Oki 2000 Annual Report Download - page 17

15
(k) Income taxes
Effective the year ended March 31, 1999, the Group fully
adopted deferred tax accounting for income taxes in accor-
dance with a new accounting standard issued by the Business
Accounting Deliberation Council. This standard requires recog-
nition of income taxes by liability method. Under the liability
method, deferred tax assets and liabilities are determined based
on the difference between financial reporting and the tax basis
of the assets and liabilities and are measured using the enacted
tax rates and laws which will be in effect when the differences
are expected to reverse. The effect of this change was to
decrease net loss by ¥23,885 million for the year ended March
31, 1999 from the amount, which would have been recorded
by the method applied in the previous year. In addition, the
cumulative effect of this change was reported as “adjustment
for the cumulative effect on prior years of retroactively recog-
nizing deferred income taxes” in the consolidated statements
of shareholders’ equity.
2. U.S. dollar amounts
The translation of yen amounts into U.S. dollar amounts is
included solely for convenience and has been made, as a
matter of arithmetic computation only, at ¥106=US$1.00, the
approximate exchange rate prevailing on March 31, 2000. The
translation should not be construed as a representation that
yen have been, could have been, or could in the future be
converted into U.S. dollars at that or any other rate.
3. Marketable securities
Information with respect to the carrying value and related
market value of marketable securities at March 31, 2000 and
1999 for which market prices are available is summarized as
follows:
Thousands of
Millions of yen U.S. dollars
2000 1999 2000
Carrying value of:
Marketable equity
securities ............................ ¥41,266 ¥42,539 $389,309
Bonds ................................... 21,685 7,078 204,583
Other..................................... 1,110 14,298 10,476
.............................................. ¥64,063 ¥63,916 $604,368
Market value of marketable
equity securities .................... ¥59,319 ¥54,185 $559,616
(e) Marketable securities
Marketable securities are stated at cost determined by the
moving average method.
(f) Inventories
Inventories are principally stated at cost determined by the
following methods:
Finished goods—Moving average method
Work in process—Specific-identification method
Raw materials and supplies—Last purchase price method
(g) Property, plant and equipment, and depreciation
Property, plant and equipment is recorded at cost, except
that, as permitted by the Corporation Tax Law of Japan, the
cost of certain land and machinery and equipment has been
reduced to offset capital gains from the disposal of certain
assets.
Depreciation of property, plant and equipment is principally
computed by the declining-balance method over the estimated
useful lives of the respective assets. However, buildings (exclud-
ing leasehold improvements) acquired after April 1, 1998 by the
Group are depreciated by the straight-line method over the peri-
ods prescribed in the Corporation Tax Law. Significant renewals
and betterments are capitalized at cost. Maintenance and repairs
are charged to income.
(h) Intangible assets and amortization
Intangible assets including computer software costs capital-
ized are amortized by the straight-line method over their
estimated useful lives.
(i) Leases
Noncancelable leases are primarily accounted for as operating
leases (regardless of whether such leases are classified as operat-
ing or finance leases) except that lease agreements which
stipulate the transfer of ownership of the leased property to the
lessee are accounted for as finance leases.
( j) Severance indemnities and pension plans
The Group has severance benefits plans covering substan-
tially all their employees. An employee who terminates employ-
ment with the Company receives approximately 60% of such
benefits in the form of a lump-sum payment, or as pension
annuity payments from the pension plans with the remainder
in a lump-sum payment from the unfunded severance benefit
plan. Severance benefits are based on the compensation at the
time of termination, years of service and certain other factors.
The Group principally provides for the liabilities for severance
indemnities at 40% of the amount which would be required to
be paid if all eligible employees voluntarily terminated their
employment at the balance sheet date.
Costs with respect to the pension plans are funded as
accrued at amounts determined actuarially.
The pension fund assets at March 31, 1999, the most recent
valuation date except for certain subsidiaries, amounted to
¥138,478 million ($1,306,404 thousand).