Brother International 2008 Annual Report Download - page 23

21Brother Annual Report 2008
(7) Long-lived Assets
The Company and its domestic subsidiaries review its long-lived assets for impairment whenever events or changes in
circumstance indicate the carrying amount of an asset or asset group may not be recoverable. An impairment loss
would be recognized if the carrying amount of an asset or asset group exceeds the sum of the undiscounted future cash
flows expected to result from the continued use and eventual disposition of the asset or asset group. The impairment
loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount,
which is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net
selling price at disposition.
(8) Bond Issue Cost
Bond issue costs are charged to income as incurred.
(9) Research and Development Costs
Research and development costs are charged to income as incurred.
(10) Leases
Finance leases that do not transfer ownership of the leased property to the lessee are primarily accounted for as rental
transactions. Under Japanese accounting standards for leases, finance leases that are deemed to transfer ownership of
the leased property to the lessee are to be capitalized, while other finance leases are permitted to be accounted for as
operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the lessee's financial
statements.
(11) Warranty Reserve
The Group provided a warranty reserve for repair service to cover all repair expenses based on the past warranty experi-
ence.
Warranty reserve included in accrued expenses was ¥7,229 million ($72,290 thousand) and ¥7,603 million at March
31, 2008 and 2007, respectively.
(12) Income Taxes
The provision for current income taxes is computed based on the pretax income included in the consolidated state-
ments of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the expect-
ed future tax consequences of temporary differences between the carrying amounts and the tax bases of assets and lia-
bilities. Deferred taxes are measured by applying currently enacted tax laws to the temporary differences.
(13) Bonuses to directors and corporate auditors
Bonuses to directors and corporate auditors are accrued at the year end to which such bonuses are attributable.
(14) Liability for Retirement Benefits
(i) Employees' Retirement Benefits — The Company has a contributory funded pension plan covering substantially all
of its employees. Certain consolidated subsidiaries have non-contributory funded pension plans or unfunded retire-
ment benefit plans. Also, certain foreign subsidiaries have defined benefit pension plans and defined contribution
pension plans.
The Company and certain consolidated subsidiaries account for the liability for retirement benefits based on
projected benefit obligations and plan assets at the balance sheet date. Certain small subsidiaries apply the simpli-
fied method to state the liability at the amount which would be paid if employees retired less plan assets at the bal-
ance sheet date.
(ii) Retirement Benefits for Directors and Corporate Auditors — Certain domestic consolidated subsidiaries provided
retirement allowances for directors and corporate auditors. Retirement allowances for directors and corporate audi-
tors were recorded to state the liability which would be paid at the moment if they retired at each balance sheet