Square Enix 2008 Annual Report Download - page 33

certain period (five years) using the straight-line method within
the average remaining years of service of the eligible employees
when the differences are recognized, commencing from the year
after the year in which they are incurred. Unrecognized prior ser-
vice cost is amortized over a certain period (one year or five
years) within the average remaining service period of the eligible
employees. In addition, at certain of the Company’s domestic
consolidated subsidiaries, a reserve for employees’ retirement
benefits is provided at an amount equal to 100% of the 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
An allowance for directors’ retirement benefits is provided to
adequately cover the costs of directors’ retirement benefits,
which are accounted for on an accrual basis in accordance with
internal policy.
• FY2007 (April 1, 2007 to March 31, 2008)
A) Allowance for doubtful accounts
Same as in FY2006
B) Reserve for bonuses
Same as in FY2006
C) Allowance for sales returns
Same as in FY2006
D) Allowance for closing of game arcades
For closures of game arcades that have been determined, an
allowance is provided at an amount in line with reasonable
estimates of future losses on such closures.
E) Allowance for employees’ retirement benefits
An allowance for employees’ retirement benefits is provided at
the amount incurred during the fiscal year, which is based on
the estimated present value of the projected benefit obligation
and pension plan assets. Unrecognized actuarial differences are
fully amortized in the year following the year in which they
arise. At certain consolidated subsidiaries, amortization for each
fiscal year is made over a certain period (five years) using the
straight-line method within the average remaining years of
service of the eligible employees when the differences are rec-
ognized, commencing from the year after the year in which 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 eligible employees. In addition,
at certain of the Company’s domestic consolidated subsidiaries,
a reserve for employees’ retirement benefits is provided at an
amount equal to 100% of the benefits the subsidiaries would be
required to pay under the lump- sum retirement plan if all eligi-
ble employees were to voluntarily terminate their employment at
the balance sheet date.
F) Allowance for directors’ retirement benefits
Same as in FY2006
(4) Translation of foreign currency transactions and accounts:
• FY2006 (April 1, 2006 to March 31, 2007)
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 rates. The
resulting translation gains or losses are credited or charged to
income. All monetary assets and liabilities of overseas consolidated
subsidiaries are translated as of the balance sheet date at the
year end rates, and all income and expense accounts are translated
at rates for their respective periods. The resulting translation adjust-
ments are recorded in net assets as “Foreign currency translation
adjustments” and are included in minority interests in consolidated
subsidiaries.
• FY2007 (April 1, 2007 to March 31, 2008)
Same as in FY2006
(5) Accounting for leases:
• FY2006 (April 1, 2006 to March 31, 2007)
Finance leases, other than those for which the ownership of the
leased assets is considered to be transferred to the lessees, are
accounted for as operating leases.
• FY2007 (April 1, 2007 to March 31, 2008)
Same as in FY2006
(6) Accounting for deferred assets:
• FY2006 (April 1, 2006 to March 31, 2007)
A) Share delivery expenses
Costs associated with issuances of shares of common stock are
expensed as incurred.
• FY2007 (April 1, 2007 to March 31, 2008)
Not applicable
(7) Additional accounting policies used to prepare consolidated
financial statements:
• FY2006 (April 1, 2006 to March 31, 2007)
A) Accounting treatment of consumption taxes
Income statement items are presented exclusive of consumption
taxes.
B) Accounting treatment of overseas consolidated subsidiaries
The accounts and records of overseas consolidated subsidiaries
are maintained in conformity with accounting principles and
practices generally accepted in their respective countries
of domicile.
• FY2007 (April 1, 2007 to March 31, 2008)
A) Accounting treatment of consumption taxes
Same as in FY2006
B) Accounting treatment of overseas consolidated subsidiaries
Same as in FY2006
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