Mazda 2007 Annual Report Download - page 67
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Intangible fixed assets
Intangible fixed assets are amortized principally on the straight-line method over useful lives of the
assets determined in accordance with Japanese income tax law.
Allowance for doubtful receivables
The Domestic Companies provide for doubtful accounts principally at an amount computed based on
past experience plus estimated uncollectible amounts based on the analysis of certain individual
doubtful accounts.
Investment valuation allowance
Investment valuation allowance provides for losses from investments. The amount is estimated in light
of the financial standings of the investee companies.
Reserve for warranty expenses
In order to match the recognition of after-sales expenses to product (vehicle) sales revenues, an
amount estimated based on product warranty provisions and actual costs incurred in the past, taking
future prospects into consideration, is recognized.
Employees’ severance and retirement benefits
The Domestic Companies provide three types of post-employment benefit plans, unfunded lump-sum
plans, funded contributory pension plans, and funded non-contributory pension plans, under which all
eligible employees are entitled to benefits based on the level of wages and salaries at the time of
retirement or termination, length of service and certain other factors. For the Company, the pension
plans cover 50% of total retirement benefits. The Domestic Companies provide defined benefit plans;
consolidated overseas subsidiaries provide defined benefit and/or contribution plans.
For the Domestic Companies, the liabilities and expenses for severance and retirement benefits are
determined based on the amounts actuarially calculated using certain assumptions.
The Domestic Companies provide for employees’severance and retirement benefits based on the
estimated amounts of projected benefit obligation and the fair value of the plan assets. Prior service
costs are recognized in expenses in equal amounts mainly over 12 years, which is within the average of
the estimated remaining service periods of employees, and actuarial gains and losses are recognized
in expenses using the straight-line basis mainly over 13 years, which is within the average of the
estimated remaining service periods, commencing with the following period. For executive officers, the
liability is provided for the amount that would be required if all the executive officers retired at the
balance sheet date.
As discussed in Note 9, in connection with the enactment of the Defined Benefit Corporate Pension
Law, as of July 31, 2005, the Mazda Social Welfare Pension Fund, which the Company and certain
Domestic Companies are members of, obtained approval from the Minister of Health, Labor and
Welfare to be relieved of the retirement benefit obligation of the substitutional portion which relates to
past employee services and for transfer of the retirement benefit obligation of the substitutional portion
and the related plan assets to the government. On March 28, 2006, the transfer of the plan assets
attributable to the substitutional portion to the government was completed.
Directors’ and corporate auditors’ retirement benefits
Directors’and corporate auditors’retirement benefits provide for the payment of retirement benefits to
directors and corporate auditors. The amount that would be required by the internal corporate policy,