Nikon 2008 Annual Report Download - page 36

34 Nikon Annual Report 2008
Non-marketable available-for-sale securities are stated
at cost determined by the moving average method.
For other than temporary declines in fair value, invest-
ment securities are reduced to net realizable value by a
charge to income.
The Company records investments in limited liability
investment partnerships (deemed “investment securi-
ties” under the provisions set forth in Article 2 Item 2 of
the Financial Instruments and Exchange Law) using the
amount of interest in such partnerships calculated based
on ownership percentage and the most recent financial
statements on the report date stipulated in the partner-
ship agreement.
(e) Inventories
Inventories of the Company and its domestic subsidiaries
are stated at cost as determined principally using the
average method. Inventories of foreign subsidiaries are
stated at the lower of cost or market as determined prin-
cipally using the average method.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depre-
ciation of property, plant and equipment of the Company
and its consolidated domestic subsidiaries is principally
computed using the declining-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
from 5 to 10 years for machinery.
(g) Long-Lived Assets
The Group reviews its long-lived assets for impairment
whenever events or changes in circumstances indicate
the carrying amount of an asset or asset group may not
be recoverable. An impairment loss would be recognized
if the carrying amount of an asset or asset group exceeds
the sum of the undiscounted future cash flows expected
to result from the continued use and eventual disposition
of the asset or asset group.
The impairment loss would be measured as the amount
by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted
cash flows from the continued use and eventual disposi-
tion of the asset or the net selling price at disposition.
(h) Retirement and Pension Plans
The Company has a defined benefit corporate pension
plan (cash balance plan ) and a defined contribution pen-
sion plan and its consolidated domestic subsidiaries have
non-contributory funded pension plans. Certain foreign
subsidiaries also have contributory pension plans.
The Group accounts for the liability for retirement
benefits based on the projected benefit obligations and
plan assets at the balance sheet date. Retirement allow-
ances for officers are recorded to state the liability at the
amount that would be required if all officers retired at
each balance sheet date.
Certain foreign subsidiaries, including the United States,
etc. record unrecognized actuarial gains and losses, which
are not charged to income, in the balance sheet.
(i) Retirement Allowances for Directors and Corporate
Auditors
Retirement allowances for directors and corporate audi-
tors are recorded to state the liability at the amount that
would be required if all directors and corporate auditors
retired at each balance sheet date.
(j) Stock Options
On December 27, 2005, the ASBJ issued ASBJ Standard
No.8, “Accounting Standard for Stock Options” and related
guidance. The new standard and guidance are applicable
to stock options newly granted on and after May 1, 2006.
This standard requires companies to recognize com-
pensation expense for employee stock options based
on the fair value at the date of grant and over the vest-
ing period as consideration for receiving goods or ser-
vices. The standard also requires companies to account
for stock options granted to non-employees based on
the fair value of either the stock option or the goods or
services received. In the balance sheet, the stock option
is presented as a stock acquisition right as a separate
component of equity until exercised. The standard cov-
ers equity-settled, share-based payment transactions,
but does not cover cash-settled, share-based payment
transactions. In addition, the standard allows unlisted
companies to measure options at their intrinsic value if
they cannot reliably estimate fair value.
The Company applied the new accounting standard for
stock options to those granted on and after May 1, 2006.
(k) Presentation of Equity
On December 9, 2005, the ASBJ published a new account-
ing standard for the presentation of equity. Under this
accounting standard, certain items which were previ-
ously presented as liabilities are now presented as com-
ponents of equity. Such items include stock acquisition
rights, minority interests, and any deferred gain or loss
on derivatives accounted for under hedge accounting.
This standard is effective for fiscal years ending on or
after May 1, 2006.
The balances of such items as of March 31, 2006 were
reclassified as separate components of equity as of
April 1, 2006 in the consolidated statement of changes
in equity.
(l) Research and Development Costs
The Group is active in research and development, and such
costs are charged to income as incurred.
(m) 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 per-
mitted to be accounted for as operating lease transactions