Fujitsu 2012 Annual Report Download - page 112

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(f) Derivative financial instruments
The Group uses derivative financial instruments mainly for the purpose of hedging against the risk of fluctuations in foreign exchange
rates and interest rates on receivables and payables denominated in foreign currencies.
The hedging instruments consist of forward exchange, option and swap contracts and related complex contracts.
Derivative financial instruments are stated at fair value, and gains or losses on changes in fair values of the hedging instruments are
recognized as “Other income (expenses).”
However, gains or losses on changes in fair values of derivative financial instruments, which qualify for deferral hedge accounting,
are deferred on the balance sheet until gain or loss on the hedged items are recognized.
(g) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount deemed sufficient to cover estimated future losses.
(h) Inventories
Finished goods are mainly stated at cost determined by the moving average method.
Work in process is mainly stated at cost determined by the specific identification method or the average cost method.
Raw materials and supplies are mainly stated at cost determined by the moving average method.
Inventories with lower profitability are written down.
(i) Property, plant and equipment (excluding lease assets)
Property, plant and equipment, including renewals and additions, are carried at cost. Maintenance and repairs, including minor renew-
als and improvements, are charged to income as incurred.
Depreciation is computed by the straight-line method over the estimated useful lives, reflected by the likely period over which the
value of the asset can be realized under actual business conditions.
Certain property, plant and equipment are impaired based on consideration of their future usefulness. Accumulated impairment loss
is subtracted directly from each asset.
(j) Intangible assets
Goodwill, including the goodwill acquired by consolidated subsidiaries, representing the premium paid to acquire a business is amor-
tized using the straight-line method over periods not exceeding 20 years as these are periods over which the Group expects to benefit
from the acquired business.
Computer software for sale is amortized based on the current year sales units to the projected total products’ sales units. Computer
software for internal use is amortized by the straight-line method over the estimated useful lives.
Other intangible assets are amortized by the straight-line method over the estimated useful lives of the respective assets.
(k) Leases
Assets acquired by lessees in finance lease transactions are recorded in the corresponding asset accounts. As for lease transactions in
which the title is not transferred to the lessees, the leased assets are depreciated over the lease term by the straight-line method.
Operating lease payments are recognized as an expense over the lease term.
(l) Provision for product warranties
Provision for product warranties is recognized at the time of sales of the products at an amount which represents the estimated cost,
based on past experience, to repair or exchange certain products within the warranty period.
110 FUJITSU LIMITED ANNUAL REPORT 2012