Epson 2016 Annual Report Download - page 113

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112
(8) Fair Value of Financial Instruments
(A) Fair value measurement
The fair values of financial assets and liabilities are determined as follows:
(Derivatives)
The fair values are calculated based on prices obtained from financial institutions.
(Equity securities and bonds receivable)
When market values for equity securities and bonds receivable are available, such values are used as the fair values.
The fair values of the equity securities and bonds receivable whose market values are unavailable are measured by
using the discounted cash flow method, price comparison method based on the prices of similar types of securities
and bonds and other valuation methods.
(Borrowings)
As current borrowings are settled on a short-term basis, the fair values approximate their carrying amounts. For
non-current borrowings with floating rates, it is assumed that the fair value is equal to the carrying amounts,
because the rates are affected in the short term by fluctuations in market interest rates, and because Epson’s credit
status has not greatly changed since they were implemented. The fair values of non-current borrowings with fixed
rates are calculated by the total sum of the principal and interest discounted using the interest rates that would be
applied if similar new borrowings were conducted.
(Bonds issued)
The fair values of bonds issued are determined based on market prices.
(Lease obligations)
The fair values are calculated based on the present value of the total amount discounted by the interest rate
corresponding to the period to maturity and the credit risk per each lease obligation classified per certain period.
(Other)
Other financial instruments are settled mainly on a short-term basis, and the fair values approximate the carrying
amounts.