Ricoh 2004 Annual Report Download - page 33

ranges from 5 years to 50 years for buildings and 2 years to 12 years for
machinery and equipment.
Effective rates of depreciation for the years ended March 31, 2002, 2003
and 2004 are summarized below:
Certain leased buildings, machinery and equipment are accounted for
as capital leases in conformity with SFAS No.13, “Accounting for Leases.”
The aggregate cost included in property, plant and equipment and related
accumulated depreciation as of March 31, 2003 and 2004 were as follows:
The related future minimum lease payments and the present value of
the net minimum lease payments as of March 31, 2004 were ¥3,456 million
($33,231 thousand) and ¥3,141 million ($30,202 thousand), respectively.
Ordinary maintenance and repairs are charged to expense as incurred.
Major replacements and improvements are capitalized. When properties are
retired or otherwise disposed of, the property and related accumulated
depreciation accounts are relieved of the applicable amounts, and any
differences are included in earnings.
(k) Goodwill and Other Intangible Assets
In June 2001, the Financial Accounting Standards Board (“FASB”) issued
SFAS No.141, “Business Combinations”, and SFAS No.142, “Goodwill and
Other Intangible Assets”. SFAS 141 requires the use of only the purchase
method of accounting for business combinations and refines the definition
of intangible assets acquired in a purchase business combination. SFAS 142
eliminates the amortization of goodwill and instead requires annual
impairment testing thereof. SFAS 142 also requires acquired intangible
assets with a definite useful life to be amortized over their respective
estimated useful lives and reviewed for impairment in accordance with SFAS
144. Any acquired intangible asset determined to have an indefinite useful
life is not amortized, but instead is tested for impairment based on its fair
value until its life would be determined to no longer be indefinite.
Ricoh adopted the provisions of SFAS 141 and SFAS 142 as of April 1,
2002. Goodwill acquired in business combinations completed before July 1,
2001, was amortized until March 31, 2002. In connection with the
transitional impairment evaluation, SFAS 142 required Ricoh to perform an
assessment of whether there was an indication that goodwill was impaired
as of April 1, 2002. To accomplish this, Ricoh (1) identified its reporting
units, (2) determined the carrying value of each reporting unit by assigning
the assets and liabilities, including the existing goodwill and intangible
assets, to those reporting units, and (3) determined the fair value of each
reporting unit. Ricoh completed the transitional assessment by September
30, 2002, and determined there was no indication that goodwill had been
impaired as of April 1, 2002. Ricoh also completed the annual assessment
for the years ended March 31, 2003 and 2004 and determined that no
goodwill impairment charge was necessary.
Prior to the adoption of SFAS 142, Ricoh classified the cost in excess of
fair value of the net assets of companies acquired in purchase transactions
as goodwill, and the goodwill was being amortized on a straight-line
method over the estimated periods benefited, not to exceed 20 years.
(l) Pension and Retirement Allowances Plans
The measurement of pension costs and liabilities is determined in
accordance with SFAS No.87, “Employers’ Accounting for Pensions.” Under
SFAS 87, changes in the amount of either the projected benefit obligation or
plan assets resulting from actual results different from that assumed and
from changes in assumptions can result in gains and losses not yet
recognized in the consolidated financial statements. Amortization of an
unrecognized net gain or loss is included as a component of the net periodic
benefit plan cost for a year if, as of the beginning of the year, that
unrecognized net gain or loss exceeds 10 percent of the greater of (1) the
projected benefit obligation or (2) the fair value of that plan’s assets. In
such case, the amount of amortization recognized is the resulting excess
divided by the average remaining service period of active employees
expected to receive benefits under the plan. The expected long-term rate of
return on plan assets used for pension accounting is determined based on
the historical long-term rate of return on plan assets. The discount rate is
determined based on the rates of return of high-quality fixed-income
investments currently available and expected to be available during the
period to maturity of the pension benefits.
In December 2003, the FASB issued SFAS No.132 (revised), “Employers’
Disclosures about Pensions and Other Postretirement Benefits.” SFAS 132
(revised) prescribes employers’ disclosures about pension plans and other
postretirement benefit plans; it does not change the measurement or
recognition of those plans. The Statement retains and revises the disclosure
requirements contained in the original SFAS 132. It also requires additional
disclosures about the assets, obligations, cash flows, and net periodic benefit
cost of defined benefit pension plans and other postretirement benefit plans.
The Statement generally is effective for fiscal years ending after December
15, 2003. Ricoh’s disclosures in Note 11 incorporate the requirements of
SFAS 132 (revised).
(m) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards. Deferred tax assets
and liabilities are measured using enacted tax rates expected to apply to
taxable income in the years in which those temporary differences and
carryforwards are expected to be realized or settled. The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(n)
Research and Development Expenses and Advertising Costs
Research and development expenses and advertising costs are expensed as
incurred.
32
Thousands of
U.S. dollars
2004
$68,760
43,308
Millions of yen
Aggregate cost
Accumulated depreciation
¥7,151
4,504
¥7,339
4,036
2004
2003
8.1%
42.9
2003
8.1%
41.0
2002
8.3%
40.6
2004
Buildings
Machinery and equipment