Epson 2011 Annual Report Download - page 78

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77
The fair value of financial instruments was calculated based on the following methods and premises:
(1) Cash and deposits, notes and accounts receivable-trade and short-term investment securities
Due to the short terms of these financial instruments, it is assumed that their fair value is equal to the carrying
amounts.
(2) Investment securities
Fair value was measured using exchange market value.
(3) Notes and accounts payable-trade, short-term loans payable, accounts payable-other
Due to the short terms of these financial instruments, it is assumed that their fair value is equal to the carrying
amounts.
(4) Bonds payable (including current portion)
Fair value was measured using market prices.
(5) Long-term loans payable (including current portion)
Because long-term loans payable that are with floating rates are affected in the short term by fluctuations in
market interest rates, and because Epson’s credit status has not changed greatly since they were implemented, it
is assumed that their fair value is equal to the carrying amounts. Among items that are based on floating interest
rates, the fair value of long-term loans payable whose interest rates become fixed as a result of interest-rate
swaps are calculated using the same method as used for determining the fair value of long-term loans payable
based on fixed interest rates. The fair value of loans payable based on fixed interest rates are calculated by
discounting the total amounts of loans payable using estimated interest rates that would be in effect if similar
loan arrangements were entered into.
Limitations
Fair value estimates are based on relevant market information. These estimates involve uncertainties and
therefore changes in assumptions could affect the estimates.
22. Contingent liabilities
Contingent liabilities for guarantee of employees’ housing loans from banks and others were \1,413 million and
\1,090 million ($13,108 thousand) as of March 31, 2010 and 2011, respectively.
23. Related party transactions
The Company has entered into real estate lease agreements with K.K. Sunritz (“Sunritz”). Mr. Yasuo Hattori, a
vice-chairman and director of the Company, and his relatives own 9.5% and 71.3% of the outstanding shares of
Sunritz, respectively.