Konica Minolta 1999 Annual Report Download - page 26

22 KONICA
Notes to Consolidated Financial Statements
KONICA CORPORATION AND CONSOLIDATED SUBSIDIARIES
1. Significant Accounting and Reporting Policies
(a) Basis of Presenting Financial Statements
The accompanying consolidated financial statements have been
prepared from the accounts maintained by Konica Corporation (the
“Company”) and its consolidated subsidiaries in accordance with the
provisions set forth in the Japanese Commercial Code (the “Code”)
and in conformity with accounting principles and practices generally
accepted in Japan, which are different in certain respects as to appli-
cation and disclosure requirements of International Accounting Standards.
Certain items presented in the consolidated financial statements
filed with the Ministry of Finance (the “MOF”) in Japan have been
reclassified for the convenience of readers outside Japan. In addition,
the consolidated financial statements of cash flows are not required
to be filed with the MOF, but have been prepared and included in the
consolidated financial statements.
The consolidated financial statements are not intended to present
the consolidated financial position, results of operations and cash
flows in accordance with accounting principles and practices gener-
ally accepted in countries and jurisdictions other than Japan.
(b) Principles of Consolidation
The consolidated financial statements include the accounts of the
Company and all of its significant subsidiaries.
Investments in unconsolidated subsidiaries and significant affiliates
(20 per cent to 50 per cent owned) are accounted for by the equity
method. Investments in insignificant affiliates are stated at cost.
Costs in excess of the net assets of purchased consolidated subsid-
iaries are amortized on a straight-line basis, principally over five years.
Intercompany balances, transactions and profits have been
eliminated in consolidation.
(c) Translation of Foreign Currencies
Translation of Foreign Currency Transactions
Revenue and cost or expense items arising from the transactions
of the Company denominated in foreign currencies are translated
into Japanese yen at relevant exchange rates prevailing at the time
of transactions (“historical rates”).
Accounts receivable or payable denominated in foreign currencies
(short-term monetary items) are translated into yen at the historical
rates. Investments in securities and investments in and advances to
subsidiaries and affiliates denominated in foreign currencies are also
translated at the historical rates.
Translation of Foreign Currency Financial Statements
The translations of foreign currency financial statements of overseas
consolidated subsidiaries and affiliates into Japanese yen are made
by applying the exchange rates prevailing at the balance sheet dates
for balance sheet items, except that the common stock and additional
paid-in capital accounts are translated at the historical rates and the
statements of income are translated at average exchange rates.
(d) Cash and Cash Equivalents
For purposes of the statements of cash flows, cash and cash
equivalents include cash on hand and amounts due from banks.
(e) Marketable Securities and Investment Securities
Marketable securities and investment securities are stated at cost,
which is determined by the moving average method.
(f) Inventories
Inventories are valued principally on an average-cost basis.
(g) Property, Plant and Equipment Depreciation
Depreciation of property, plant and equipment for the Company and
domestic consolidated subsidiaries is computed using the declining
balance method except for depreciation of buildings acquired after
April 1, 1998, based on the estimated useful lives of assets which are
prescribed by Japanese income tax laws.
Depreciation of buildings acquired after April 1, 1998, is computed
using the straight-line method, based on the same estimated useful
lives as above. Also, in fiscal 1999 the companies adopted useful
lives of buildings (other than improvements) shorter than those used
in previous fiscal years, pursuant to the amendments of the Japanese
income tax laws. Its effect was immaterial. Depreciation of foreign
subsidiaries is computed using the straight-line method.
Ordinary maintenance and repairs are charged to income as
incurred. Major replacements and improvements are capitalized.
When properties are retired or otherwise disposed of, the property
and related accumulated depreciation accounts are relieved of the
applicable amounts and any differences are charged or credited
to income.
(h) Retirement Plans
Employees of the Company are, under normal circumstances, enti-
tled to a lump-sum retirement payment based upon the length of
service and current salary at the time of retirement.
The Company has funded pension plans with trust banks and
insurance companies to cover a portion of retirement benefits pay-
able to employees. It is the policy of the Company to provide for
“Reserve for employees’ retirement allowances” in an amount equiv-
alent to the present value of the liability for such retirement benefits
payable to all eligible employees upon their voluntary retirement at
the balance sheet dates, less the accumulated balance of fund
assets at such dates.
Under the plans, 50 per cent of the retirement benefits payable
to employees retiring at their mandatory retirement age is paid out
of the pension plans. The past service costs are being amortized over
a period of 12 years and 6 months.
Another pension plan provides for a portion of the retirement bene-
fits, the past service cost of which is being amortized over a period
of 20 years.
Employees of consolidated domestic subsidiaries are generally
covered by unfunded retirement benefit programs. Several of the
domestic subsidiaries have funded pension plans to cover a portion
of the retirement benefit payments.