Olympus 2003 Annual Report Download - page 29

OLYMPUS 2003 
1. summar y of signif icant account ing pol icies
(a) Basis of presenting consolidated financial statements
Olympus Optical Co., Ltd. (the “Company”) and its consolidated domestic subsidiaries maintain their accounts and records in accor-
dance with the provisions set forth in the Commercial Code of Japan (the “Code”) and the Securities and Exchange Law and in con-
formity with accounting principles and practices generally accepted in Japan. The accounts of overseas consolidated subsidiaries are
based on their accounting records maintained in conformity with generally accepted accounting principles and practices prevailing in
the respective countries of domicile. Certain accounting principles and practices generally accepted in Japan are different from
International Accounting Standards and standards in other countries in certain respects as to application and disclosure requirements.
Accordingly, the accompanying consolidated financial statements are intended for use by those who are informed about Japanese
accounting principles and practices.
The accompanying consolidated financial statements are a translation of the audited consolidated financial statements of the
Company which were prepared in accordance with accounting principles and practices generally accepted in Japan from the accounts
and records maintained by the Company and its consolidated subsidiaries and were filed with the appropriate Local Finance Bureau
of the Ministry of Finance as required by the Securities and Exchange Law.
In preparing the accompanying consolidated financial statements, certain reclassifications have been made in the consolidated
financial statements issued domestically in order to present them in a form which is more familiar to readers outside Japan.
The translation of the Japanese yen amounts into U.S. dollars, using the exchange rate of ¥ to US$., are included solely for
the convenience of the readers. The convenience translations should not be construed as representations that the Japanese yen
amounts have been, could have been, or could in the future be, converted into U.S. dollars at this or any other rate of exchange.
(b) Principles of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries. All signifi-
cant intercompany balances and transactions have been eliminated in the consolidation.
The Company consolidates all significant investees which were controlled through substantial ownership of majority voting rights
or existence of certain conditions.
Investments in certain unconsolidated subsidiaries and affiliated companies in which the Company has significant influence, but
less than a controlling interest, are accounted for using the equity method. Investments in companies in which the Company does not
have significant influence are accounted for at cost. The differences between acquisition cost and underlying net equity at the time of
acquisition are generally being amortized on the straight-line method over five years.
(c) Foreign currency transaction
Assets and liabilities denominated in foreign currencies are translated into Japanese yen at exchange rates at the balance sheet date in
accordance with the revised accounting standards for Foreign Currency Translations (“O pinion Concerning Establishment of
Accounting Standard for Foreign Currency Translations” issued by the Business Accounting Deliberation Council on O ctober ,
), effective from the year ended March , . Prior to April , , current assets and liabilities denominated in foreign cur-
rencies were translated into Japanese yen at exchange rates at the balance sheet date and non-current assets and liabilities were trans-
lated at historical exchange rates. Resulting gains or losses are recorded in income for the respective periods. Foreign currency items
with forward exchange contracts are translated at the contracted rates. There was no effect on the consolidated statement of income
for  from adopting the revised accounting standard.
(d) T ranslation of foreign currency financial statement
In accordance with the revised accounting standards for foreign currency translations, assets and liabilities denominated in foreign
functional currencies are translated at the exchange rate at the balance sheet date. Shareholders’ equity accounts are translated at his-
torical exchange rates. Revenue and expenses denominated in foreign functional currencies are translated at the average exchange rate
for each fiscal year. Effective for the year ended March , , differences resulting from translation are presented as “Foreign cur-
rency translation adjustments” in Shareholders’ equity of the accompanying consolidated balance sheets. There was no effect on the
consolidated statement of income for  from adopting the revised accounting standard.
(e) Cash and cash equivalents
In preparing the consolidated statements of cash flows, cash on hand, readily-available deposits and short-term highly liquid invest-
ments with maturities of not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
(f) Marketable and investment securities
Prior to April , , marketable securities listed on securities exchanges were stated at the lower of average cost or market on an
item-by-item basis and securities other than listed securities are stated at moving-average cost. Funds in trust represented short-term
funds deposited with and managed by trust banks and securities companies. Funds consisted mainly of marketable equity securities
and interest-bearing bonds and each individual fund was stated at its acquisition cost.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
ol ympus opt ical co., l t d. and consol idat ed subsidiar ies
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