Nikon 2002 Annual Report Download - page 24

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(d) Inventories
Inventories of the Company and its domestic subsidiaries are stated at cost as determined principally using the average method, except for work in
process which is determined by the specific identification method. Inventories of foreign subsidiaries are stated at the lower of cost or market as
determined principally using the first-in, first-out method.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of the Company and domestic subsidiaries is principally computed using the declin-
ing-balance method, while the straight-line method is applied to buildings (excluding facilities incidental to buildings), and foreign subsidiaries apply
the straight-line method, using rates based on the estimated useful lives of the assets. The range of useful lives is principally from 30 to 40 years
for buildings and structures, and from 5 to 10 years for machinery and equipment.
(f) Retirement and Pension Plans
The Company and major subsidiaries have non-contributory funded pension plans covering substantially all of its employees. Certain foreign sub-
sidiaries also have contributory pension plans.
Effective April 1, 2000, the Company and domestic subsidiaries adopted the new accounting standard for employees’ retirement benefits and
account for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date.
The full amount of the transitional obligation of ¥26,203 million determined as of April 1, 2000 less securities contributed to the pension fund
of ¥6,711 million is being amortized over two years commencing from the fiscal year ended March 31, 2001.
(g) Research and Development Costs
The Group is active in research and development, and such costs are charged to income as incurred.
(h) Leases
All leases are accounted for as operating leases by the Company and its domestic subsidiaries. Under Japanese accounting standards for leases,
finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are permitted
to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the lessee’s financial
statements.
(i) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements of operations. The Group pro-
vides for interperiod allocation of income taxes based on the asset and liability method.
Deferred income taxes are recorded to reflect the impact of temporary differences between assets and liabilities recognized for financial report-
ing purposes and such amounts recognized for tax purposes. These deferred taxes are measured by applying currently enacted tax laws to the
temporary differences.
(j) Appropriations of Retained Earnings
Appropriations of retained earnings at each year end are reflected in the consolidated financial statements in the following year upon shareholder’s
approval.
(k) Foreign Currency Transactions
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the current
exchange rates in effect at each balance sheet date. The foreign exchange gains and losses from transactions are recognized in the statements of
operations to the extent that they are not hedged by forward exchange contracts.
(l) Foreign Currency Financial Statements
The balance sheet accounts and revenue and expense accounts of the foreign subsidiaries are translated into Japanese yen at the current
exchange rates except for shareholders’ equity, which is translated at the historical exchange rate.