Mazda 2007 Annual Report Download - page 66
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Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the
exchange rate on the fiscal year end; gains and losses in foreign currency translation are included in
the income of the current period.
Balance sheets of consolidated overseas subsidiaries are translated into Japanese yen at the rates
on the subsidiaries’balance sheet dates except for shareholders' equity accounts, which are translated
at the historical rates. Income statements of consolidated overseas subsidiaries are translated at average
rates during the subsidiaries’accounting periods, with the translation differences prorated and included
in the shareholders’equity as foreign currency translation adjustments and minority interests.
Cash and cash equivalents
The Company and its consolidated subsidiaries consider all highly liquid investments with maturities of
three months or less at the time of acquisition to be cash equivalents.
Securities
The Company and its consolidated domestic subsidiaries (together the “Domestic Companies”) classify
securities as (a) securities held for trading purposes (hereafter, “trading securities”), (b) debt securities
intended to be held to maturity (hereafter, “held-to-maturity debt securities”), (c) equity securities issued
by subsidiaries and affiliated companies, and (d) all other securities that are not classified in any of the
above categories (hereafter, “available-for-sale securities”).
The Company and its consolidated subsidiaries do not have trading securities or held-to-maturity
debt securities. Equity securities issued by subsidiaries and affiliated companies which are not
consolidated or accounted for using the equity method are stated at moving-average cost. Available-
for-sale securities with available fair market values are stated at fair market value. Unrealized gains and
unrealized losses on these securities are reported, net of applicable income taxes, as a separate
component of valuation and translation adjustments of equity. Realized gains and losses on sale of
such securities are computed using moving-average cost. Available-for-sale securities without available
fair market values are stated mainly at moving average cost.
If the market value of equity securities issued by unconsolidated subsidiaries and affiliated companies
and available-for-sale securities declines significantly, such securities are stated at fair market value
and the difference between fair market value and the carrying amount is recognized as a loss in the
period of the decline. If the fair market value of equity securities issued by unconsolidated subsidiaries
and affiliated companies not on the equity method is not readily available, such securities should be
written down to net asset value with a corresponding charge in the statement of income in the event
net asset value declines significantly. In these cases, such fair market value or the net asset value will
be the carrying amount of the securities at the beginning of the next year.
Inventories
Inventories are stated at cost determined principally by the average method.
Property, plant and equipment
Property, plant and equipment are stated mainly at cost. Depreciation is computed principally using
the straight-line method over the useful lives of the assets determined in accordance with Japanese
income tax law.