Konica Minolta 2008 Annual Report Download - page 47

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Securities
Investments by the Companies in equity securities issued by
unconsolidated subsidiaries and affiliates are accounted for using
the equity method; however, investments in certain unconsoli-
dated subsidiaries and affiliates are stated at cost because the
effect of application of the equity method would be immaterial.
Other securities for which market quotations are available are
stated at fair value. Net unrealized gains or losses on these securities
are reported, net of tax, as a separate component of net assets.
Other securities for which market quotations are unavailable
are stated at cost, except in cases where the fair value of equity
securities issued by unconsolidated subsidiaries and affiliates or
other securities has declined significantly and such impairment of
value is deemed other than temporary. In these instances, securi-
ties are written down to the fair value and the resulting losses are
charged to income during the period.
Hedge Accounting
Gains or losses arising from changes in fair value of derivatives
designated as “ hedging instruments” are deferred as an asset or a
liability and charged or credited to income in the same period that
the gains and losses on the hedged items or transactions are
recognized.
Derivatives designated as hedging instruments by the
Companies are principally interest rate swaps, commodity swaps
and forward foreign currency exchange contracts. The related
hedged items are trade accounts receivable and payable, raw
materials, long-term bank loans and debt securities issued by the
Companies.
The Companies have a policy to utilize the above hedging
instruments in order to reduce the Companies’ exposure to the risk
of interest rate, commodity price and exchange rate fluctuations.
As such, the Companies’ purchases of the hedging instruments
are limited to, at maximum, the amounts of the hedged items.
The Companies evaluate the effectiveness of their hedging
activities by reference to the accumulated gains or losses on the
hedging instruments and the related hedged items from the
commencement of the hedges.
(j) Leases
Finance leases held by the Company and its domestic consolidated
subsidiaries, other than those which are deemed to transfer the
ownership of the leased assets to lessees, are accounted for using
a method similar to that used for ordinary operating leases.
(k) Retirement Benefit Plans
Retirement Benefits for Employees
The Company, domestic consolidated subsidiaries and certain
overseas consolidated subsidiaries have obligations to make
defined benefit retirement payments to their employees and,
therefore, provide accrued retirement benefits based on the esti-
mated amount of projected benefit obligations and the fair value
of plan assets.
For the Company and its domestic consolidated subsidiaries,
unrecognized prior service cost is amortized by the straight-line
method over a 10-year period, which is shorter than the average
remaining years of service of the eligible employees. Unrecognized
net actuarial gain or loss is primarily amortized from the following
year by the straight-line method over a 10-year period, which is
shorter than the average remaining years of service of the eligible
employees.
Accrued Retirement Benefits for Directors and Statutory
Auditors
Domestic consolidated subsidiaries record a reserve for retirement
benefits for directors and statutory auditors based on the amount
payable accumulated at the end of the period based on the
internal regulations.
(l) Accounting Standard for Stock Options
On December 27, 2005, the Accounting Standards Board of Japan
issued Financial Accounting Standard No.8 “ Accounting Standard
for Stock Options” . Further, on May 31, 2006, the Accounting
Standards Board of Japan issued Financial Accounting Standards
Implementation Guidance No. 11 – “ Application Guidance on
Accounting Standard for Stock Options” .
The Company and its domestic consolidated subsidiaries
adopted this standard from the year ended March 31, 2007. As a
result, operating income and income before income taxes and
minority interests decreased by ¥108 million ($915 thousand) for
the year ended March 31, 2007 as compared with the amounts
which would have been reported if the previous standard had
been applied consistently.
(m) Accounting Standard for Retirement Benefits in the
United States
Effective from the year ended March 31, 2007, consolidated
subsidiary Konica Minolta Business Solutions U.S.A., Inc., adopted
a new accounting standard for retirement benefits in the United
States.
As a result of adoption of this new standard, retained earn-
ings increased by ¥137 million as of March 31, 2007 and actuarial
gains and losses were charged directly to retained earnings from
the year ended March 31, 2007.
(n) Per Share Data
Net income per share of common stock has been computed based
on the weighted-average number of shares outstanding during
the year.
Cash dividends per share shown for each year in the accom-
panying consolidated statements are dividends declared as
applicable to the respective year.
(o) Accounting Standard for Presentation of Net Assets in
the Balance Sheets
Effective from the year ended March 31, 2007, the Company and
its domestic consolidated subsidiaries adopted the new accounting
standard, “ Accounting Standard for Presentation of Net Assets in
the Balance Sheet” (Statement No.5 issued by the Accounting
Standards Board of Japan, on December 9, 2005), and the imple-
mentation guidance for the accounting standard for presentation
of net assets in the balance sheet (The Financial Accounting
Standard Implementation Guidance No.8 issued by the
Accounting Standards Board of Japan, on December 9, 2005).
The consolidated balance sheet as of March 31, 2007 and
following periods prepared in accordance with the new account-
ing standard comprises three sections, which are the assets,
liabilities and net assets sections.
The adoption of the new accounting standard had no impact
on the consolidated statement of income for the year ended March
31, 2007. If the new accounting standards had not been adopted
at March 31, 2007, shareholders’ equity amounting to ¥367,558
million would have been presented.