Suzuki 2002 Annual Report Download - page 25

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SUZUKI MOTOR CORPORATION
23
The Company has a policy to utilize the above hedging instruments in order to reduce the Company's
exposure to the risk of interest rate and foreign exchange fluctuation. Thus, the Company's purchases of the
hedging instruments are limited to, at maximum, the amounts of the hedged items. The Company evaluates
effectiveness of its hedging activities by reference to the accumulated gains or losses on the hedging
instruments and the related hedged items from the commencement of the hedges.
(d)Foreign currency translation
All monetary assets and liabilities denominated in foreign currencies, whether long-term or short-term are
translated into Japanese yen at the exchange rates prevailing at the balance sheet date. Resulting gains and
losses are included in net profit or loss for the period.
Assets and liabilities of the foreign subsidiaries and affiliates are translated into Japanese yen at the
exchange rates prevailing at the balance sheet date.
The shareholders' equity at the beginning of the year is translated into Japanese yen at the historical rates.
Profit and loss accounts for the year are translated into Japanese yen using the average exchange rate during
the year or, alternatively, using the exchange rates prevailing at the balance sheet date. Differences in yen
amounts arising from the use of different rates are presented as "foreign currency translation adjustments" in
the shareholders' equity.
(e)Inventories
Inventories are stated at the lower of cost or market value, cost being determined principally by the
periodic average method.
(f)Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation is principally computed by the declining-
balance method based on estimated useful lives of the assets (mainly 3-75 years).
Provision for additional depreciation to certain assets is made to reflect use of machinery and equipment in
excess of normal production schedules, a substantial portion of which is, however, not tax deductible.
Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.
(g)Leases
Finance lease transactions, except for those which meet the conditions that the ownership of the lease assets
is substantially transferred to the lessee, are accounted for on a basis similar to ordinary rental transactions.
(h)Income taxes
The provision for income taxes is computed based on the pretax income included in consolidated
statements of income. The assets and liability approach is adopted to recognize deferred tax assets and
liabilities for the expected future tax consequences of temporary differences between the carrying amounts
and the tax bases of assets and liabilities.