Pentax 2003 Annual Report Download - page 43

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No»1BASIS OF PRESENTING CONSOLIDATED
FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in the
Japanese Securities and Exchange Law and its related accounting
regulations, and in conformity with accounting principles and
practices generally accepted in Japan, which are different in
certain respects as to application and disclosure requirements of
International Financial Reporting Standards. The consolidated
financial statements are not intended to present the financial
position, results of operations and cash flows in accordance with
accounting principles and practices generally accepted in
countries and jurisdictions other than Japan.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the
consolidated financial statements issued domestically in order to
present them in a form which is more familiar to readers outside
Japan.
The consolidated financial statements are stated in Japanese
yen, the currency of the country in which Hoya Corporation
(the “Company”) is incorporated and operates. The translations
of Japanese yen amounts into U.S. dollar amounts are included
solely for the convenience of readers outside Japan and have
been made at the rate of ¥120 to U.S.$1, the approximate rate
of exchange at March 31, 2003. Such translation should not be
construed as representations that the Japanese yen amounts
could be converted into U.S. dollars at that or any other rate.
Certain reclassifications have been made in the 2002 and
2001 consolidated financial statements to conform to the
classifications used in 2003. These reclassifications had no effect
on previously reported net income.
No»2SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES
a. Consolidation
The consolidated financial statements as of March 31, 2003
include the accounts of the Company and its 52 (51 in 2002
and 46 in 2001) significant subsidiaries (together, the “Group”).
Under the control or influence concept, those companies in
which the Company, directly or indirectly, is able to exercise
control over operations are fully consolidated, and those
companies over which the Group has the ability to exercise
significant influence are accounted for by the equity method.
Investments in 2 (2 in 2002 and 4 in 2001) associated
companies in 2003 are accounted for by the equity method.
Investments in the remaining unconsolidated subsidiaries and
associated companies are stated at cost. If the equity method of
accounting had been applied to the investments in these
companies, the effect on the accompanying consolidated
financial statements would not be material.
The differences between the cost and underlying net equity of
investment in consolidated subsidiaries and associated compa-
nies accounted for by the equity method are charged to income
when incurred, except that goodwill of some subsidiaries
acquired in Europe is being amortized on a straight-line basis
over a period of 5 years and the amortized amount is included in
other expenses.
All significant intercompany balances and transactions have
been eliminated in consolidation. All material unrealized profits
included in assets resulting from transactions within the Group
are eliminated.
b. Cash Equivalents
Cash equivalents are short-term investments that are readily
convertible into cash and that are exposed to insignificant risk of
changes in value.
Cash equivalents include time deposits, certificate of deposits,
commercial paper and mutual funds investing in bonds, all of
which mature or become due within three months of the date of
acquisition.
c. Inventories
Inventories are primarily stated at cost, cost being determined
principally by the average method.
d. Investment Securities
Investment securities are classified as available-for-sale securities
and are reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate component of
shareholders’ equity. The cost of securities sold is determined
based on the moving-average method.
Non-marketable available-for-sale securities are stated at cost
determined by the moving-average method.
For other than temporary declines in fair value, investment
securities are reduced to net realizable value by a charge to
income.
Notes to Consolidated Financial Statements
Hoya Corporation and Consolidated Subsidiaries