Square Enix 2011 Annual Report Download - page 61

Loss on evaluation of investments in securities 456
Non-deductible portion of allowance for doubtful accounts 67
Non-deductible portion of excess expenses on lump-sum
depreciable assets 219
Loss carried forward, etc., at overseas subsidiaries 1,720
Allowance for game arcade closings 238
Loss carried forward 173
Other 443
Valuation allowance (2,936)
Offset to deferred tax liabilities (non-current) (1,792)
Total 1,082
Total deferred tax assets 5,576
Deferred tax liabilities
(1) Current liabilities
Accrued expenses and other cost calculation details 190
Other 0
Offset to deferred tax assets (non-current assets) (191)
Total —
(2) Non-current liabilities
Non-current assets 1,544
Tax effects from intangible non-current assets
relating to business combinations 2,076
Other 749
Offset to deferred tax assets (non-current) (1,792)
Total 2,577
Total deferred tax liabilities 2,577
Balance: Net deferred tax assets 2,998
2. A reconciliation of the statutory tax rate and the effective tax rate is
as follows:
No breakdown of key components is presented for the fiscal year
ended March 31, 2011 because the Company posted a loss before
income taxes and minority interests.
Business Combinations
■ Year ended March 31, 2010
Application of the purchase method
1. Name of the company acquired and business operations subject
to the business combination, main purpose of the business
combination, date of business combination, legal form of business
combination, and name of the company and percentage of voting
rights held subsequent to business combination
(1) Name of the company acquired and its principal business
operations
Name of company: Eidos plc (hereinafter “Eidos”)
Type of business: Games (interactive entertainment products)
(2) Purpose of the business combination
This acquisition was carried out based on the judgment that, by
combining the hit products of Eidos with the products of SQUARE
ENIX Group, it would further strengthen the position of the
SQUARE ENIX Group as one of the global leaders in the interactive
entertainment industry.
(3) Date of business combination
April 22, 2009
(4) Legal form of the business combination and name of the post-
combination company
Legal form of the business combination: Share acquisition
Post-combination name of the acquired company: Eidos Ltd.
(5) Percentage of voting rights acquired: 100%
2. Period for which the acquired company’s operating results have
been included in the Company’s consolidated financial statements
April 22, 2009 to March 31, 2010
3. Acquisition cost of the company subject to business combination
and breakdown thereof
Acquisition price Eidos shares GBP84,418,536.85
(¥12,217 million)
Acquisition cost GBP84,418,536.85 (¥12,217 million)
The yen amount shown above was calculated using the exchange
rate prevailing on April 22, 2009.
4. Amount of goodwill recognized, reasons for recognition, and
method and period of amortization
(1) Amount of goodwill recognized: GBP45,205,785.17
(¥6,542 million)
The yen amount shown above was calculated using the
exchange rate prevailing on April 22, 2009.
(2) Reasons for recognition of goodwill
Principally, in the regions where Eidos conducts its games
business, a portion of the excess earnings power its major
game titles are expected to generate could not be identified with
specific assets, and this amount was recognized as goodwill.
(3) Method and period of amortization of goodwill
Amortized by the straight-line method over 10 years
5. Breakdown of principal assets received and liabilities assumed as
of the date of business combination
Millions of yen
Current assets ¥ 7,786
Non-current assets 19,543
Total assets 27,329
Current liabilities 14,654
Total liabilities 14,850
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