Konica Minolta 2014 Annual Report Download - page 57

Notes to the Consolidated Financial Statements
Konica Minolta, Inc. and Consolidated Subsidiaries
For the fi scal years ended March 31, 2014 and 2013
1. Basis of Presenting Financial Statements
The accompanying consolidated fi nancial statements of Konica
Minolta, Inc., (the “Company”) and its consolidated subsidiaries
(the “Companies”) are prepared on the basis of accounting prin-
ciples generally accepted in Japan, which are different in certain
respects from the application and disclosure requirements of
International Financial Reporting Standards, and are compiled
from the consolidated fi nancial statements prepared by the
Company as required by the Securities and Exchange Law of
Japan. Accounting principles generally accepted in Japan allow
consolidation of foreign subsidiaries based on their fi nancial
statements in conformity with International Financial Reporting
Standards and accounting principles generally accepted in the
United States.
The accompanying consolidated fi nancial statements incorpo-
rate certain reclassifi cations in order to present them in a format
that is more appropriate to readers outside Japan. In addition,
the notes to the consolidated fi nancial statements include infor-
mation that is not required under generally accepted accounting
principles in Japan, but is provided herein as additional
information.
As permitted under the Securities and Exchange Law of
Japan, amounts of less than one million yen have been omitted.
As a result, the totals shown in the accompanying consolidated
fi nancial statements (both in yen and in dollars) do not necessarily
agree with the sums of the individual amounts.
2. Summary of Signifi cant Accounting Policies
(a) Principles of Consolidation
The consolidated fi nancial statements include the accounts of
the Company and, with certain exceptions which are not mate-
rial, those of its 109 subsidiaries (112 subsidiaries for 2013) for
which it retains control. All signifi cant intercompany transac-
tions, balances and unrealized profi ts among the Companies are
eliminated on consolidation.
Investments in 2 signifi cant affi liates (2 unconsolidated sub-
sidiaries and 2 signifi cant affi liates for 2013) are accounted for
using the equity method of accounting.
Investments in unconsolidated subsidiaries and other affi liates
that are not accounted for using the equity method are stated at
cost, since they have little impact on net income (loss) or
retained earnings, and their signifi cance as a whole is minor.
(b) Translation of Foreign Currencies
Translation of Foreign Currency Transactions and Balances
All monetary assets and liabilities denominated in foreign curren-
cies, whether long-term or short-term, are translated into Japa-
nese yen at the exchange rates prevailing at the balance sheet
date. The resulting exchange gains and losses are charged or
credited to income.
Translation of Foreign Currency Financial Statements
The translation of foreign currency fi nancial statements of
foreign consolidated subsidiaries into Japanese yen is done by
applying the exchange rates prevailing at the balance sheet
dates for items in balance sheets, except common stock, capital
surplus and retained earnings accounts, which are translated at
the historical rates, and the average exchange rates prevailing
during the periods for items in the statements of income.
(c) Cash and Cash Equivalents
Cash and cash equivalents in the consolidated statements of
cash fl ows comprise cash on hand and short-term investments
that are due for redemption in one year or less and are easily
converted into cash with minimal risk of change in value.
(d) Allowance for Doubtful Accounts
The allowance for doubtful accounts is provided for probable
losses from uncollectible receivables based on specifi c doubtful
accounts and historical loss experience.
(e) Inventories
Inventories held by the Company and domestic consolidated
subsidiaries are mainly stated using the cost price method
(carrying amount in the balance sheet is written down for any
decreases in profi tability) where cost is determined using the
total average method. Inventories held by foreign consolidated
subsidiaries are mainly stated at the lower of cost or market
value or net realizable value, where cost is determined using the
fi rst-in, fi rst-out method.
(f) Property, Plant and Equipment
Depreciation of property, plant and equipment (excluding lease
assets) for the Company and domestic consolidated subsidiaries
is calculated using the declining balance method, except for
depreciation of buildings acquired after April 1, 1998, which are
depreciated using the straight-line method over their estimated
useful lives. Depreciation of property, plant and equipment
(excluding lease assets) for foreign consolidated subsidiaries is
calculated using the straight-line method.
For fi nance leases where ownership is not transferred, depre-
ciation is calculated using the straight-line method over the lease
period utilizing a residual value of zero. For fi nance leases
entered into the Company and its domestic consolidated subsid-
iaries before March 31, 2008 and which do not transfer owner-
ship, lease payments are recognized as an expense.
(g) Intangible Assets
Intangible assets (excluding lease assets) are depreciated using
the straight-line method. In addition, software is depreciated using
the straight-line method over its estimated useful life (5 years).
(h) Goodwill
Goodwill is amortized on a straight-line basis over a period not
exceeding 20 years.
(i) Income Taxes
Deferred income taxes are recognized based on temporary
differences between the tax basis of assets and liabilities and
those as reported in the consolidated fi nancial statements.
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KONICA MINOLTA, INC. Annual Report 2014