), (b)
debt securities intended to be held to maturity (hereafter, “held-to-maturity
debt securities”), (c) equity securities issued by subsidiaries and affiliated
companies, and (d) for all other securities that are not classified in any of
the above categories (hereafter, “available-for-sale securities”).
The Companies had no trading securities or held-to-maturity debt
securities. Equity securities issued by subsidiaries and affiliated companies
which are not consolidated or accounted for using the equity method
are stated at moving-average cost. Available-for-sale securities with fair
market value are stated at fair market value. Unrealized holding gains and
losses on these securities are reported, net of applicable income taxes,
as a separate component of the net assets. Realized gain on sale of such
securities is computed using the moving-average cost. Available-for-sale
securities with no fair market value are stated at moving-average cost.
If the market value of equity securities issued by subsidiaries and affiliated
companies which are not consolidated or on the equity method and
available-for-sale securities declines significantly, such securities are
stated at fair market value and the difference between the fair market
value and the carrying amount is recognized as loss in the period of the
decline. If the fair market value of equity securities issued by subsidiaries
and affiliated companies is not readily available, such securities should
be written down to net asset value in the event net asset value has
significantly declined. Unrealized losses on these securities are reported in
the income statements.
(5) Allowance for doubtful accounts
The Companies provide allowance for doubtful accounts to cover probable
losses on collection by estimating uncollectible amounts individually in
addition to amounts for possible losses on collection in the past.
(6) Inventories
Inventories held by the Company and its consolidated subsidiaries except
for those in America and Europe are principally stated at cost determined
by the weighted-average method.
Inventories held by the consolidated subsidiaries in America and Europe
are principally stated at the lower of market or cost, mainly determined by
the moving-average method.
(7) Property, plant, equipment and depreciation
Property, plant and equipment are stated at cost except for certain land.
The Companies compute depreciation of property, plant and equipment,
except for certain buildings, using the declining-balance method at rates
based on the useful lives prescribed by Japanese tax regulations, while
overseas consolidated subsidiaries use the straight-line method over the
estimated useful lives.
Notes to Consolidated Financial Statements