Mitsubishi 2013 Annual Report Download - page 49

MITSUBISHI MOTORS CORPORATION
Annual Report 2013 47
Floating rate bank borrowings are exposed to interest rate risk.
For some of our long-term bank borrowings, derivative transac-
tions (interest rate swaps) are used as hedging instruments on an
individual loan contract basis to hedge the interest payable fluctua-
tion risk. Such transactions meet the criteria of special accounting
provisions for interest rate swaps, and therefore hedge effectiveness
assessment is not required.
Certain intercompany loans are exposed to foreign currency risk,
however derivative transactions are used as hedging instruments for
some of these loans.
In order to mitigate counterparty risks, the Group enters into
derivative transactions only with highly rated financial institutions.
Trade payables and bank borrowings are exposed to liquidity
risk. Each Group company manages these risks, by preparing cash
flow projections and other similar tools.
(c) Supplementary information about the fair value of financial
instruments
The notional amount with respect to the derivative transactions
presented in “Fair value of financial instruments” does not
represent the amount of market risk associated with the relevant
derivative transactions.
Fair value of financial instruments
The carrying amount, fair value, and the difference between the car-
rying amount and the fair value of the financial instruments at March
31, 2013 and 2012 were as follows. These financial instruments do
not include any financial instrument for which it is extremely difficult
to reasonably measure fair value. (Refer to Note 15.2)
(In millions of yen)
March 31, 2013
Carrying
amount Fair value Difference
Cash and bank deposits ¥409,509 ¥409,509 ¥ —
Notes and accounts
receivable–trade 149,555 149,555 —
Finance receivables 75,084
Allowance for doubtful
accounts (*1) (3,577)
71,507 71,471 (35)
Investment (*2) 17,862 17,862 —
Total assets ¥648,434 ¥648,398 ¥ (35)
Notes and accounts
payable–trade ¥313,810 ¥313,810 ¥—
Short-term loans payable 113,984 113,984 —
Long-term loans payable 250,397 252,410 2,012
Accounts payable – other and
accrued expenses (*3) 106,168 106,168 —
Total liabilities ¥784,361 ¥786,374 ¥2,012
Derivative transactions (*4) 20,933 20,933 —
(In thousands of U.S. dollars)
March 31, 2013
Carrying
amount Fair value Difference
Cash and bank deposits
$4,354,165 $4,354,165 $ —
Notes and accounts
receivable–trade
1,590,170 1,590,170 —
Finance receivables
798,348
Allowance for doubtful
accounts (*1)
(38,038)
760,310 759,930 (380)
Investment (*2)
189,926 189,926 —
Total assets
$6,894,573 $6,894,193 $(380)
Notes and accounts
payable–trade
$3,336,637 $3,336,637 $ —
Short-term loans payable
1,211,961 1,211,961 —
Long-term loans payable
2,662,390 2,683,786 21,395
Accounts payable – other and
accrued expenses (*3)
1,128,850 1,128,850 —
Total liabilities
$8,339,840 $8,361,235 $21,395
Derivative transactions (*4)
222,576 222,576 —
(*1) Allowance for doubtful accounts recognized for individual financial
receivable is deducted from the carrying amounts directly.
(*2) Investments presented in the balance sheets consist of: investment
securities of ¥67,251 million ($715,060 thousand), which include securi-
ties with market value of ¥17,862 million ($189,926 thousand) and
non-listed stocks and stocks of unconsolidated subsidiaries and affiliates
of ¥49,388 million ($525,134 thousand) (refer to Note 15.2); and other
investments in unconsolidated subsidiaries and affiliates of ¥29,609
million ($314,825 thousand) at March 31, 2013.
(*3) Accounts payable – other and accrued expenses presented in the
balance sheets consist of accrued expenses and accounts payable of
¥106,168 million ($1,128,850 thousand) and allowance for product
warranties of ¥28,273 million ($300,621 thousand) at March 31, 2013.
(*4) The amount of the receivable/payable derived from derivative transac-
tions is presented on a net basis.