Mazda 2015 Annual Report Download - page 58

Deferred tax assets and liabilities reflect the estimated tax effects of loss carryforwards
and accumulated temporary differences between assets and liabilities for financial
accounting purposes and those for tax purposes. The significant components of deferred
tax assets and liabilities as of March 31, 2015 and 2014 were as follows:
Millions of yen
Thousands of
U.S. dollars
As of March 31 2015 2014 2015
Deferred tax assets:
Allowance for doubtful receivables ¥ 1,187
¥ 1,226
$ 9,892
Liability for retirement benefits 22,053
24,034
183,775
Loss on impairment of long-lived assets 4,186
4,539 34,883
Accrued bonuses and other reserves 26,906
33,734
224,217
Inventory valuation 6,873
5,659
57,275
Valuation loss on investment securities, etc. 121
1,405 1,008
Deferred gains/(losses) on hedges —
672
—
Net operating loss carryforwards 57,989
88,189
483,242
Other 53,665
36,770
447,207
Total gross deferred tax assets 172,980
196,228
1,441,499
Less valuation allowance (66,862)
(84,089)
(557,183)
Total deferred tax assets 106,118
112,139
884,316
Deferred tax liabilities:
A sset retirement cost corresponding to asset
retirement obligations, and others (13,159)
(5,841) (109,658)
Net deferred tax assets ¥ 92,959
¥ 106,298
$ 774,658
The net deferred tax assets are included in the following accounts in the consolidated
balance sheets:
Millions of yen
Thousands of
U.S. dollars
As of March 31 2015 2014 2015
Current assets—Deferred tax assets ¥76,758 ¥54,897
$639,650
Investments and other assets—Deferred tax assets 25,784
54,189
214,867
Current liabilities—Other current liabilities (47)
(59)
(392)
Long-term liabilities—Other long-term liabilities (9,536)
(2,729)
(79,467)
Net deferred tax assets ¥92,959
¥106,298
$774,658
(Additional information)
(Adjustment of deferred tax assets and liabilities for enacted changes in tax laws
and rates)
On March 31, 2015, “Act on Partial Amendment of the Income Tax Act, etc.” (Act No. 9 of
2015) and “Act on Partial Amendment of the Local Tax Act, etc.” (Act No. 2 of 2015) were
enacted into law. As a result of the amendment, the statutory income tax rates, which the
Domestic Companies have utilized for the measurement of deferred tax assets and liabili-
ties for the year ended March 31, 2015, have been changed from the previous 35.4% to
the following rates.
– For the temporary differences expected to be reversed from April 1, 2015 to March 31,
2016: 32.8%
– For the temporary differences expected to be reversed on or after April 1, 2016: 32.1%
Due to this change in statutory income tax rates, net deferred tax assets as of March
31, 2015 decreased by ¥3,058 million ($25,483 thousand) and deferred income tax
expense recognized for the year ended March 31, 2015 increased by ¥3,211 million
($26,758 thousand). And net unrealized gain/(loss) on available-for-sale securities,
deferred gains/(losses) on hedges and accumulated adjustments for retirement benefit
increased by ¥118 million ($983 thousand), ¥26 million ($217 thousand) and ¥9 million
($75 thousand), respectively. Further, the balance of deferred tax liabilities relating to land
revaluation decreased by ¥7,055 million ($58,792 thousand) and land revaluation in accu-
mulated other comprehensive income/(loss) increased by the same amount.
15 DERIVATIVE FINANCIAL INSTRUMENTS AND HEDGING
TRANSACTIONS
The Group uses forward foreign exchange contracts as derivative financial instruments
only for the purpose of mitigating future risks of fluctuations in foreign currency exchange
rates. Also, only for the purpose of mitigating future risks of fluctuations in interest rates
with respect to borrowings, the Group uses interest rate swap contracts. The Group does
not engage in speculative transactions as a matter of policy, limiting the transaction amount
to actual demand.
Forward foreign exchange contracts are subject to risks of foreign exchange rate
changes. Also, interest rate swap contracts are subject to risks of interest rate changes.
Use of derivatives to manage these risks could result in the risk of a counterparty
defaulting on a derivative contract. However, the Company believes that the risk of a coun-
terparty defaulting is minimum since the Group uses only highly credible financial institu-
tions as counterparties.
Mazda Annual Report 2015
56
C
CONTENTS
Growth Strategy
Message from Management
Introduction
Review of Operations
Foundations Underpinning
Sustainable Growth