Square Enix 2006 Annual Report Download - page 33

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allowance is provided for losses due to the return of game
software and other items, at an estimated amount of future
losses assessed by each game title.
D) Allowance for store closings
For store closures determined during this fiscal year, an
allowance is provided to an amount in line with reasonable
estimates of future losses arising from such closures.
E) Allowance for retirement benefits
An allowance for retirement benefits is provided at the
amount incurred during this fiscal year, which is based on the
estimated present value of the projected benefit obligation.
Unrecognized actuarial differences are fully amortized in the
next year in which they arise. At certain consolidated sub-
sidiaries, amortization for each period is made over a certain
period (five years), using the straight-line method within the
average remaining years of service of employees when they
are accrued, commencing from the period after they are
incurred. Unrecognized prior service cost is amortized over a
certain period (one year or five years) within the average
remaining service period of the employees. In addition, at
certain of the Company’s domestic consolidated sub-
sidiaries, a reserve for retirement benefits is provided equal
to 100% of such benefits the subsidiaries would be
required to pay under the lump-sum retirement plan if all
eligible employees were to voluntarily terminate their
employment at the balance sheet date.
F) Allowance for directors’ retirement benefits
Same as FY2004
(4) Translation of foreign currency transactions and accounts:
• FY2004 (April 1, 2004 to March 31, 2005)
All monetary assets and liabilities of the Company and its domestic
consolidated subsidiaries denominated in foreign currencies are
translated at the balance sheet date at the year-end rate. The
resulting translation gains or losses are charged or credited to
income. All monetary assets and liabilities of overseas subsidiaries
are translated as of the balance sheet year-end rate, and all
income and expense accounts are translated at rates for their
respective periods. The resulting translation adjustments are
recorded in minority interests in consolidated subsidiaries and
shareholders’ equity as “ Foreign currency translation adjustment.”
• FY2005 (April 1, 2005 to March 31, 2006)
Same as FY2004
(5) Accounting for leases:
• FY2004 (April 1, 2004 to March 31, 2005)
Finance leases, other than those for which the ownership of the
leased assets are considered to be transferred to the lessees, are
accounted for as operating leases.
• FY2005 (April 1, 2005 to March 31, 2006)
Same as FY2004
(6) Accounting for deferred assets:
• FY2004 (April 1, 2004 to March 31, 2005)
Stock issuance expenses
Costs associated with issuance of common shares are
expensed as incurred.
A) Corporate bond issuance expenses
—————
• FY2005 (April 1, 2005 to March 31, 2006)
Stock issuance expenses
Same as FY2004
A) Corporate bond issuance expenses
Costs associated with issuance of corporate bonds are
expensed as incurred.
(7) Additional accounting policies used to prepare consolidated
financial statements:
• FY2004 (April 1, 2004 to March 31, 2005)
A) Accounting treatment of consumption tax
Income statement items are presented exclusive of
consumption tax.
B) Accounting treatment of overseas subsidiaries
The accounts and records of overseas subsidiaries are
maintained in conformity with accounting principles and
practices generally accepted in their respective countries.
• FY2005 (April 1, 2005 to March 31, 2006)
A) Accounting treatment of consumption tax
Same as FY2004
B) Accounting treatment of overseas subsidiaries
Same as FY2004
5 . V a lu a t io n o f A s s e t s a n d L ia b ilit ie s o f
C o n s o lid a t e d S u b s id ia r ie s
• FY2004 (April 1, 2004 to March 31, 2005)
All assets and liabilities of consolidated subsidiaries are revalued
on acquisition.
• FY2005 (April 1, 2005 to March 31, 2006)
Same as FY2004