Square Enix 2008 Annual Report Download - page 31

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(Rationale for the exclusion of subsidiaries from the scope of
consolidation)
Same as FY2006
2. Application of the Equity Method of Accounting
• FY2006 (April 1, 2006 to March 31, 2007)
Number of equity-method affiliates: 4
Baltec Co., Ltd.
Kaaku Ltd.
Kaasa Solution GmbH
Brave, Inc.
Non-consolidated subsidiaries that are not accounted for under the
equity method (SOLID CO., LTD., SG Lab Inc., Stylewalker, Inc. and
PlayOnline, Inc.) and affiliated companies (BMF CORPORATION and
KUSANAGI INC.) were excluded from the scope of application of the
equity method because their impact on consolidated net income and
retained earnings was small.
During the fiscal year ended March 31, 2007, the Company
invested in Brave, Inc., turning this company into a subsidiary
accounted for under the equity method.
• FY2007 (April 1, 2007 to March 31, 2008)
Number of equity-method affiliates: 3
Kaaku Ltd.
Kaasa Solution GmbH
Brave, Inc.
Baltec Co., Ltd. was excluded from application of the equity method
in this fiscal year, owing to the transfer of all shares held in that
company to another party.
Non-consolidated subsidiaries that are not accounted for under
the equity method (SOLID CO., LTD., PlayOnline, Inc., SQUARE ENIX
MOBILE STUDIO CO., LTD. and SMILE-LAB Co., Ltd.) and affiliated
companies (BMF CORPORATION, Stylewalker, Inc. and KUSANAGI
INC.) were excluded from the scope of application of the equity
method because their impact on consolidated net income and
retained earnings was small.
3. Fiscal Year End of Consolidated Subsidiaries
• FY2006 (April 1, 2006 to March 31, 2007)
Among the Company’s consolidated subsidiaries, the fiscal years of
SQUARE ENIX (China) CO., LTD., HUANG LONG CO., LTD.,
COMMUNITY ENGINE NETWORK SOFTWARE (BEIJING) CO., LTD.,
BEIJING TAIXIN CULTURAL AMUSEMENT CO., LTD., SQUARE
PICTURES, INC. and FF·FILM·PARTNERS end on December 31.
In the preparation of the accompanying consolidated financial
statements, their financial statements which have a December 31
fiscal year end, have been used. Significant transactions between
their fiscal year end and the consolidated balance sheet date of
March 31 are reconciled for consolidation.
For SQUARE ENIX WEBSTAR NETWORK TECHNOLOGY (BEIJING)
CO., LTD., a provisional settlement of accounts as of the Company’s
balance sheet date was used as the basis for the preparation of the
consolidated financial statements.
• FY2007 (April 1, 2007 to March 31, 2008)
Among the Company’s consolidated subsidiaries, the fiscal years of
SQUARE ENIX (China) CO., LTD., HUANG LONG CO., LTD., BEIJING
TAIXIN CULTURAL AMUSEMENT CO., LTD., SQUARE PICTURES, INC.
and FF.FILM.PARTNERS end on December 31.
In the preparation of the accompanying consolidated financial
statements, their financial statements which have a December 31
fiscal year end, have been used. Significant transactions between
their fiscal year end and the consolidated balance sheet date of
March 31 are reconciled for consolidation.
For SQUARE ENIX WEBSTAR NETWORK TECHNOLOGY (BEIJING)
CO., LTD., a provisional settlement of accounts as of the Company’s
balance sheet date was used as the basis for the preparation of the
consolidated financial statements.
4. Summary of Significant Accounting Policies
(1) Standards and valuation methods for major assets
• FY2006 (April 1, 2006 to March 31, 2007)
A) Investment securities
Other investment securities
Securities for which fair values are available:
Market value, determined by the quoted market price as of
the balance sheet date, with unrealized gains and losses
reported as a separate component of net assets at a
net-of-tax amount, and cost of sales determined by the
moving-average method
Securities for which fair values are unavailable:
Stated at cost determined by the average method
B) Inventories
Manufactured goods, merchandise:
Stated at cost, determined by the monthly average method
Certain consolidated subsidiaries, however, determine cost by
the moving-average method
Content production account:
Stated at cost, determined by the identified cost method
Amusement equipment:
Stated at cost, determined by the identified cost method
Unfinished goods:
Some consolidated subsidiaries state unfinished goods
at cost, determined by the moving-average method
Supplies:
Stated at the last purchase price
• FY2007 (April 1, 2007 to March 31, 2008)
A) Investment securities
Other investment securities
Securities for which fair values are available:
Same as in FY2006
29