Suzuki 2005 Annual Report Download - page 32

expected future tax consequences of temporary differences between the carrying
amounts and the tax bases of assets and liabilities.
In making a valuation for the possibility of collection of deferred tax assets, the
Company and its subsidiaries estimate our future taxable income reasonably. If the
estimated amount of future taxable income decrease, deferred tax assets may
decrease and income taxes expenses may be posted.
(l)Accrued retirement and severance benefits
In order to allow for payment of employees' retirement benefits, based on the
estimated amount of retirement benefits liabilities and pension assets at the end of
this fiscal year, the allowable amount which occurs at the end of this fiscal year is
appropriated.
With regard to prior service costs, the amount, prorated on a straight line basis
over the period of average length of employees' remaining service years at the time
when it
occurs, is treated as expenses. As for the actuarial differences, the amounts
prorated on a straight line basis over the period of average length of employees'
remaining service years in each year in which the differences occur are
respectively treated as expenses from the next term of the year in which they arise.
As for directors, the amount payable to be paid at the end of year is posted
pursuant to the Company's regulations on the retirement allowance of directors.
Retirement benefit cost and retirement benefit obligation are calculated on the
actuarial assumptions, which include discount rate, assumed return of investment
ratio,
revaluation ratio, salary rise ratio, retirement ratio and mortality ratio. Discount rate
is decided on the basis of yield on low-risk, long-term bonds, and assumed return
of investment ratio is decided based on the investment policies of pension assets of
each pension system etc. Decreased yield on long-term bond leads to a decrease
in discount rate and has an adverse influence on the calculation of retirement
benefit cost. However, the pension system adopted by the Company has a cash
balance type plan, and thus the revaluation ratio, which is one of the base ratios,
can offset any adverse effects caused by a decrease in the discount rate.
If the investment yield of pension assets is less than the assumed return of
investment ratio, it will have an adverse effect on the calculation of retirement
benefit cost. But by focusing on low-risk investments, this influence should be
minimal in the case of the pension fund systems of the Company and its
subsidiaries.
(m)Revenue recognition
Sales of products are generally recognized in the accounts as delivery is made.
(n)Amounts per share
Primary net income per share is computed based on the weighted average
number of shares issued during the respective years. Fully diluted net income per
share is computed assuming that all convertible bonds were converted into
common stock, with an applicable adjustment for related interest expense and net
of tax. Cash dividends per share are the amounts applicable to the respective
periods including dividends to be paid after the end of the period.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SUZUKI MOTOR CORPORATION
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