Mazda 2016 Annual Report Download - page 64

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, 2016 and 2015 were as follows:
Millions of yen
Thousands of
U.S. dollars
As of March 31 2016 2015 2016
Deferred tax assets:
Allowance for doubtful receivables ¥ 965
¥ 1,187 $ 8,540
Liability for retirement benefits 27,064
22,053
239,504
Impairment loss 3,319
4,186
29,372
Accrued bonuses and other reserves 52,805
26,906 467,301
Inventory valuation 6,964
6,873
61,628
Valuation loss on investment securities, etc. 904
121
8,000
Net operating loss carryforwards 47,937
57,989
424,221
Other 54,410
53,665
481,505
Total gross deferred tax assets 194,368
172,980
1,720,071
Less valuation allowance (55,159)
(66,862)
(488,133)
Total deferred tax assets 139,209
106,118
1,231,938
Deferred tax liabilities:
Asset retirement cost corresponding to
asset retirement obligations, and others (19,192)
(13,159) (169,841)
Net deferred tax assets ¥120,017 ¥ 92,959
$1,062,097
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 2016 2015 2016
Current assets—Deferred tax assets ¥105,653 ¥76,758
$ 934,982
Investments and other assets—Deferred tax assets 22,256
25,784
196,956
Current liabilities—Other current liabilities (149)
(47)
(1,319)
Non-current liabilities—Other non-current liabilities (7,743)
(9,536)
(68,522)
Net deferred tax assets ¥120,017
¥92,959
$1,062,097
(Additional information)
(Adjustment of deferred tax assets and liabilities for enacted changes
in tax laws and rates)
On March 29, 2016, “Act on Partial Amendment of the Income Tax Act, etc.” (Act No. 15 of 2016) and
“Act on Partial Amendment of the Local Tax Act, etc.” (Act No. 13 of 2016) were enacted in the Diet.
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 liabilities for the year ended March
31, 2016, have been changed from the previous 32.1% to the following rates.
— For the temporary differences expected to be reversed from April 1, 2016 to March 31, 2018: 30.7%
— For the temporary differences expected to be reversed on or after April 1, 2018: 30.5%
Due to this change in statutory income tax rates, net deferred tax assets as of March 31, 2016
decreased by ¥3,720 million ($32,920 thousand) and deferred income tax expense recognized for
the year ended March 31, 2016 and net unrealized gain/(loss) on available-for-sale securities
increased by ¥3,357 million ($29,708 thousand) and ¥80 million ($708 thousand), respectively.
And deferred gains/(losses) on hedges and accumulated adjustments for retirement benefit
decreased by ¥9 million ($80 thousand) and ¥434 million ($3,840 thousand), respectively. Further,
the balance of deferred tax liabilities relating to land revaluation decreased by ¥3,399 million
($30,080 thousand) and land revaluation in accumulated 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 counterparty defaulting is
minimum since the Group uses only highly credible financial institutions as counterparties.
Notes to Consolidated Financial Statements
MAZDA ANNUAL REPORT 2016
Financial Section
Message from
Management
Review of Operations
Drivers of Value Creation
Foundations Underpinning
Sustainable Growth
Contents