Honda 2008 Annual Report Download - page 98

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A n n u a l R e p o r t 2 0 0 8
9 6
(b) The fair values of foreign currency forward exchange contracts, foreign currency option contracts and foreign currency
swap agreements are included in other assets and other current assets and/or liabilities in the consolidated balance sheets
as follows (see note 9):
Yen
(millions)
U.S. dollars
(millions)
(note 2)
2007 2008 2008
Other current assets ¥ 3,735 ¥ 36,488 $ 364
Other assets — 79,681 796
Other current liabilities (24,783) 429 4
¥(21,048) ¥116,598 $1,164
(c) The fair values of interest rate swap agreements are included in other assets and other current assets and/or liabilities in
the consolidated balance sheets as follows (see note 9):
Yen
(millions)
U.S. dollars
(millions)
(note 2)
2007 2008 2008
Other current assets ¥ 3,890 ¥ 753 $ 8
Other assets 6,976 (20,415) (204)
Other current liabilities (2,417) (54,721) (546)
¥ 8,449 ¥(74,383) $ (742)
The estimated fair values have been determined using
relevant market information and appropriate valuation
methodologies. However, these estimates are subjective in
nature and involve uncertainties and matters of significant
judgment and, therefore, cannot be determined with
precision. The effect of using different assumptions
and/or estimation methodologies may be significant to the
estimated fair values.
The methodologies and assumptions used to estimate
the fair values of financial instruments are as follows:
Cash and cash equivalents, trade receivables and trade
payables
The carrying amounts approximate fair values because of
the short maturity of these instruments.
Finance subsidiaries—receivables
The fair values of retail receivables and term loans to dealers
were estimated by discounting future cash flows using the
current rates for these instruments of similar remaining
maturities. Given the short maturities of wholesale
receivables, the carrying amount of those receivables
approximates fair value. The fair value of the retained
interest in the sold pools of finance receivables were
estimated by calculating the present value of the future cash
flows using a discount rate commensurate with the risks
involved.
Marketable securities
The fair value of marketable securities was estimated using
quoted market prices.
Held-to-maturity securities
The fair value of held-to-maturity securities was estimated
using quoted market prices.
Debt
The fair values of bonds and notes were estimated based on
the quoted market prices for the same or similar issues. The
fair value of long-term loans was estimated by discounting
future cash flows using rates currently available for loans
of similar terms and remaining maturities. The carrying
amounts of short-term bank loans and commercial paper
approximate fair values because of the short maturity of
these instruments.
Foreign exchange and interest rate instruments
The fair values of foreign currency forward exchange
contracts and foreign currency option contracts were
estimated by obtaining quotes from banks. The fair values
of currency swap agreements and interest rate swap
agreements were estimated by discounting future cash flows
using rates currently available for these instruments of similar
terms and remaining maturities.