Honda 2007 Annual Report Download - page 100

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benefit pension plan established under the Welfare Pension
Insurance Law. EITF 03-2 requires employers to account for
the separation process of the substitutional portion from the
entire EPF plan (which includes a corporation portion) upon
completion of the transfer to the government of the substitu-
tional portion of the benefit obligation and related plan
assets. The separation process is considered the culmination
of a series of steps in a single settlement transaction. Under
this approach, the difference between the fair value of the
obligation and the assets required to be transferred to the
government should be accounted for and separately
disclosed as a subsidy.
As stipulated in the Japanese Welfare Pension Insurance
Law, the “Honda Employees’ Pension Fund (a confederated
welfare pension fund, the “Fund”)”, of which the Company
and a part of its domestic subsidiaries and affiliates
accounted for under the equity method were members, has
obtained approval from the Japanese Minister of Health,
Labor and Welfare for exemption from benefits obligations
related to past employee service with respect to the substitu-
tional portion of the Fund on July 1, 2005 and completed its
transfer on March 9, 2006. Previously on April 1, 2004, the
Company received approval of exemption from the obligation
for benefits related to future employee services with respect
to the fund. As a result, the Company recognized a gain of
¥228,681 million, which is the difference between the settled
accumulated benefit obligation and the assets transferred to
the government; a gain of ¥56,448 million for the
derecognition of previous accrued salary progression; and
settlement loss of ¥147,113 million for the related unrecog-
nized loss. Collectively, the Company recognized a net gain
of ¥138,016 million for the fiscal year ended March 31, 2006.
The Company and its consolidated subsidiaries adopted
SFAS No.158, “Employers’ Accounting for Defined Benefit
Pension and Other Postretirement Plans—an amendment of
FASB Statements No. 87, 88, 106, and 132(R)” on March 31,
2007, recognized its overfunded or underfunded status as an
asset or liability in its consolidated balance sheets.
The incremental effect of applying SFAS No. 158 at March 31, 2007, on balance sheet items is as follows:
Yen (millions)
Before After
Application of Application of
SFAS 158 Adjustments SFAS 158
Other assets ¥00,575,851 ¥(011,347 ¥00,587,198
Total assets 12,025,153 11,347 12,036,500
Accrued expenses 847,008 (39,667) 807,341
Total current liabilities 4,327,194 (39,667) 4,287,527
Other liabilities 1,047,374 190,338 1,237,712
Total liabilities 7,280,311 150,671 7,430,982
Accumulated other comprehensive loss, net* (287,842) (139,324) (427,166)
Total stockholders’ equity 4,621,935 (139,324) 4,482,611
U.S. dollars (millions) (note 2)
Before After
Application of Application of
SFAS 158 Adjustments SFAS 158
Other assets $004,878 $(0,096 $004,974
Total assets 101,865 96 101,961
Accrued expenses 7,175 (336) 6,839
Total current liabilities 36,656 (336) 36,320
Other liabilities 8,873 1,612 10,485
Total liabilities 61,672 1,276 62,948
Accumulated other comprehensive loss, net* (2,439) (1,180) (3,619)
Total stockholders’ equity 39,152 (1,180) 37,972
* The incremental effect of applying SFAS No. 158 on accumulated other comprehensive loss, net, includes tax effect of ¥72,881 million ($617 million).