Epson 2010 Annual Report Download - page 52

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51
foreign subsidiaries at rates based on estimated useful lives. For buildings acquired by the Company and its
Japanese subsidiaries on or after April 1, 1998, depreciation is computed based on the straight-line method,
which is prescribed by Japanese income tax laws.
The estimated useful lives of significant depreciable assets principally range from 8 to 50 years for buildings and
structures, and from 2 to 12 years for machinery, equipment and vehicles.
(7) Intangible assets
Amortization of intangible assets is computed using the straight-line method. Amortization of software for
internal use is computed using the straight-line method over its estimated useful life, ranging from three to five
years.
(8) Impairment of long-lived assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. This review is performed using estimates of future cash
flows. If the carrying value of a long-lived asset is considered to be impaired, an impairment charge is recorded
for the excess of the carrying value of the long-lived asset over its recoverable amount.
(9) Provision for bonuses
Provision for bonuses to employees is calculated on the basis of the estimated amounts that Epson is obligated to
pay its employees after the fiscal year-end for services provided up to the balance sheet dates.
Provision for bonuses to directors and statutory auditors are provided for the estimated amounts that the
Company is obligated to pay to directors and statutory auditors subject to the resolution of the general
shareholders’ meeting held subsequent to the fiscal year-end.
(10) Provision for product warranties
Epson provides an accrual for estimated future warranty costs based on the historical relationship of warranty
costs to net sales. Specific warranty provisions are made for those products where warranty expenses can be
specifically estimated.
(11) Provision for loss on litigation
Provision for loss on litigation are mainly provided for the estimated future compensation payment and litigation
expenses.
(12) Income taxes
The provision for income taxes is computed based on income before income taxes and minority interest in the
consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and
liabilities for the expected future tax consequences of temporary differences between the carrying amounts and
the tax basis of assets and liabilities.
The Company applies the consolidated tax return system for the calculation of income taxes. Under the
consolidated tax return system, the Company consolidates all wholly-owned domestic subsidiaries based on
Japanese tax regulations.
(13) Provision for retirement benefits
The Company and some of its Japanese subsidiaries recognize provision for retirement benefits to employees
based on the actuarial valuation of projected benefit obligation and the fair value of plan assets. Other Japanese