Trend Micro 2010 Annual Report Download - page 27

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29
(4) Policy for translation of major foreign currency assets and liabilities into Yen
Foreign currency denominated receivables and payables are translated into Japanese
yen at period-end rates of exchange and the resulting foreign currency translation
adjustments are taken into account in regards to profits and losses.
Assets and liabilities of foreign subsidiaries are translated into Japanese yen at period-
end spot exchange rates and all income and expense accounts are translated at the
average exchange rate. The resulting translation adjustments are included in foreign
currency translation adjustment and minority interest.
(5) Revenue Recognition Policy
Sales recognition policy for PCS
The product license agreement contracted with the end-user contains provisions
concerning PCS (customer support and upgrading of products and their pattern files).
The Company applies the following revenue recognition method for the share of PCS
revenue.
PCS revenue is recognized separately from total revenue and is deferred as deferred
revenues under current and non-current liabilities based on the contracted period.
Deferred revenue is finally recognized as revenue evenly over the contracted period.
(6) Consumption tax
Accounting subject to consumption tax is stated at the amount net of the related
consumption tax.
(7) Valuation of assets and liabilities of consolidated subsidiaries
Assets and liabilities of consolidated subsidiaries are measured at fair value.
(8) Amortization of Goodwill
Goodwill is amortized evenly over the appropriate period, not exceeding 20 years.
(9) All the amounts shown in yen in this document have been expressed in the unit of one
million (1,000,000) yen, with any amount less than such unit being disregarded.
󲃕Changes in accounting policy)
1. Accounting standard for retirement benefits
The Company has applied "Partial Amendments to Accounting Standard for Retirement
Benefits (Part3)" (ASBJ Statement No.19 2008 July 31st). It has no impact on operating
income, ordinary income, or net income before income tax.
2. Change in accounting principles of stock compensation expense
The Company treated a part of stock compensation expense as "Cost of sales" until fiscal 2009,
however, from fiscal 2010, we treat all stock compensation expense as "Selling, general &
administrative expense". This expense is not directly related to the cost accounting
calculation based on the cost sharing contract started from fiscal 2010. The effect of this
change is immaterial.
(NOTES TO THE CONSOLIDATED BALANCE SHEET)
Accumulated depreciation of property and equipment: 8,393 million yen