Suzuki 2007 Annual Report Download - page 34

SUZUKI MOTOR CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of Suzuki Motor Corporation (the Company) have been
prepared on the basis of generally accepted accounting principles and practices in Japan, and the consolidated
financial statements were filed with the Ministry of Finance as required by the Securities and Exchange Law of Japan.
The preparation of the Consolidated Financial Statements requires the management to select and adopt accounting
standards and make estimates and assumptions that affect the reported amount of assets and liabilities, revenue and
expenses, and the corresponding methods of disclosure.
As such, the management’s estimates are made reasonably based on historical results. But due to the inherent
uncertainty involved in making estimates, actual results could differ from these estimates.
For the convenience of readers outside Japan, certain reclassifications and modifications have been made to the
original Consolidated Financial Statements.
As permitted, an amount of less than one million yen has been omitted. For the convenience of readers, the
Consolidated Financial Statements, including the opening balance of shareholders’ equity, have been presented in U.S.
dollars by translating all Japanese yen amounts on the basis of 118.05 to U.S.$1, the rate of exchange prevailing as of
March 31, 2007. Consequently, the totals shown in the Consolidated Financial Statements (both in yen and in U.S.
dollars) do not necessarily agree with the sum of the individual amounts.
NOTE 2: Summary of significant accounting policies
(a) Principles of consolidation
The Consolidated Financial Statements for the years ended March 31, 2007 and 2006, include the accounts of
the Company and its significant subsidiaries and the number of consolidated subsidiaries are 138 and 135
respectively. All significant inter-company accounts and transactions are eliminated in consolidation. Investments
in affiliated companies are accounted for by the equity method.
As for the evaluation of assets and liabilities of consolidated subsidiaries, the complete market value
accounting method is adopted. The difference at the time of acquisition between the cost and underlying net
equity of investments in consolidated subsidiaries and in affiliated companies accounted for under the equity
method is, as a rule, amortized on a straight-Line basis over a period of five years after appropriate adjustments.
As for 54 companies of consolidated subsidiaries, their fiscal year end is December 31. “American Suzuki
Motor Corporation” and the other 11 companies within above-mentioned 54 companies, their accounts were
consolidated based on their financial statements by the preliminary settlement as of March 31,2007.
(b) Allowance for doubtful receivables
The allowance for doubtful receivables is appropriated into the account for an estimated uncollectible sum. If
the financial condition of our customers deteriorates and their level of solvency decreases, additional allowances
or bad debt losses may be incurred.
(c) Reserve for warranty costs
The reserve for warranty costs is appropriated into the account to allow for an estimated costs related to
maintenance services of the products sold. This estimate, which is affected by the actual defect ratio of products
and repairing costs is, in principle, based on warranty agreements and historical results. Therefore if the
estimates differ from the actual defect ratio of products and repairing costs, this reserve may need to be revised.
(d) Allowance for recycling end-of-life products
The reserve is appropriated for an estimated expense related to the recycling end-of-life products of the
Company based on actual sales.
(e) Allowance for product liabilities
With regard to the products exported to the North American market, to prepare for any payment of
compensation not covered by “Product Liability Insurance”, the anticipated amount to be borne by the Company
and its subsidiaries is calculated and provided on the basis of historical results. Therefore if lawsuits increase, this
reserve may need to be revised.
CONSOLIDATED FINANCIAL STATEMENTS OF 2007
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