Olympus 2012 Annual Report Download - page 75

Download and view the complete annual report

Please find page 75 of the 2012 Olympus annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 105

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105

Investments in certain unconsolidated subsidiaries and affiliated companies in which the Company has significant influence, but less than a controlling interest, are accounted
for by the equity method. For the year ended March 31, 2012, 4 (4 in 2011) affiliates were accounted for by the equity method. Investments in subsidiaries and affiliates which are not
consolidated or accounted for by the equity method are carried at cost or less. Where there has been a significant decline in the value of such investments, the Company has written
down the investments. The differences between acquisition cost and underlying net equity at the time of acquisition (goodwill) are generally being amortized on the straight-line
method in the range of mainly 5 to 20 years.
(c) CASH AND CASH EQUIVALENTS
In preparing the consolidated statements of cash flows, cash on hand, readily - available deposits and short-term highly liquid investments with maturities not exceeding three months
at the time of purchase and subject to insignificant risk of change in value are considered to be cash and cash equivalents.
(d) SECURITIES
In accordance with the accounting standard for financial instruments, the Company and its consolidated subsidiaries classified their securities into four categories.
Held-to-maturity debt securities are stated at amortized cost. Equity securities issued by non-consolidated subsidiaries and affiliated companies are stated at moving-average
cost. Available-for-sale securities with fair values are stated at fair value and those with no fair values at cost. Unrealized gains and losses on available-for-sale securities are reported,
net of applicable income taxes, as a separate component of net assets. Realized gain or loss on sale of securities is computed using the moving-average cost method.
(e) DERIVATIVE AND HEDGE ACCOUNTING
Accounting standard for financial instruments requires companies to state derivative financial instruments at fair value and to recognize changes in the fair value as gains and losses
unless derivative financial instruments meet the criteria for hedge accounting.
When derivative financial instruments are used as hedges and meets hedging criteria, the Company and consolidated subsidiaries defer recognition of gains and losses resulting
from changes in fair value of derivative financial instruments until the related losses and gains on the hedged items are recognized.
(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, 2012 and 2011 were as follows:
2012 2011
Buildings and structures .......................................................................................................................................................................... 11.0% 10.7%
Machinery and equipment ....................................................................................................................................................................... 32.9% 31.4%
(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 of receivables. It consists of the
estimated uncollectible amount with respect to certain identified doubtful receivables and an amount calculated using the historical percentage of write-offs.
(i) PROVISION FOR WARRANTY COSTS
Provision for warranty costs is provided to cover the cost of all services anticipated to be incurred during the entire warranty period based on the warranty contracts and past
experience.
(j) PROVISION FOR RETIREMENT BENEFITS
The Company and its consolidated subsidiaries provided allowance for employees’ retirement benefits as of the balance sheet date 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 amount to be paid in accordance with the internal rules if all eligible directors and corporate
auditors resigned their offices as of the balance sheet date.
Provision for retirement benefits presented in the non-current liabilities of the consolidated balance sheets included retirement allowance for directors and corporate auditors as
of March 31, 2012 and 2011.
OLYMPUS 󱚈 Annual Report 2012 73