Pentax 2004 Annual Report Download - page 52

pronouncements are effective for fiscal years beginning on or after
April 1, 2005 with early adoption permitted for fiscal years ending
on or after March 31, 2004.
The Group adopted the new accounting standard for
impairment of fixed assets for the year ended March 31, 2004.
The Group reviews its long-lived assets for impairment
whenever events or changes in circumstance indicate the carrying
amount of an asset or asset group may not be recoverable. An
impairment loss would be recognized if the carrying amount of an
asset or asset group exceeds the sum of the undiscounted future
cash flows expected to result from the continued use and eventual
disposition of the asset or asset group. The impairment loss would
be measured as the amount by which the carrying amount of the
asset exceeds its recoverable amount, which is the higher of the
discounted cash flows from the continued use and eventual
disposition of the asset or the net selling price at disposition.
The effect of adoption of the new accounting standard for
impairment of fixed assets was to decrease income before income
taxes and minority interests for the year ended March 31, 2004 by
¥2,040 million ($19,245 thousand).
g. Intangible Assets—Intangible assets are carried at cost less
accumulated amortization, which is calculated by the straight-line
method. Amortization of software is calculated by the straight-
line method over 5 years. Goodwill recognized under the Japanese
Commercial Code (the "Code") is fully charged to income when
incurred.
h. Retirement Benefits—The Company and certain subsidiaries
had a contributory funded pension plan and an unfunded retire-
ment benefit plan which covered substantially all of their employees.
Effective April 1, 2000, the Company and domestic subsidiar-
ies adopted a new accounting standard for employees' retirement
benefits and accounted for the liability for retirement benefits
based on projected benefit obligations and plan assets at the
balance sheet date. The transitional obligation of ¥3,166 million,
determined as of April 1, 2000, was being amortized over 15 years
and presented as other expense in the consolidated statements of
income.
For the year ended March 31, 2003, the contributory funded
pension plan was dissolved and the unfunded retirement benefit
plan was abolished. The remaining balance of transitional
obligation at the dissolution of the contributory funded pension
plan and the abolishment of the unfunded retirement benefit plan
was charged to income.
The annual provision for accrued retirement benefits for
directors and corporate auditors of the Company and its domestic
subsidiaries was also calculated to state the liability at the amount
that would be required if all directors and corporate auditors
retired at each balance sheet date. The provisions for the retire-
ment benefits are not funded.
For the year ended March 31, 2004, the Company and its
domestic subsidiaries abolished the retirement benefit plan for
directors and corporate auditors.
i. Research and Development Expenses—Research and develop-
ment expenses are charged to income when incurred.
j. Leases—All leases are accounted for as operating leases.
Under Japanese accounting standards for leases, finance leases
that deem to transfer ownership of the leased property to the
lessee are to be capitalized, while other finance leases are
permitted to be accounted for as operating lease transactions if
certain "as if capitalized" information is disclosed in the notes to
the lessee's consolidated financial statements.
k. Income Taxes—The provision for income taxes is computed
based on the pretax income included in the consolidated state-
ments of income. The asset and liability approach is used to
recognize deferred tax assets and liabilities for the expected future
tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities. Deferred taxes
are measured by applying currently enacted tax laws to the
temporary differences.
l. Appropriations of Retained Earnings—Appropriations of
retained earnings at each year end are reflected in the consoli-
dated financial statements for the following year upon sharehold-
ers' approval or resolution of the Board of Directors.
m. Foreign Currency Transactions—All short-term and long-term
monetary receivables and payables denominated in foreign
currencies are translated into Japanese yen at the exchange rates
at the balance sheet date. The foreign exchange gains and losses
from translation are recognized in the statements of income to the
extent that they are not hedged by forward exchange contracts.
n. Foreign Currency Financial Statements—The balance sheet
accounts of the consolidated overseas subsidiaries and associated
companies are translated into Japanese yen at the current
exchange rates as of the balance sheet dates except for sharehold-
ers' equity, which is translated at historical exchange rates.
Differences arising from such translation are shown as "Foreign
currency translation adjustments" in a separate component of
shareholders' equity.
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