Casio 2008 Annual Report Download - page 32

30 CASIO COMPUTER CO., LTD.
Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount sufficient to cover probable losses on the collection of receivables.
For the Group, the amount of the allowance is determined based on past write-off experience and an estimated amount of prob-
able bad debt based on a review of the collectibility of individual receivables.
Inventories
Inventories are stated principally at the lower of cost (first-in, first-out) or market (replacement cost or net realizable value).
Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is principally determined by the declining-balance method at rates
based on estimated useful lives except for the following buildings. The building of the head office of the Company and buildings,
excluding building fixtures, acquired after March 31, 1998 are depreciated using the straight-line method. The depreciation period
ranges from 2 years to 65 years for buildings and structures and 1 year to 20 years for machinery and equipment.
(Changes in Accounting Policies)
In accordance with fiscal 2007 Amend Part of the Corporation Tax Law, the Company and its consolidated subsidiaries have
adopted new accounting standards, effective from the year ended March 31, 2008, for the depreciation of property, plant and
equipment acquired on April 1, 2007 or after.
The adoption of the new standards causes operating income and income before income taxes and minority interests to be
reduced by ¥527 million ($5,270 thousand).
(Additional information)
Accompanying the recent amendment to the Corporation Tax Law, a new method of depreciation has been applied to property,
plant and equipment acquired on or prior to March 31, 2007. Under the new method, the difference between the amount
equivalent to 5% of the acquisition cost and the remainder value is depreciated over a period of five years in equal amounts, begin-
ning with the term that follows a term during which the book value of the asset is depreciated to 5% of the acquisition cost. The
reported figure is included in depreciation expenses.
As a result, operating income and income before income taxes and minority interests for the reporting term were each reduced
by ¥636 million ($6,360 thousand) compared with the amount calculated by the previous method.
Software costs
Software is categorized by the following purposes and amortized using the following two methods.
Software for market sales: The production costs for the master product are capitalized and amortized over no more than 3
years on a projected revenue basis.
Software for internal use:
The acquisition costs of software for internal use are amortized over 5 years using the straight-line method.
The amount of software costs capitalized is included in other assets in the consolidated balance sheets.
Stock issuance expenses
Stock issuance expenses are charged to income as incurred. Stock issuance expenses are included in other expenses in the consoli-
dated statements of income.
Bond issuance expenses and bond premium
Bond issuance expenses are charged to income as incurred. Bond issuance expenses are included in other expenses in the consoli-
dated statements of income.
Bond premium was amortized using the straight-line method over the life of the bond (6 years and 10 months).
Employees’ severance and retirement benefits
Under the terms of the employees’ severance and retirement plan, eligible employees are entitled under most circumstances, upon
mandatory retirement or earlier voluntary severance, to severance payments based on compensation at the time of severance and
years of service.
Employees’ severance and retirement benefits of the Company and some of its consolidated subsidiaries in Japan are covered
by two kinds of pension plans which are defined benefit corporate pension fund plan and tax-qualified pension plan. And those of
the Company and some of its consolidated subsidiaries in Japan are covered by lump-sum indemnities.
The Company and its domestic consolidated subsidiaries received the permission from the Minister of Health, Labor and Welfare,
for release from the obligation of paying benefits for employees’ prior services relating to the substitutional portion of the Welfare
Pension Insurance Scheme. Concurrently, employees’ pension fund plan was changed to defined benefit corporate pension fund plan.
The Company and some of its domestic consolidated subsidiaries provide defined contribution plan. In addition, the Company
has established an employee retirement benefits trust.
The liabilities and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated
using certain assumptions.
The Company and its consolidated subsidiaries in Japan provided liabilities for severance and retirement benefits at March 31,
2001 based on the estimated amounts of projected benefit obligation and the fair value of the plan assets at that date.
The excess of the projected benefit obligation over the total of the fair value of pension assets as of April 1, 2000 and the liabili-
ties for severance and retirement benefits recorded as of April 1, 2000 (the “net transition obligation”) is recognized in expenses in
equal amounts over 10 years commencing with the year ended March 31, 2001.