Suzuki 2010 Annual Report Download - page 34

SUZUKI MOTOR CORPORATION 33
Notes to Consolidated Financial Statements
NOTE 1:Basisofpresentingconsolidatednancialstatements
The accompanying consolidated nancial statements of Suzuki Motor Corporation (the Company) have been prepared on the ba-
sis of generally accepted accounting principles and practices in Japan, and the consolidated nancial statements were led with the
Ministry of Finance Japan as required by the Financial Instruments and Exchange Act of Japan.
The preparation of the consolidated nancial 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 cor-
responding methods of disclosure.
As such, the management’s estimates are made reasonably based on historical results. But due to the inherent uncertainty in-
volved in making estimates, actual results could differ from these estimates.
For the convenience of readers outside Japan, certain reclassications and modications have been made to the original consoli-
dated nancial statements.
As permitted, an amount of less than one million yen has been omitted. For the convenience of readers, the consolidated nan-
cial statements, including the opening balance of shareholders’ equity, have been presented in U.S. dollars by translating all Japa-
nese yen amounts on the basis of 93.04 to U.S.$1, the rate of exchange prevailing as of March 31, 2010. Consequently, the totals
shown in the consolidated nancial statements (both in yen and in U.S. dollars) do not necessarily agree with the sum of the individu-
al amounts.
NOTE 2:Summaryofsignicantaccountingpolicies
(a) Principles of consolidation
The consolidated nancial statements for the years ended March 31, 2010 and 2009, include the accounts of the Com-
pany and its signicant subsidiaries and the number of consolidated subsidiaries are 138 and 140 respectively. All signicant
inter-company accounts and transactions are eliminated in consolidation. Investments in afliated 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 afliated companies accounted for under the equity method is, as a rule, amortized on a straight-line basis
over a period of ve years after appropriate adjustments.
The account settlement date of 31 consolidated subsidiaries is December 31, but Magyar Suzuki Corporation Ltd. and 4
others are consolidated based on the nancial statements of provisional account settlement as of March 31. Other 26 sub-
sidiaries are consolidated with the nancial statements based on their respective account settlement date.
The account settlement date of other consolidated subsidiaries is the same as the consolidated account settlement date.
(b) Allowance for doubtful receivables
The allowance is appropriated for an estimated uncollectible amount into this account based on doubtful receivable ratio
for general receivables and the identied collectibility for specic receivables.
(c) Provision for warranty costs
The provision is appropriated into this account based on the warranty agreement and past experience in order to allow for
expenses related to the maintenance service of products sold.
(d) Provision for recycling end-of-life products
The provision is appropriated for an estimated expense related to the recycling end-of-life products of the Company
based on actual sales.
(e) Provision for product liabilities
With regards to the products exported to North American market, to prepare for the payment of compensation, not cov-
ered by “Product Liability Insurance” the anticipated amount to be borne by the Company is computed and provided on the
basis of actual results in the past.
(f) Short-term investment securities and Investment securities
The Company and its subsidiaries hold securities of listed companies, which have a risk of price uctuations, and non-
listed companies whose stock prices are difcult to be evaluated.
If we judge the decline in investment value is not temporary, we recognize revaluation loss based on the reasonable stan-
dard. If the stock market falls, we may incur signicant loss on valuation of securities.
Securities have to be classied into four categories: trading securities; held-to-maturity debt securities; investments of the
Company in equity securities issued by consolidated subsidiaries and afliates; and available-for-sale securities.
According to this classication, securities held by the Company and its subsidiaries are available-for-sale securities.
Available-for-sale securities for which market quotations are available are stated at market value method based on the market
values as of the consolidated account settlement date (The evaluation differences shall be reported as a component of net
assets, and sales costs shall be calculated mainly by the moving average method).
Available-for-sale securities for which market quotations are unavailable are stated at cost by a moving average method.
Consolidated Financial Statements