Suzuki 2015 Annual Report Download - page 44

42 SUZUKI MOTOR CORPORATION
Consolidated Financial Statements
b. Intangible assets (excluding lease assets)
................. Straight-line method
c. Lease assets
Finance lease which transfer ownership
................. The same method as depreciation and amortization of self-owned noncurrent assets.
Finance lease which do not transfer ownership
................. Straight-line method with the lease period as the durable years. As to lease assets with guaranteed residual
value under lease agreement, remaining value is the guaranteed residual value. And as to other lease as-
sets, remaining value would be zero.
(o) Income taxes
The provision for income taxes is computed based on the income before income taxes included in the consolidated state-
ments of income. The assets and liability approach is adopted to recognize deferred tax assets and liabilities for the 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 their fu-
ture taxable income reasonably. If the estimated amount of future taxable income decrease, deferred tax assets may decrease
and income taxes expenses may be posted.
Consolidated tax payment has been applied to The Company and its domestic wholly owned subsidiaries since the scal
year ended 31 March 2012.
(p) Retirementbenets
With regard to calculation of retirement benet obligations, benet formula basis method was used to attribute expected
benet to period up to the end of this scal year. With regard to past service costs, they are treated as expense on a straight-
line basis over the certain years within the period of average length of employees’ remaining service years at the time when it
occurs. As for the actuarial gain or loss, the amounts, prorated on a straight-line basis over the certain years within 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.
Retirement benet cost and retirement benet 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 inuence on the calculation of
retirement benet 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 benet cost. But by focusing on low-risk investments, this inuence should be minimal in the case
of the pension fund systems of The Company and its subsidiaries.
(q) 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 stock options are exercised. Cash dividends per
share are the amounts applicable to the respective periods including dividends to be paid after the end of the period.
(r) Cash and cash equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered cash equivalents.
(s) Reclassication
Certain reclassications of previously reported amounts are made to conform to current classications.
NOTE 3: Changes in accounting policies
(a) Applicationofaccountingstandardforretirementbenets
Body text stipulated in article 35 of the Accounting Standard for Retirement Benets (Accounting Standards Board of Japan
(ASBJ) Statement No.26 of 17 May 2012) and article 67 of the Guidance on Accounting Standard for Retirement Benets (ASBJ
Guidance No.25 of 26 March 2015) have been applied from this consolidated scal year.
The revision of the calculation method for retirement benet obligations and service costs, with the changing method of attrib-
uting benets to accounting periods from the straight-line basis method to the benet formula basis, and the changing method
of determination of the discount rate from the method of determination the bonds period by using the approximate number of
years of the average remaining service period of employees which is based on determination of the discount rate to a single
weighted average discount rate reecting the estimated timing and amount of benet payment, have been applied from this
consolidated scal year.
In accordance with transitional accounting as stipulated in article 37 of the Accounting Standard for Retirement Benets, the
effect of the changes in accounting policies arising from initial application is recognized in retained earnings from the begin-
ning of this consolidated scal year.