Toshiba 2012 Annual Report Download - page 97

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TOSHIBA Annual Report 2012
INCOME TAXES
The provision for income taxes is computed based on the income (loss) from continuing operations, before income taxes
and noncontrolling interests included in the consolidated statements of income. Deferred income taxes are recorded to
reflect the expected future tax consequences of temporary differences between the tax basis of assets and liabilities and
their reported amounts in the financial statements, and are measured by applying currently enacted tax laws.The effect
on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the change is
enacted.Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit
will not be realized.
The Group recognizes the financial statement effects of tax positions when they are more likely than not, based on the
technical merits, that the tax positions will be sustained upon examination by the tax authorities. Benefits from tax
positions that meet the more-likely-than-not recognition threshold are measured at the largest amount of benefit that is
greater than 50 percent likely of being realized upon settlement.
ACCRUED PENSION AND SEVERANCE COSTS
The Company and certain subsidiaries have various retirement benefit plans covering substantially all employees. The
unrecognized net obligation existing at initial application of ASC No.715 “Compensation-Retirement Benefits”, and prior
service costs resulting from amendments to the plans are amortized over the average remaining service period of
employees expected to receive benefits. Unrecognized actuarial gains and losses that exceed 10 percent of the greater of
the projected benefit obligation or the fair value of plan assets are also amortized over the average remaining service
period of employees expected to receive benefits.
NET EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO SHAREHOLDERS OF THE COMPANY
Basic net earnings (loss) per share attributable to shareholders of the Company (“EPS”) are computed based on the
weighted-average number of shares of common stock outstanding during each period. Diluted EPS assumes the dilution
that could occur if stock acquisition rights were exercised to issue common stock, unless their inclusion would have an
anti-dilutive effect.
REVENUE RECOGNITION
Revenue of mass-produced standard products, such as digital products and electronic devices, is recognized when there
is persuasive evidence of an arrangement, the product has been delivered, the sales price is fixed or determinable, and
collectibility is reasonably assured. Mass-produced standard products are considered delivered to customers once they
have been shipped, and the title and risk of loss have transferred.
Revenue related to equipment that requires installation, such as social infrastructure business, is recognized when the
installation of the equipment is completed, the equipment is accepted by the customer and other specific criteria of the
equipment are demonstrated by the Group.
Revenue from services, such as maintenance service for plant and other systems, that are priced and sold separately
from the equipment is recognized ratably over the contract term or as the services are provided.
Revenue on long-term contracts is recorded under the percentage of completion method. To measure the extent of
progress toward completion, the Group generally compares the costs incurred to date to the estimated total costs to
complete based upon the most recent available information. When estimates of the extent of progress toward
completion and contract costs are reasonably dependable, revenue from the contract is recognized based on the
percentage of completion. A provision for contract losses is recorded in its entirety when the loss first becomes evident.
Revenue from arrangements with multiple elements, which may include any combination of products, equipment,
installment and maintenance, is allocated to each element based on its relative selling price if such element meets the
criteria for treatment as a separate unit of accounting as prescribed in ASC No.605 “Revenue Recognition” ("ASC No.605").
Otherwise, revenue is deferred until the undelivered elements are fulfilled as a single unit of accounting. The Company
adopted Accounting Standards Updates ("ASU") No.2009-13 effective April 1, 2011, which amends ASC No.605. The
adoption of ASU No.2009-13 does not have a material impact on the Company's financial position and results of
operations.
Revenue from the development of custom software products is recognized when there is persuasive evidence of an
arrangement, the sales price is fixed or determinable, collectibility is probable, and the software product has been
delivered and accepted by the customer. The Company adopted ASU No.2009-14 effective April 1, 2011, which amends
ASC No.985 “Software”. The adoption of ASU No.2009-14 does not have a material impact on the Company's financial
position and results of operations.
SHIPPING AND HANDLING COSTS
The Group includes shipping and handling costs which totaled ¥73,688 million ($898,634 thousand) and ¥80,316 million
for the years ended March 31, 2012 and 2011, respectively in selling, general and administrative expenses.