Square Enix 2010 Annual Report Download - page 47

taxes, advance payments received, deposits received and short-
term loans, through the monthly review of its funding plan and
other methods. Although foreign currency-denominated trade
payables involve exposure to exchange-rate fluctuations, the
Group reduces this risk through similar methods to those used
to manage the risk associated with foreign currency-denomi-
nated trade receivables. Although the Group is exposed to inter-
est-rate risk through short-term loans, since the borrowing
periods are short, the Group is able to respond flexibly to inter-
est rate fluctuations.
Current portion of corporate bonds comprise yen zero-
coupon convertible bonds due 2010, which are redeemable in
November 2010. Corporate bonds comprise euro yen zero-
coupon convertible bonds due 2015, which the Group issued
in the fiscal year under review to refinance the aforementioned
corporate bonds redeemable within one year. Since each of
these bonds are issued as zero-coupon bonds, they do not
involve exposure to interest rate fluctuation risk.
(3) Supplementary information regarding the fair value, etc., of
financial instruments
The fair value of financial instruments includes amounts
based on market prices as well as those calculated using an
appropriate formula when there is no applicable market price.
Since variable factors are included in the calculation of such
fair values, the adoption of different assumptions may lead to
changes in these fair value amounts.
2. Fair value of financial instruments
With regard to financial instruments held by the Company and
its consolidated subsidiaries, the values presented on the
consolidated balance sheet as of March 31, 2010, the estimated
fair value and the difference between these amounts are as fol-
lows. Items for which fair value is difficult to estimate are not
included in the following table (Note 2).
Millions of yen
Assets: Book value Fair value Difference
(1) Cash and deposits ¥111,211 ¥111,211 ¥ —
(2) Notes and accounts receivable 30,682
Allowance for doubtful accounts (530)
Notes and accounts receivable, net 30,152 30,152 —
(3) Short-term investment securities 35,000 35,000 —
(4) Investment securities 480 480 —
(5) Rental deposits 13,530
Allowance for doubtful deposits paid (526)
Rental deposits, net 13,004 11,973 (1,030)
(6) Construction support deposits 1,125 1,087 (37)
(7) Claims in bankruptcy 202
Allowance for doubtful accounts (180)
Claims in bankruptcy, net 21 21 —
Total 190,995 189,927 (1,068)
Liabilities:
(1) Notes and accounts payable 10,666 10,666 —
(2) Short-term loans 2,808 2,808 —
(3) Current portion of corporate bonds 37,000 37,000 —
(4) Other accounts payable 3,528 3,528 —
(5) Accrued expenses 6,611 6,611 —
(6) Accrued income taxes 4,090 4,090 —
(7) Accrued consumption taxes 2,839 2,839 —
(8) Deposits received 561 561 —
(9) Corporate bonds 35,000 39,287 4,287
Total ¥103,106 ¥107,393 ¥ 4,287
Derivative transactions ———
Notes: 1. Matters concerning the methods for estimating fair value and short-term
investment securities
Assets
(1) Cash and deposits, and (2) Notes and accounts receivable
Since these items are settled on a short-term basis, book value is used
on the assumption that fair value is principally equivalent to book value.
(3) Short-term investment securities
Short-term investment securities comprise negotiable certificates of
deposit. Owing to their short-term maturity, fair value is recognized as
equivalent to book value. Book value is therefore recorded as fair value.
(4) Investment securities
Investment securities comprise stock market listed shares and fair
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