Mazda 2016 Annual Report Download - page 54

Notes to Consolidated Financial Statements Mazda Motor Corporation and Consolidated Subsidiaries
1 BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Mazda Motor Corporation (the “Company”)
and its consolidated subsidiaries (together, the “Group”) have been prepared in accordance with
the provisions set forth in the Financial Instruments and Exchange Law of Japan and its related
accounting regulations, and in conformity with accounting principles generally accepted in Japan
(“Japanese GAAP”), which are different in certain respects as to application and disclosure
requirements from International Financial Reporting Standards (“IFRS”).
For the convenience of readers outside Japan, the accompanying consolidated financial state-
ments have been reformatted and translated into English from the consolidated financial statements
of 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 of Japan. Certain supplementary information included in the statutory Japanese
language consolidated financial statements 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 conve-
nience of readers outside Japan, using the prevailing exchange rate at March 31, 2016, which was
¥113 to U.S. $1.00. The 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 Company and its 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 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 Company and 58 subsidiaries (59 in the year
ended March 31, 2015). In addition, 13 affiliates (14 in the year ended March 31, 2015) are
accounted for by the equity method.
The consolidated year-end balance sheet date is March 31. Among the consolidated subsidiaries,
12 companies (15 at March 31, 2015) 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 4 of the 12 companies, the financial statements of these companies with the
December 31 year-end balance sheet date are used. However, adjustments necessary in consoli-
dation 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 8 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.
Foreign currency translation
Receivables and payables denominated in foreign currencies are translated into Japanese yen
at the exchange rate at the fiscal year-end; gains and losses in foreign currency translation are
included in the income of the current period.
Balance sheets of consolidated foreign subsidiaries are translated into Japanese yen at the
rates on the subsidiaries’ balance sheet dates except for net assets accounts, which are translated
at historical rates. Income statements of consolidated foreign subsidiaries are translated at average
rates during the subsidiaries’ accounting periods, with the translation differences prorated and
included in the net assets as foreign currency translation adjustment and non-controlling interests
in consolidated subsidiaries.
Cash and cash equivalents
The Group considers all highly liquid investments with maturities of three months or less at the
time of acquisition to be cash equivalents.
Securities
Securities are classified 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 unconsolidated 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 Group does not have trading securities or held-to-maturity debt securities. Equity securities
issued by unconsolidated subsidiaries and affiliated companies which, based on the applicable
materiality provisions of Japanese GAAP, are not 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 accumulated other comprehensive income within net assets.
Realized gains and losses on the 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.
MAZDA ANNUAL REPORT 2016
52 Financial Section
Message from
Management
Review of Operations
Drivers of Value Creation
Foundations Underpinning
Sustainable Growth
Contents