Trend Micro 2010 Annual Report Download - page 37

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39
Lease assets
Lease assets arising from non-ownership-transfer finance leases
The Company has applied a straight-line method, which assumes that a useful life
is equal to the lease period and that an estimated residual value is zero. The
conventional accounting treatment still applies to non-ownership-transfer finance
leases that commenced before the starting date for applying a new revised
accounting standard for the lease transactions (ASBJ Statement No.13).
3. Accounting policies for allowances
Allowance for bad debt In order to provide reserves against future losses
from default of notes and accounts receivable, a
bad debt provision is provided. The amount is
determined using a percentage based on the
actual doubtful account loss against the total of
debts. As for high-risk receivables, the expected
unrecoverable amount is considered individually.
Allowance for loss on investments
in subsidiaries and affiliates
In order to provide reserves against future loss
from investments in subsidiaries, estimated loss
from investments in subsidiaries is provided
based on an examination of the relevant
subsidiary’s financial condition and expected
recoverability.
Allowance for bonuses Bonuses for employees are provided at an
estimate of the amount
Allowance for bonuses is not provided during this
fiscal year.
Allowance for sales returns In order to provide reserves against future losses
from sales return subsequent to the fiscal year
end, allowance for sales returns is provided based
on past experience with the sales return rate.
Allowance for retirement benefits: In order to provide reserves against future losses
arising from the retirement of employees,
allowance for retirement benefits recognized to
have been incurred at the end of the period is
provided based on retirement benefit liabilities
projected at the end of the period.
Actuarial difference is recognized in the following
fiscal year.
4. 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 its pattern files).
The Company applies the following revenue recognition method for the share of PCS.
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.
Deferred revenue is finally recognized as revenue evenly over the contracted period.