Nikon 2007 Annual Report Download - page 36

34 NIKON ANNUAL REPORT 2007
(s) Per Share Information
Basic net income per share is computed by dividing net income available to common shareholders by the weighted-average number of common shares outstand-
ing for the period, retroactively adjusted for stock splits.
Diluted net income per share reflects the potential dilution that could occur if securities were exercised or converted into common stock. Diluted net income
per share of common stock assumes full conversion of the outstanding convertible notes and bonds at the beginning of the year (or at the time of issuance) with
an applicable adjustment for related interest expense, net of tax and full exercise of outstanding warrants.
Cash dividends per share presented in the accompanying consolidated statements of income are dividends applicable to the respective years including divi-
dends to be paid after the end of the year.
(t) New Accounting Pronouncements
Measurement of Inventories— Under generally accepted accounting principles in Japan (“Japanese GAAP”), inventories are currently measured either by the
cost method, or at the lower of cost or market. On July 5,2006,the ASBJ issued ASBJ Statement No.9, “Accounting Standard for Measurement of Inventories,”
which is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted. This standard requires that inventories held for sale in the
ordinary course of business be measured at the lower of cost or net selling value, which is defined as the selling price less additional estimated manufacturing
costs and estimated direct selling expenses. The replacement cost may be used in place of the net selling value, if appropriate. The standard also requires that
inventories held for trading purposes be measured at the market price.
Lease Accounting— On March 31, 2007, the ASBJ issued ASBJ Statement No.13, “Accounting Standard for Lease Transactions,” which revised the existing
accounting standard for lease transactions issued on June 17,1993.
Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however,
other finance leases are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the note to the
lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions should be capitalized. The revised accounting standard for lease transactions is
effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted for fiscal years beginning on or after April 1, 2007.
Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements— Under Japanese GAAP, a company
currently can use the financial statements of foreign subsidiaries which are prepared in accordance with generally accepted accounting principles in their respective
jurisdictions for its consolidation process unless they are clearly unreasonable. On May 17, 2006, the ASBJ issued ASBJ Practical Issues Task Force (PITF) No.18,
“Practical Solution on Unification of Accounting Policies Applied to Foreign Subsidiaries for the Consolidated Financial Statements.” The new task force
prescribes: 1) the accounting policies and procedures applied to a parent company and its subsidiaries for similar transactions and events under similar
circumstances should in principle be unified for the preparation of the consolidated financial statements, 2) financial statements prepared by foreign subsidiaries
in accordance with either International Financial Reporting Standards or the generally accepted accounting principles in the United States tentatively may be
used for the consolidation process, 3) however, the following items should be adjusted in the consolidation process so that net income is accounted for in
accordance with Japanese GAAP unless they are not material;
(1) Amortization of goodwill
(2) Actuarial gains and losses of defined benefit plans recognized outside profit or loss
(3) Capitalization of intangible assets arising from development phases
(4) Fair value measurement of investment properties, and the revaluation model for property, plant and equipment, and intangible assets
(5) Retrospective application when accounting policies are changed
(6) Accounting for net income attributable to a minority interest
The new task force is effective for fiscal years beginning on or after April 1, 2008 with early adoption permitted.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS