Suzuki 2013 Annual Report Download - page 42
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Please find page 42 of the 2013 Suzuki annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.40 SUZUKI MOTOR CORPORATION
Consolidated Financial Statements
(l) Retirementbenets
In order to allow for payment of employees’ retirement benets, based on estimated amount of retirement benets liabilities
and pension assets at the end of the current consolidated scal year, the allowable amount which occurs at the end of the
current consolidated scal year is appropriated.
With regard to prior service costs, the amount, prorated on a straight line basis over the certain period within average length
of employees’ remaining service years at the time when it occurs, is treated as expense. As for the actuarial differences, the
amounts prorated on a straight line basis over the certain period within average length of employees’ remaining service years
in each scal year in which the differences occur are respectively treated as expenses from the next term of the scal year in
which they arise.
As for Directors and Company Auditors of The Company, the amount to be paid at the end of scal year had been posted
pursuant to The Company’s regulations on the retirement allowance of Directors and Company Auditors. However, The Com-
pany’s retirement benet system for them was abolished at the closure of the Ordinary General Meeting of Shareholders held
on June 2006. And it was approved at Ordinary General Meeting of Shareholders that reappointed Directors and Company
Auditors were paid their retirement benet at the time of their retirement, based on their years of service. Estimated amount of
such retirement benets is appropriated at the end of the current consolidated scal year.
Furthermore, for the Directors and Company Auditors of some consolidated subsidiaries, the amount to be paid at the end of
the year was posted pursuant to their regulation on the retirement allowance of Directors and Company Auditors.
Retirement benet cost and retirement benet obligation are calculated based on the actuarial assumptions, which include
discount rate, assumed return of investment ratio, revaluation ratio, salary rise ratio, retirement ratio and mortality ratio. Dis-
count 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 inuence on the calculation of
retirement benet 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 reduce 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 benet cost. But by focusing on low-risk investments, this inuence should be minimal in the case
of the pension fund systems of The Company and its subsidiaries.
(m) Provision for disaster
Reasonably estimated amount is appropriated for anticipated loss mainly caused by relocation of plants and facilities located
in the Ryuyo Region in Iwata City, Shizuoka Prefecture where massive tsunami damages caused by Tokai and Tonankai Earth-
quake are anticipated.
(n) Provisionforlossonliquidationofsubsidiariesandafliates
Reasonably estimated amount is appropriated for anticipated loss caused by liquidation and restructuring of businesses oper-
ated by subsidiaries and afliates.
(o) Revenue recognition
Sales of products are generally recognized in the accounts as deliveries are made.
(p) Net income 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.
(q) Cash and cash equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered cash and cash
equivalents.
(r) Reclassication
Certain reclassications of previously reported amounts are made to conform with current classications.