Suzuki 2012 Annual Report Download - page 40

38 SUZUKI MOTOR CORPORATION
Consolidated Financial Statements
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 Financial
Services Agency as required by the Financial Instruments and Exchange Act 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 meth-
ods 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 82.19 to U.S. $1, the rate of exchange prevailing as of March 30, 2012. 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, 2012 and 2011, include the accounts of The Company
and its significant subsidiaries and the number of consolidated subsidiaries are 138 and 138 respectively. All significant inter-
company accounts and transactions are eliminated in consolidation. Investments in affiliated companies are accounted for by
the equity method.
The difference at the time of acquisition between the cost and underlying net equity of investments in consolidated subsidiar-
ies (goodwill) 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.
The account settlement date of 30 consolidated subsidiaries is December 31, but Magyar Suzuki Corporation Ltd. and 4 oth-
ers are consolidated based on the financial statements of provisional account settlement as of March 31. Other 25 subsidiar-
ies are consolidated with the financial 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
In order to allow for loss from bad debts, estimated uncollectible amount based on actual ratio of doubtful account is appro-
priated as to general receivable. As for specific receivable with higher default possibility, recoverable amount is estimated
respectively and uncollectible amount is appropriated
(c) Provision for product warranties
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 covered
by “Product Liability Insurance” the anticipated amount to be borne by the Group 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 fluctuations, and non-listed
companies whose stock prices are difficult to be evaluated.
If we judge the decline in investment value is not temporary, we recognize revaluation loss based on the reasonable standard.
If the stock market falls, we may incur significant loss on valuation of securities.
Securities have to be classified into four categories: trading securities; held-to-maturity debt securities; investments of The
Company in equity securities issued by consolidated subsidiaries and affiliates; and available-for-sale securities.
According to this classification, securities held by The Company and its subsidiaries are available-for-sale securities. Avail-
able-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 as-
sets, 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.