Mazda 2008 Annual Report Download - page 69

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1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been prepared in accordance with the provisions set forth
in the Financial Instruments and Exchange Law (formerly Securities and Exchange Law) and its related accounting
regulations, and in conformity with accounting principles generally accepted in Japan, which are different in certain
respects as to application and disclosure requirements of International Financial Reporting Standards.
The accounts of overseas subsidiaries are based on their accounting records maintained in conformity
with generally accepted accounting principles (“GAAP”) prevailing in the respective countries of domicile. The
accompanying consolidated financial statements have been restructured and translated into English with some
expanded descriptions from the consolidated financial statements of Mazda Motor Corporation (the “Company”)
prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Financial Instruments and Exchange Law (formerly Securities and Exchange Law). Some
supplementary information included in the statutory Japanese language consolidated financial statements, but not
required for fair presentation, is not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers
outside Japan, using the prevailing exchange rate at March 31, 2008, which was ¥100 to U.S.$1.00. The convenience
translations should not be construed as representations that the Japanese yen amounts have been, could have been,
or could in the future be, converted into U.S. dollars at this or any other rate of exchange.
2. SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The accompanying consolidated financial statements include the accounts of the Company and significant
companies, over which the Company has power of control through majority voting rights or existence of certain
conditions evidencing control by the Company. Investments in non-consolidated subsidiaries and affiliates, over which
the Company has the ability to exercise significant influence over operating and financial policies of the investees, are
accounted for by the equity method.
The consolidated financial statements include the accounts of the Company and 58 subsidiaries (58 in the year ended
March 31, 2007 and 58 in the year ended March 31, 2006). In addition, 13 affiliates (13 in the year ended March 31, 2007
and 14 in the year ended March 31, 2006) are accounted for by the equity method.
The consolidated year-end balance sheet date is March 31. Among the consolidated subsidiaries, 8 companies
(8 at March 31, 2007 and 7 at March 31, 2006) have a year-end balance sheet date of December 31, which is
different from the consolidated balance sheet date. In preparing the consolidated financial statements, for 5 of the
8 companies, the financial statements of these companies with the December 31 year-end balance sheet date
are used. However, adjustments necessary in consolidation are made for material transactions that have occurred
between the balance sheet date of these subsidiaries and the consolidated year-end balance sheet date. For the
other 3 companies, special purpose financial statements that are prepared for consolidation as of the consolidated
balance sheet date are used to supplement the companies’ statutory financial statements.
In the elimination of investments in subsidiaries, the assets and liabilities of subsidiaries, including the portion
attributable to minority shareholders, are evaluated using the fair value at the time the Company acquired control of
the respective subsidiaries.
The difference between acquisition cost and net assets acquired is shown as consolidation goodwill and amortized
on a straight-line basis over a period (primarily 5 years) during which each investment is expected to generate
benefits.
Through the year ended March 31, 2007, among the consolidated overseas subsidiaries, Compania Colombiana
Automotriz S.A. (“CCA”) prepares its financial statements based on the accounting principles generally accepted
in Colombia to reflect adjustments for the country’s inflationary economy and changing prices. Commencing the
year ended March 31, 2008, CCA’s financial statements do not reflect such adjustments. Refer to following section
“3. Adoption of new accounting standards” for more detail.
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.
                     