Mazda 2015 Annual Report Download - page 50

Income taxes
Income taxes are comprised of corporation, enterprise and inhabitants taxes. Deferred tax
assets and liabilities are recognized to reflect the estimated tax effects attributable to tempo-
rary differences and carryforwards. Deferred tax assets and liabilities are measured using
the enacted tax rates that will be in effect when the temporary differences are expected to
reverse. The measurement of deferred tax assets is reduced by a valuation allowance, if
necessary, by the amount of any tax benefits that are not expected to be realized.
The Company and its wholly owned domestic subsidiaries elect to file a consolidated
corporate tax return as a consolidation group.
Research and development costs
Research and development costs are charged to income when incurred. For the years
ended March 31, 2015 and 2014, research and development costs were ¥108,378 million
($903,150 thousand) and ¥99,363 million, respectively.
Derivatives and hedge accounting
Derivative financial instruments are mainly stated at fair value, and changes in the fair
value are recognized as gains or losses unless derivative financial instruments are used
for hedging purposes and meet criteria for hedge accounting.
If derivative financial instruments are used as hedges and meet certain hedging criteria,
recognition of gains or losses resulting from changes in the fair value of derivative financial
instruments is deferred until the related losses or gains on the hedged items are
recognized.
Also, if interest rate swap contracts are used as hedges and meet certain hedging crite-
ria, the net amount to be paid or received under the interest rate swap contract is added to
or deducted from the interest on the assets or liabilities for which the swap contract was
executed.
Amounts per share of common stock
The computations of net income per share of common stock are based on the average
number of shares outstanding during each fiscal year. Diluted net income per share of
common stock is computed based on the average number of shares outstanding during
each fiscal year after giving effect to the diluting potential of common stock to be issued
upon the exercise of stock acquisition rights and stock options.
For the years ended March 31, 2015 and 2014, only information on net income per
share of common stock is provided without information on diluted net income per share of
common stock to reflect the diluting effect, because there were no dilutive potential
common stocks for the years ended March 31, 2015 and 2014.
The Company implemented a share consolidation on its common stock with a ratio of
five shares to one share on August 1, 2014. Net income per share of common stock are
calculated based on the assumption that consolidation of shares had been carried out at
the beginning of the year ended March 31, 2014.
Cash dividends per share represent amounts applicable for the respective years on an
accrual basis.
3
ADOPTION OF NEW ACCOUNTING STANDARDS AND ACCOUNTING
CHANGES
(Changes in accounting policies)
Effective from the year ended March 31, 2015, the Company and its domestic subsidiaries
have applied the article 35 of the Accounting Standard for Retirement Benefits (Accounting
Standards Board of Japan (“ASBJ”) Statement No.26, May 17, 2012 (hereinafter, the
“Statement No.26”)) and the article 67 of the Guidance on Accounting Standard for
Retirement Benefits ASBJ Guidance No.25, March 26, 2015, and have reviewed the deter-
mination of retirement benefit obligations and current service costs. As a result the
Company and its domestic subsidiaries have changed the method of attributing expected
benefit to periods from a straight-line basis to a benefit formula basis. In addition, the
method for determination of the discount rate has been also amended. The amended
method is to use the different discount rates, which reflect the estimated timing of each
benefit payment. Under the previous method, the discount rate was determined based on
the average period up to the estimated timing of benefit payment.
In accordance with the article 37 of the Statement No.26, the effect of changing the
determination of retirement benefit obligations and current service costs has been recog-
nized in retained earnings, at the beginning of the year ended March 31, 2015.
As a result of the application, an asset for retirement benefits has increased by ¥221
million ($1,842 thousand), a liability for retirement benefits has decreased by ¥2,861 million
($23,842 thousand) and retained earnings has increased by ¥2,841 million($23,675 thou-
sand), at the beginning of the year ended March 31, 2015. In addition, operating income
and income before income taxes for the year ended March 31, 2015 have each increased
by ¥630 million ($5,250 thousand).
Mazda Annual Report 2015
48
C
CONTENTS
Growth Strategy
Message from Management
Introduction
Review of Operations
Foundations Underpinning
Sustainable Growth