Canon 2004 Annual Report Download - page 74

Download and view the complete annual report

Please find page 74 of the 2004 Canon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 86

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86

72
CANON INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
December 31 Thousands of
Millions of yen U.S. dollars
2004 2003 2004
Deferred tax assets:
Inventories ¥11,364 13,540 $109,269
Accrued business tax 10,149 8,684 97,587
Accrued pension and severance cost 34,680 45,149 333,462
Minimum pension liability adjustments 22,778 56,526 219,019
Research and development — costs capitalized for tax purposes 22,499 20,766 216,337
Property, plant and equipment 17,406 17,074 167,365
Accrued expenses 17,976 15,964 172,846
Net operating losses carried forward 1,799 6,279 17,298
Other 24,258 21,330 233,250
Total gross deferred tax assets 162,909 205,312 1,566,433
Less valuation allowance (3,495) (8,401) (33,606)
Net deferred tax assets 159,414 196,911 1,532,827
Deferred tax liabilities:
Undistributed earnings of foreign subsidiaries (5,638) (6,424) (54,212)
Net unrealized gains on securities (6,833) (6,191) (65,702)
Tax deductible reserve (11,975) (9,828) (115,144)
Financing lease revenue (30,196) (25,049) (290,346)
Other (5,329) (2,392) (51,240)
Total gross deferred tax liabilities (59,971) (49,884) (576,644)
Net deferred tax assets ¥99,443 147,027 $956,183
The tax effects of temporary differences that give rise to
the deferred tax assets and deferred tax liabilities at December
31, 2004 and 2003 are presented below:
The net changes in the total valuation allowance for the
years ended December 31, 2004, 2003, and 2002 were
decreases of ¥4,906 million ($47,173 thousand), ¥1,282
million and ¥3,192 million, respectively.
Based upon the level of historical taxable income and
projections for future taxable income over the periods which
the net deductible temporary differences are expected to
reverse, management believes it is more likely than not that
Canon will realize the benefits of these deferred tax assets, net
of the existing valuation allowance at December 31, 2004.
At December 31, 2004, Canon had net operating losses
which can be carried forward for income tax purposes of
¥5,065 million ($48,702 thousand) to reduce future taxable
income. Periods available to reduce future taxable income vary
in each tax jurisdiction and range from one year to ten years
as follows:
Thousands of
Millions of yen U.S. dollars
Within one year ¥ 182 $ 1,750
After one year through five years 4,805 46,202
After five years through ten years 78 750
Total ¥5,065 $ 48,702