Square Enix 2011 Annual Report Download - page 40

Notes to Consolidated Financial Statements (JPNGAAP)
Buildings and structures 3-65 years
Tools and fixtures 2-20 years
Amusement equipment 3 years
(auxiliary components: 5 years)
B) Intangible assets (excluding leased assets)
Amortized using the straight-line method. Software used in-house
is amortized using the straight-line method based on an internal
estimate of its useful life (five years).
C) Leased assets
Leased assets under finance lease transactions that do not transfer
ownership.
Depreciation for leased assets is computed under the straight-
line method over the lease term with no residual value. Among
finance lease transactions that do not transfer ownership, those
lease transactions that commenced on or before March 31,
2008, are accounted for in the same manner as operating lease
transactions.
■ Year ended March 31, 2011
A) Property and equipment (excluding leased assets)
Property and equipment of the Company and its domestic
consolidated subsidiaries are depreciated using the declining-
balance method. However, for buildings (excluding building fixtures)
acquired on or after April 1, 1998, and overseas consolidated
subsidiaries, the straight-line method is applied. The estimated
useful lives of major assets are as follows:
Buildings and structures 3-65 years
Tools and fixtures 2-20 years
Amusement equipment 3-5 years
B) Intangible assets (excluding leased assets)
Same as the year ended March 31, 2010
C) Leased assets
Same as the year ended March 31, 2010
(3) Method of recognition for significant deferred assets:
■ Year ended March 31, 2010
Corporate bond issuance costs:
Corporate bond issuance costs are expensed as incurred.
■ Year ended March 31, 2011
Not applicable
(4) Accounting for allowances and reserves:
■ Year ended March 31, 2010
A) Allowance for doubtful accounts
An allowance for doubtful accounts provides for possible losses
on defaults of receivables. The allowance is made up of two
components: the estimated credit loss on doubtful receivables
based on an individual assessment of each account, and a general
reserve calculated based on historical default rates.
B) Reserve for bonuses
A reserve for bonuses is provided for payments to employees of
the Company and certain consolidated subsidiaries at the amount
expected to be paid in respect of the calculation period ended on
the balance sheet date.
C) Allowance for sales returns
At certain consolidated subsidiaries prior to the fiscal year ended
March 31, 2010, allowances are provided for losses on the return
of published materials, at an amount calculated based on historical
experience prior to this fiscal year and allowances are provided
for losses on the return of game software and other, comprising
an estimated amount of future losses assessed based on the
probability of the return by each game title.
D) Allowance for game arcade closings
For closures of game arcades that have been determined at certain
consolidated subsidiaries, an allowance is provided at an amount in
line with reasonable estimates of future losses on such closures.
E) Allowance for employees’ retirement benefits
At the Company and certain consolidated subsidiaries, an
allowance for employees’ retirement benefits is provided at the
amount incurred during the fiscal year, 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 recognized, 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 eligible employees were to voluntarily
terminate their employment at the balance sheet date.
F) Allowance for directors’ retirement benefits
At the Company and certain consolidated subsidiaries 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.
■ Year ended March 31, 2011
A) Allowance for doubtful accounts
Same as the year ended March 31, 2010
B) Reserve for bonuses
A reserve for bonuses is provided for payments to employees
and executive officers of the Company and certain consolidated
subsidiaries at the amount expected to be paid in respect of the
calculation period ended on the balance sheet date.
C) Allowance for sales returns
Same as the year ended March 31, 2010
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