Mitsubishi 2000 Annual Report Download - page 49

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Notes to consolidated financial statements
47
Mitsubishi Motors Corporation and Consolidated Subsidiaries
Notes to Consolidated Financial Statements
March 31, 2000
1. Significant accounting policies
(a) Basis of presentation
Mitsubishi Motors Corporation ("MMC") and its domestic subsidiaries maintain their books of account in conformity
with the financial accounting standards of Japan, and its foreign subsidiaries, in conformity with those of the countries of
their domicile.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles and
practices generally accepted in Japan and have been compiled from the consolidated financial statements filed with the
Ministry of Finance as required by the Securities and Exchange Law of Japan.
Effective the year ended March 31, 2000, MMC was required to prepare a consolidated statement of cash flows as part
of its consolidated financial statements for the first time under the Securities and Exchange Law of Japan. Accordingly,
MMC prepared its 2000 consolidated statement of cash flows in accordance with "Accounting Standards for Consolidated
Statements of Cash Flows" and restated the previously reported consolidated statement of cash flows for 1999.
As permitted, amounts of less than one million yen have been omitted. Consequently, the totals shown in the accom-
panying consolidated financial statements (both in yen and U.S. dollars) do not necessarily agree with the sum of the indi-
vidual amounts.
(b) Principles of consolidation
Until the year ended March 31, 1999, the consolidated financial statements included the accounts of MMC and its signifi-
cant subsidiaries, and investments in certain unconsolidated subsidiaries and significant affiliates (owned 20% to 50%)
were accounted for by the equity method.
In accordance with the revised accounting standards for consolidation, the accompanying consolidated financial state-
ments for the year ended March 31, 2000 include the accounts of MMC and its significant companies controlled directly
or indirectly by MMC and companies over which MMC exercises significant influence in terms of their operating and fi-
nancial policies have been included in the consolidated financial statements on an equity basis. All significant intercom-
pany transactions and accounts have been eliminated in consolidation.
Effective April 1, 1999, the differences arising from the cost of the companies' investments in subsidiaries and affili-
ates over the equity in their net assets at fair value (at cost until March 31, 1999) are charged or credited to income in the
year of acquisition. The effect of this change was to increase total assets by ¥3,977 million ($37,466 thousand) and mi-
nority interest by ¥2,241 million ($21,112 thousand), net of tax. The difference at the time of acquisition between the cost
and underlying net equity of investments in consolidated subsidiaries and other companies accounted for by the equity
method is amortized over a period of less than 10 years, in considering the benefit of the difference.
Unrealized gross profit on inventories sold by MMC or its subsidiaries to affiliates had been eliminated in full in the
previous period. However such amounts have been eliminated according to the percentage of shareholding in the current
year. The change resulted in a decrease of loss before income taxes by ¥3,995million ($37,635 thousand) for the year
ended March 31, 2000.
(c) Cash and cash equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered cash equiva-
lents.
(d) Inventories
Inventories of MMC and its domestic subsidiaries are principally stated at cost determined by the first-in first-out or spe-
cific identification method. Inventories of the foreign subsidiaries are principally stated at the lower of cost determined
by the specific-identification method or market.
(e) Marketable securities and investment in securities
Marketable equity securities and investments in securities listed on stock exchanges or quoted at OTC market are stated at
the lower of cost or market, cost being determined by the moving average method. Other marketable securities and in-
vestments in securities are stated at cost determined by the moving average method.