Casio 2016 Annual Report Download - page 26

Annual Report 2016 / 4625
CONTENTS
To Our Stakeholders Prole Special Features ESG Information Financial Section Corporate Data
Notes to Consolidated Financial Statements
Years ended March 31, 2016 and 2015 Casio Computer Co., Ltd. and Consolidated Subsidiaries
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated financial statements of CASIO COMPUTER CO., LTD. (“the Company”) and
its consolidated subsidiaries 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 from International Financial Reporting Standards.
The accompanying consolidated financial statements have been restructured and translated into English
(with certain expanded disclosure) 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. Certain 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 translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of
readers outside Japan, using the prevailing exchange rate at March 31, 2016, which was ¥113 to U.S.$1. The
convenience translation should not be construed as a representation 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. Significant Accounting Policies
Consolidation
The accompanying consolidated financial statements include the accounts of the Company and significant
subsidiaries (together with the Company, “the Group”) which the Company controls through majority voting
rights or existence of certain conditions. Shares of associates of which the Company has the ability to
exercise significant influence over operating and financial policies are accounted for using the equity method.
In the elimination of investments in subsidiaries, the portion of assets and liabilities of a subsidiary
attributable to the subsidiary’s shares acquired by the Company are recorded based on the fair value as of the
respective dates when such shares are acquired. The amounts of assets and liabilities attributable to non-
controlling interests of the subsidiary are determined using the financial statements of the subsidiary.
Material intercompany balances, transactions and profits have been eliminated in consolidation.
The difference between the cost and underlying fair value of the net assets of investments in subsidiaries at
acquisition is included in other assets and is amortized on a straight-line basis over five years.
Cash flow statements
In preparing the consolidated statements of cash flows, cash on hand, readily available deposits and short-
term highly liquid investments with maturities not exceeding three months at the time of purchase are
considered to be cash and cash equivalents.
Foreign currency translation
All monetary assets and liabilities denominated in foreign currencies are translated at the current exchange
rates at the balance sheet date, and the translation gains and losses are credited or charged to income (loss).
Assets and liabilities of consolidated overseas subsidiaries are translated into yen at the current exchange
rate at the balance sheet date while their revenue and expenses are translated at the average exchange rate
for the period. Differences arising from such translation are included in net assets as foreign currency
translation adjustment.
Securities and investment securities
Debt securities designated as held-to-maturity are carried at amortized cost using the straight-line method.
Available-for-sale securities for which fair value is readily determinable, are stated at fair value as of the end of
the period with unrealized gains and losses, net of applicable deferred tax assets or liabilities, not reflected in
earnings but directly reported as a separate component under net assets. The cost of such securities sold is
determined primarily by the moving-average method. Available-for-sale securities for which fair value is not
readily determinable are stated primarily at moving-average cost.
Derivatives and hedge accounting
The accounting standards for financial instruments require companies to state derivative financial instruments
at fair value and to recognize changes in the fair value as gains or losses unless derivative financial instruments
meet the criteria for hedge accounting.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Group defers
recognition of gains or losses resulting from changes in the fair value of derivative financial instruments until
the related losses or gains on the hedged items are recognized.
Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount
to be paid or received under the interest rate swaps is added to or deducted from the interest on the assets
or liabilities for which the swap contract is executed.
The Group uses forward foreign currency contracts and interest rate swaps as derivative financial
instruments primarily for the purpose of mitigating future risks of fluctuations of foreign currency exchange
rates with respect to foreign currency assets and liabilities and of interest rate changes with respect to cash
management.
Forward foreign currency and interest rate swap contracts are subject to risks of foreign currency exchange
rate changes and interest rate changes, respectively.
The derivative transactions are executed and managed by the Company’s Finance Department in
accordance with the established policies and within the specified limits on the amounts of derivative
transactions allowed.