Nissan 2006 Annual Report Download - page 69

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corresponding amounts which would have been recorded if the
previous method had been followed. In addition, this change had no
effect on segment information.
(e) Until the year ended March 31, 2005, the Company and its
domestic consolidated subsidiaries applied special treatment to
forward foreign exchange contracts entered into to hedge forecasted
sales denominated in foreign currencies. These contracts qualified for
deferral hedge accounting as these sales and accounts receivable
were translated and reflected in the consolidated financial statements
at their corresponding contracted rates.
Effective April 1, 2005, the Company and its domestic subsidiaries
changed their method of accounting for such sales, accounts
receivable and forward foreign exchange contracts and began
applying the benchmark method. Under this method, sales
denominated in foreign currencies are translated into Japanese yen
at the exchange rates in effect at each transaction date and the
related accounts receivable are translated at the exchange rates in
effect at the balance sheet dates, with the related exchange
differences charged or credited to income, whereas the forward
foreign exchange contracts are carried at fair value. This change was
made as a result of the implementation of a newly modified internal
operating system with respect to forward foreign exchange contracts
in order to achieve a better presentation of gain or loss related to
open derivatives positions. The effect of this change on the
consolidated financial statements was immaterial for the year ended
March 31, 2006.
(f) Effective April 1, 2005, the Company and its domestic
consolidated subsidiaries adopted a new accounting standard for the
impairment of fixed assets. The Group bases its grouping for assessing
impairment losses on fixed assets on its business segments
(automobiles and sales finance) and geographical segments.
However, the Group determines whether or not an asset is impaired
on an individual asset basis depending on whether the asset is
deemed idle or if it is scheduled to be disposed of.
As a result of the adoption of this new standard, the Company and
its domestic consolidated subsidiaries have recognized an impairment
loss in the amount of ¥26,827 million ($229,291 thousand) on idle
assets and assets to be disposed of due to a significant decline in
their market value by reducing their book value to the respective net
realizable value of each asset. Accordingly, income before income
taxes and minority interests decreased by the same amount for the
year ended March 31, 2006 from the corresponding amount which
would have been recorded under the previous method. The effect of
this change on segment information is explained in Note 21.
Nissan Annual Report 2005 67
FINANCIAL SECTION
3. U.S. DOLLAR AMOUNTS
Amounts in U.S. dollars are included solely for the convenience of the reader. The rate of ¥117 = U.S.$1.00, the approximate rate of exchange in
effect on March 31, 2006, has been used. The inclusion of such amounts is not intended to imply that yen amounts have been or could be readily
converted, realized or settled in U.S. dollars at that or any other rate.
4. RECEIVABLES
Receivables at March 31, 2006 and 2005 consisted of the following:
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
As of Mar. 31, 2006 Mar. 31, 2005 Mar. 31, 2006
Notes and accounts receivable......................................................................................................................................... ¥ 488,600 ¥ 538,029 $ 4,176,068
Finance receivables.................................................................................................................................................................... 3,589,127 3,026,788 30,676,299
Less allowance for doubtful receivables................................................................................................................... (87,979) (75,272) (751,957)
..................................................................................................................................................................................................................... ¥3,989,748 ¥3,489,545 $34,100,410
Finance receivables principally represent receivables from customers on loans made by financing subsidiaries in connection with sales of
automobiles.
5. INVENTORIES
Inventories at March 31, 2006 and 2005 were as follows:
Thousands of
Millions of yen U.S. dollars
2005 2004 2005
As of Mar. 31, 2006 Mar. 31, 2005 Mar. 31, 2006
Finished products................................................................................................................................................................................... ¥607,149 ¥502,032 $5,189,308
Work in process and other.............................................................................................................................................................. 249,350 206,030 2,131,196
............................................................................................................................................................................................................................... ¥856,499 ¥708,062 $7,320,504