Alpine 2011 Annual Report Download - page 21

21
March 31, 2011, 2010 and 2009
ALPINE ELECTRONICS, INC.
1. Basis of 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
Financial Instruments and Exchange Law and its related accounting
regulations, and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), 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. However, as described in Note 2(21), necessary adjustments are
made upon consolidation.
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 Financial
Instruments 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 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, 2011, which was ¥83.15 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.
(2) Equity method
Investment securities in affiliates (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 2011, 2010 and
2009.
Effective from the year ended March 31, 2011, the Companies adopted
“Accounting Standard for Equity Method of Accounting for Investments”
(Statement No.16 issued by the Accounting Standards Board of Japan
on March 10, 2008) and “Practical Solution on Unification of Accounting
Policies Applied to Associates Accounted for Using Equity Method”
(Practical Issues Task Force No.24 issued on March 10, 2008).
The impact on income before income taxes and minority interests is
nothing.
(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 affiliates,
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 affiliates 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 affiliates
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 affiliates 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 statements of operations.
(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 domestic consolidated
subsidiaries are principally stated at cost determined by the weighted-
average method. The value in the balance sheet is calculated by the
method of write-down of the carrying amount based on the decline of the
profitability.
Inventories held by the foreign consolidated subsidiaries are principally
stated at the lower of market or cost, mainly determined by the weighted-
average method or the moving-average method.
Effective from the year ended March 31, 2009, the Company and its
domestic consolidated subsidiaries adopted the new accounting standard,
“Accounting Standard for Measurement of Inventories” (Statement No.9
issued by the Accounting Standards Board of Japan on July 5, 2006).
As a result of the adopting the standard, operating loss decreased by ¥31
million and loss before income taxes and minority interests increased by
¥1,060 million for the fiscal year ended March 31, 2009.
In addition, as a result of reviewing the classification by adopting the
standard, the classification for Loss on abandonment of inventories
Notes to Consolidated Financial Statements