Olympus 2010 Annual Report Download - page 42

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40 OLYMPUS 2010
(f) INVENTORIES
Inventories are stated at the lower of cost (first-in-first-out) or net realizable value.
(g) PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at cost. Depreciation is mainly computed by the declining balance method at rates based on the
estimated useful lives of the relevant assets. The effective annual rates of depreciation as of March 31, 2010, 2009 and 2008 were as follows:
2010 2009 2008
Buildings and structures .............................................................................................. 10.5% 8.2% 10.4%
Machinery and equipment ............................................................................................ 36.9% 37.4% 39.5%
(h) ALLOWANCE FOR DOUBTFUL ACCOUNTS
The Company and consolidated subsidiaries provide allowance for doubtful accounts at an amount sufficient to cover probable losses
on collection. It consists of the estimated uncollectible amount with respect to certain identified doubtful receivables and an amount
calculated using the actual percentage of write-offs.
(i) PENSION AND RETIREMENT ALLOWANCE PLANS
Employees of the Company, certain domestic consolidated subsidiaries and foreign consolidated subsidiaries are covered by funded
pension plans.
Employees of other domestic consolidated subsidiaries, directors and corporate auditors of several domestic consolidated subsidiaries
are covered primarily by unfunded retirement allowance plans.
The amounts of pension payments and retirement allowances are generally determined on the basis of length of service and basic salary
at the time of termination of service.
It is the Company’s policy to fund amounts required to maintain sufficient plan assets to provide for accrued benefits. The plan assets
consist principally of interest-bearing bonds and listed equity securities.
The Company and its consolidated subsidiaries provided allowance for employees severance and retirement benefits at the end of fiscal
year based on the amounts of projected benefit obligation and the fair value of the plan assets at that date.
Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognized primarily by the straight-line
method over periods (mainly 5 years) which are shorter than the average remaining years of service of the employees.
Prior service cost is being amortized by the straight-line method over periods (mainly 5 years) which are shorter than the average
remaining years of service of the employees.
The retirement allowance for directors and corporate auditors was recorded at an estimate of amount to be paid in accordance with the
internal rules for those benefits if all eligible directors and corporate auditors resigned their offices at the balance sheet date.
Allowance for employees’ severance and retirement benefits was included in the liability section of the consolidated balance sheets
together with severance and retirement allowance for directors and corporate auditors as of March 31, 2010 and 2009.
(j) RESEARCH AND DEVELOPMENT
Expenses relating to research and development activities are charged to income as incurred. Total amounts charged to income were
¥61,850 million (US$687,222 thousand), ¥70,010 million and ¥65,928 million for the years ended March 31, 2010, 2009 and 2008, respectively.
(k) CERTAIN LEASE TRANSACTIONS
Noncancellable lease transactions that transfer substantially all risks and rewards associated with the ownership of assets are accounted for
as finance leases. All other lease transactions are accounted for as operating leases and relating payments are charged to income as incurred.
Leased assets are fully depreciated over the term of the lease based on the straight-line method.
The accounting treatment for finance lease contracts that do not transfer ownership to lease which commenced before March 31, 2008
follows the same method as for ordinary operating lease transactions.
(l) INCOME TAXES
The Company recognizes tax effects of temporary differences between the financial reporting and the tax bases of assets and liabilities by
using the enacted tax rates and laws which will be in effect when differences are expected to reverse.
The Company and some subsidiaries adopted the consolidated taxation system designating Olympus Corporation and some subsidiaries
as the parent company.
(m) AMOUNTS PER SHARE
Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of
common shares outstanding for each fiscal year. Diluted EPS is similar to basic EPS except that the weighted-average of common shares
outstanding is increased by the number of additional common shares that would have been outstanding if the potentially dilutive common
shares had been issued. For the year ended March 31 2010, there were no dilutive common shares which have resulted in a dilutive effect.
For the year ended March 31, 2009, although there were dilutive potential common shares, the diluted net income per share was not
presented due to the net loss per share. For the year ended March 31 2008, there were dilutive common shares which have resulted in a
dilutive effect and the Companys dilutive net income per share was ¥214.44.