Square Enix 2004 Annual Report Download - page 33

SQUARE ENIX 2004 31
In the previous year, “Increase (decrease) in accounts payable-other”
included in “Other” was ¥535 million. In the current year, “Foreign
exchange gain (loss)” included in “Other” was ¥61 million.
Cash flows from financing activities:
“Payments for partnership distributions”, which was included in “Other” in
the previous year, is presented separately in the current year as the amount
became material. In addition, “Repayments of long-term debt”, which was
presented separately in the previous year, is included in “Other” as the
amount became immaterial.
In the previous year, “Payments for partnership distributions” included
in “Other” was ¥151 million. In the current year, “Repayments of long-
term debt” included in “Other” was ¥22 million.
Fiscal year under review (April 1, 2003 to March 31, 2004)
The Company
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Additional Information
Previous fiscal year (April 1, 2002 to March 31, 2003)
ENIX
—
SQUARE
—
Fiscal year under review (April 1, 2003 to March 31, 2004)
The Company
(Accounting treatment for costs related to the planning and development
of game contents paid to third party)
Until the year ended March 31, 2003, the Company had expensed the costs
related to the planning and development of game contents when paid to
third party. Effective from the year ended March 31, 2004, as a result of an
effort to strengthen the decision-making process in connection to the
development of game software and to implement more stringent selection
criteria, such costs incurred during the development stage are capitalized as
“Content production account” and charged to cost of sales at the time of
sale of related game products.
For the year ended March 31, 2004, “Content production account”
includes such capitalized costs in the amount of ¥3,763 million.
(Accounting for business combination)
On April 1, 2003, SQUARE and ENIX merged and formed SQUARE
ENIX. The merger was effected through the issue of 51,167,293 common
shares and allocated on the basis of one SQUARE common share for every
0.85 ENIX common shares. The merger was cosummated on an equal
footing by combining the entire control over net assets and management
activities prior to the merger, and sharing both the benefits and risks of
post merger equally. In addition, it was not determinable as to which entity
was the acquirer. Therefore, this business combination was accounted for
using the pooling-of-interests method.
Details of post-merger assets and liabilities are provided in the following
pages.
* SQUARE Assets and Liabilities Transferred due to Merger
Amount
Category Millions of Yen
ASSETS
Current Assets 36,490
Cash and deposits 16,931
Accounts receivable-trade 11,438
Finishedgoods 45
Merchandise 11
Contents production account 3,402
Suppliers 77
Prepaid expenses 375
Accounts receivable-other 483
Income tax receivable 537
Deferred tax assets 2,980
Other current assets 217
Allowance for doubtful accounts (10)
Fixed assets 14,370
Property and equipment 3,759
Buildings and structures 621
Machinery and equipment 2,663
Land 421
Construction in progress 53
Intangible assets 1,027
Goodwill 250
Trademarks 45
Telephone rights 6
Software 636
Software production account 88
Investments and other assets 9,584
Investment securities 1,345
Investment in subsidiaries 3,376
Long-term loans receivable 4
Long-term prepaid expenses 5
Investment in consortiums 560
Leasehold deposits 590
Deferred tax assets 3,383
Other investments 316
Allowance for doubtful accounts (0)
Total assets 50,860