Pentax 2007 Annual Report Download - page 53

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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 generally
accepted in Japan, “Japanese GAAP”, which are different in cer-
tain respects as to application and disclosure requirements of
International Financial Reporting Standards.
The accounts of overseas subsidiaries are based on their
accounting records maintained in conformity with generally accept-
ed accounting principles prevailing in the respective countries of
domicile. The accompanying consolidated financial statements
have been restructured and translated into English (with some
expanded descriptions and the inclusion of consolidated state-
ments of changes in net assets for 2006 and 2005) from the
consolidated financial statements of Hoya Corporation (the
“Company”) prepared in accordance with Japanese GAAP and
filed with the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Securities and Exchange Law. Some
supplementary information included in the statutory Japanese
language consolidated financial statements, but not required for
fair presentation, is not presented in the accompanying consolidat-
ed financial statements.
The translations of the Japanese yen amounts into U.S. dollars
are included solely for the convenience of readers outside Japan,
using the prevailing exchange rate at March 31, 2007, which was
¥118.05 to U.S. $1. 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.
No. 1 BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
a. Principles of Consolidation—The consolidated financial state-
ments as of March 31, 2007 include the accounts of the Company
and its 67 (62 in 2006 and 58 in 2005) subsidiaries (together, the
“Group”).
Under the control or influence concept, those companies in
which the Company, directly or indirectly, is able to exercise con-
trol 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.
Investment in an affiliated company through the years is
accounted for by the equity method and remaining non-consolidated
subsidiaries and affiliated companies are stated at cost due to
immateriality.
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 invest-
ments that are readily convertible into cash, and are exposed to
insignificant risk of changes in value. Cash equivalents mature or
become due within three months of the date of acquisition.
c. Inventories—Inventories are stated principally at cost using the
average method.
d. Investment Securities—All investment securities are classified
as available-for-sale securities. Marketable available-for-sale secu-
rities are reported at fair value, with unrealized gains and losses,
net of applicable taxes, reported in a separate component of net
assets. 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 tempo-
rary declines in fair value, investment securities are reduced to net
realizable value by a charge to income.
e. Property, Plant and Equipment—Property, plant and equipment
are stated at cost. Depreciation of property, plant and equipment
of the Company and its domestic subsidiaries is computed sub-
stantially by the declining-balance method at rates based on the
estimated useful lives of the assets, while the straight-line method
is applied to buildings acquired on or after April 1, 1998 by the
Company and its domestic subsidiaries, and to almost all property,
plant and equipment of consolidated foreign subsidiaries. The net
book value of tangible fixed assets depreciated by the straight-line
method was approximately 66.2% of total tangible fixed assets in
2007 and 66.4% in 2006. The ranges of useful lives are from 10 to
50 years for buildings and structures and from 3 to 10 years for
machinery and vehicles.
No. 2 SUMMARY OF SIGNIFICANT ACCOUNTING AND REPORTING POLICIES
Notes to Consolidated Financial Statements
Hoya Corporation and Subsidiaries