Epson 2016 Annual Report Download - page 69

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At the commencement of the lease term, finance leases are recognised as assets and liabilities in the consolidated
statement of financial position at amounts equal to the fair value of the leased property or, if lower, the present
value of the minimum lease payments, each determined at the inception of the lease. Minimum lease payments are
apportioned between the finance charge and the reduction of the outstanding liability. The asset is depreciated
using the straight-line method over the shorter of the lease term and its estimated useful life which is consistent
with that for depreciable assets that are owned. Contingent rents are recognised as expenses in the periods in which
they are incurred.
Lease payments under an operating lease are recognised as an expense on a straight-line basis over the lease term
in the consolidated statement of comprehensive income.
Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement and
requires an assessment of whether fulfilment of the arrangement is dependent on the use of a specific asset or assets
(the asset) and the arrangement conveys a right to use the asset.
(10) Investment Property
Investment property is property held to earn rentals or for capital appreciation or both.
After recognition as an asset, investment property is measured by using the cost model and is carried at its cost less
any accumulated depreciation and any accumulated impairment losses.
Investment property is depreciated using the straight-line method over its estimated useful life. The estimated
useful life of major investment properties is 35 years.
(11) Impairment of Non-financial Assets
Epson assesses whether there is any indication that an asset may be impaired. If any such indication exists, or
irrespective of whether there is any indication of impairment, where impairment testing is required, the recoverable
amount of the asset is estimated. If it is not possible to estimate the recoverable amount for each asset, the
recoverable amount of the cash-generating unit to which the asset belongs is determined. The recoverable amount
is measured at the higher of an asset’s or cash-generating unit’s fair value less costs of disposal and its value in use.
If carrying amount of an asset or cash-generating unit exceeds its recoverable amount, an impairment loss is
recognised and the carrying amount of the asset is reduced to its recoverable amount. The impairment loss is
recognised in profit or loss. In determining an asset’s value in use, an estimate of the future cash flows expected to
derive from the asset are discounted to the present value, using pretax discount rates that reflect current market
assessments of the time value of money and the risks specific to the asset.
An impairment loss for goodwill is recognised in profit or loss in the consolidated statement of comprehensive
income and not reversed in a subsequent period. Epson assesses whether there is any indication that an impairment
loss recognised in prior periods for an asset other than goodwill may no longer exist or may have decreased. If any
such indication exists, the recoverable amount of that asset is estimated. If the recoverable amount exceeds the
carrying amount of the asset, an impairment loss is reversed to the carrying amount that would have been
determined (net of amortisation or depreciation) if no impairment loss had been recognised for the asset in prior
years.
(12) Non-current Assets Held for Sale and Discontinued Operations
Epson classifies a non-current asset or disposal group as held for sale if its carrying amount will be recovered
principally through a sale transaction rather than through continuing use. The non-current asset or disposal group as
held for sale is available for immediate sale in its present condition and its sale is highly probable when Epson
management commits to a plan to sell the asset or disposal group.
Epson measures the non-current asset or disposal group classified as held for sale at the lower of its carrying
amount and fair value less costs to sell. The non-current asset is not depreciated or amortised while it is classified
as held for sale or while it is part of a disposal group classified as held for sale.
A discontinued operation is a component of an entity, that is a cash-generating unit or a group of cash-generating
units, that either has been disposed of, or is classified as held for sale, and (a) represents a separate major line of
business or geographical area of operations, (b) is part of a single co-ordinated plan to dispose of a separate major
line of business or geographical area of operations or (c) is a subsidiary acquired exclusively with a view to resale.
(13) Post-employment Benefits
Epson has defined benefit plans and defined contribution plans as post-employment benefits plans.
For each defined benefit plan, Epson calculates the present value of defined benefit obligations and the related
current service cost and past service cost, using the projected unit credit method. For a discount rate, a discount
period is set based on the estimated timing of benefit payments in each period, and the discount rate is determined
by reference to market yields as of the end of fiscal year on high quality corporate bonds for the period
corresponding to the discount period. The net defined benefit liability (asset) is measured by deducting the fair
value of any plan assets (including adjustments of the net defined benefit asset and the asset ceiling, if necessary)