Nikon 2011 Annual Report Download - page 40

38
(g) Inventories
Inventories of the Company and its domestic subsidiaries
are stated at the lower of cost, determined principally by the
average method or net selling value. Inventories of foreign
subsidiaries are stated at the lower of cost or market as
determined principally using the average method.
(h) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Deprecia-
tion of property, plant and equipment of the Company and its
consolidated domestic subsidiaries is principally computed by
the declining-balance method, while the straight-line method
is applied to buildings (excluding facilities incidental to build-
ings), 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. The useful
lives for lease assets are the terms of the respective leases.
(i) Long-lived Assets
The Group reviews its long-lived assets for impairment when-
ever 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 recover-
able amount, which is the higher of the discounted cash flows
from the continued use and eventual disposition of the asset
or the net selling price at disposition.
(j) Retirement and Pension Plans
The Company has a defined benefit corporate pension plan
(cash balance plan) and a defined contribution pension
plan and its consolidated domestic subsidiaries have non-
contributory funded pension plans. Certain foreign sub-
sidiaries 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 allowances for officers
are recorded to state the liability at the amount that would be
required if all officers retired at each balance sheet date.
As stated in 2 (b), the Company adjusted the amortization
of actuarial gain or loss of pensions that has been directly
recorded in the equity by foreign subsidiaries including those
in the United States in the consolidation process so that net
income is accounted for in accordance with Japanese GAAP.
In July 2008, the Accounting Standards Board of Japan
(ASBJ) issued an Accounting Standard—ASBJ Statement
No. 19 Partial Amendments to Accounting Standard for
Retirement Benefits (Part 3). The objective of the Accounting
Standard is to remove the treatment, which provides that
an entity may use the discount rate determined taking into
consideration fluctuations in the yield of bonds over a certain
period, in Note 6 of interpretive notes to the Accounting
Standard for Retirement Benefits.
(k) Asset Retirement Obligations
In March 2008, the ASBJ published a new accounting standard
for asset retirement obligations, ASBJ Statement No. 18,
“Accounting Standard for Asset Retirement Obligations,” and
ASBJ Guidance No. 21, “Guidance on Accounting Standard for
Asset Retirement Obligations. ”Under this accounting stan-
dard, an asset retirement obligation is defined as a legal
obligation imposed either by law or contract that results from
the acquisition, construction, development and the normal
operation of a tangible fixed asset and is associated with the
retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum of
the discounted cash flows required for the future asset retire-
ment and is recorded in the period in which the obligation is
incurred if a reasonable estimate can be made. If a reason-
able estimate of the asset retirement obligation cannot be
made in the period the asset retirement obligation is incurred,
the liability should be recognized when a reasonable estimate
of asset retirement obligation can be made. Upon initial rec-
ognition of a liability for an asset retirement obligation, an
asset retirement cost is capitalized by increasing the carrying
amount of the related fixed asset by the amount of the liability.
The asset retirement cost is subsequently allocated to
expense through depreciation over the remaining useful life
of the asset. Over time, the liability is accreted to its present
value each period. Any subsequent revisions to the timing
or the amount of the original estimate of undiscounted cash
flows are reflected as an increase or a decrease in the carry-
ing amount of the liability and the capitalized amount of the
related asset retirement cost.
This standard was effective for fiscal years beginning on
or after April 1, 2010 .The Company applied this accounting
standard effective April 1, 2010.
The impact of this change on income before income taxes
is immaterial, and ¥1,073 million of the effect of application
in accounting standard for asset retirement obligations is
changed to statements of operation for the year ended
March 31, 2011.
(l) Retirement Allowances for Directors and
Corporate Auditors
Retirement allowances for directors and corporate auditors
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.
(m) Stock Options
In December 2005, the ASBJ issued ASBJ Standard No. 8,
“Accounting Standard for Stock Options” and related guid-
ance. The new standard and guidance are applicable to stock
options newly granted on and after May 1, 2006.