Nikon 2012 Annual Report Download - page 39

37
NIKON CORPORATION ANNUAL REPORT 2012
FINANCIAL SECTION
(c) Cash Equivalents
Cash equivalents are short-term investments that are readily
convertible into cash and that are exposed to insignificant risk
of changes in value.
Cash equivalents include time deposits, certificates of
deposit, commercial paper, and mutual funds invested in
bonds that represent short-term investments, all of which
mature or become due within three months of the date of
acquisition.
(d) Inventories
Inventories of the Company and its domestic subsidiaries are
stated at the lower of cost, determined principally by the aver-
age method, or net selling value. Inventories of foreign subsid-
iaries are stated at the lower of cost or market as determined
principally using the average method.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation
of property, plant and equipment of the Company and its con-
solidated domestic subsidiaries is principally computed by 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. The useful
lives for lease assets are the terms of the respective leases.
(f) Long-lived Assets
The Group reviews its long-lived assets for impairment when-
ever events or changes in circumstances indicate that the carry-
ing 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.
(g) Investment Securities
Investment securities are classified and accounted for,
depending on management’s intent, as follows:
i) held-to-maturity debt securities, which are expected to
be held to maturity with the positive intent and ability to
hold to maturity are reported at amortized cost; and
ii) available-for-sale securities, which are not classified
as held-to-maturity securities, are reported at fair value,
with unrealized gains and losses, net of applicable taxes,
reported in a separate component of equity.
Nonmarketable available-for-sale securities are stated
at cost determined by the “moving average” method.
For other-than-temporary declines in fair value, investment
securities are reduced to net realizable value by a charge to
income.
The Company records investments in limited liability invest-
ment partnerships (deemed “investment securities” 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 percent-
age and the most recent financial statements on the report
date stipulated in the partnership agreement.
(h) 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 a defined-
benefit corporate pension plan and lump-sum retirement
allowance. Certain domestic subsidiaries have a small enter-
prise retirement allowance mutual aid system. Certain foreign
subsidiaries also have a defined-benefit plan and a defined-
contribution pension plan.
The Group accounts for the liability for retirement benefits
based on the projected benefit obligations and plan assets at
the balance sheet date.
In the current fiscal year, the Company contributed
¥14,600 million ($177,637 thousand) in cash to a retirement
benefit trust. The contribution was made to improve the
funding of the benefit plan.
(i) Retirement Allowances for Directors and
Corporate Auditors
Retirement allowances for directors and corporate auditors
were recorded to state the liability at the amount that would be
required if all directors and corporate auditors retired at each
balance sheet date. However, the Company decided to abolish
the Retirement Benefits Plan for Directors, Corporate Audi-
tors and Officers at the close of the Annual General Share-
holders’ Meeting held on June 29, 2011 and make a final
payment of retirement benefits corresponding to the service
period of each of its directors, corporate auditors and officers,
in accordance with the resolution at the Annual General
Shareholders’ Meeting. The unpaid amount was recorded in
“Other long-term liabilities” in 2012.
(j) 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
standard, an asset retirement obligation is defined as a legal
obligation imposed either by law or contract that results from