Mitsubishi 2003 Annual Report Download - page 51

49 MITSUBISHI MOTORS CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
Mitsubishi Motors Corporation (“MMC”) and its domestic consolidated subsidiaries maintain their books of account in conformity
with the financial accounting standards of Japan, and its foreign subsidiaries in conformity with those of their countries of domicile.
The accompanying consolidated financial statements have been prepared in accordance with accounting principles and prac-
tices generally accepted and applied in Japan and have been compiled from the consolidated financial statements filed with the
Financial Services Agency as required by the Securities and Exchange Law of Japan.
The accompanying consolidated financial statements have been prepared from the accounts maintained by MMC and its con-
solidated subsidiaries in accordance with the provisions set forth in the Japanese Commercial Code and in conformity with account-
ing principles and practices generally accepted in Japan, which may differ in certain material respects from accounting principles and
practices generally accepted in countries and jurisdictions other than Japan.
In addition, the notes to the consolidated financial statements include information which is not required under accounting prin-
ciples generally accepted in Japan but is presented herein as additional information.
Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.
As permitted, amounts of less than one million Yen have been omitted. Consequently, the totals shown in the accompanying
financial statements (both in yen and U.S. dollars) do not necessarily agree with the sum of the individual amounts.
(b) Principles of consolidation
All significant companies for which MMC has effective control are consolidated. Significant companies over which MMC has the
ability to exercise significant influence have been accounted for by the equity method.
All significant intercompany transactions have been eliminated in consolidation.
The difference at the date of acquisition between the acquisition cost and the fair value of the net assets acquired are expensed
when incurred or amortized over periods that do not exceed 10 years.
(c) Cash and cash equivalents
All highly liquid and low-risk investments with maturities of three months or less when purchased are considered cash equivalents.
(d) Inventories
Inventories of MMC and its domestic consolidated subsidiaries are principally stated at cost determined by the first-in first-out or
specific identification method. Inventories of the foreign consolidated subsidiaries are principally stated at the lower of cost or mar-
ket value. Cost is determined by the specific-identification method.
(e) Investments in securities
Investments in securities that are expected to be held-to-maturity are stated at their amortized costs.
Other securities with a readily determinable market value are stated at fair value. The difference between the acquisition cost
and the carrying value of other securities, including unrealized gain and loss, is recognized in “Unrealized holding gain on securities.”
The cost of other securities sold is computed based on the moving average method.
Other securities without a readily determinable market value are stated at cost determined by the moving average method.
(f) Depreciation
Depreciation of property, plant and equipment at MMC and its consolidated subsidiaries is principally calculated by the declining-
balance method or the straight-line method over the estimated useful lives of the respective assets.
Mitsubishi Motors Corporation and Consolidated Subsidiaries
March 31, 2003