Wacom 2007 Annual Report Download - page 25

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Notes to Consolidated Financial Statements
1. Basis of presenting consolidated nancial statements:
The accompanying consolidated nancial statements
have been prepared from the consolidated nancial
statements of Wacom Co., Ltd. (the “Company”) led
with the Director of the Kanto Local Finance Bureau in
accordance with the Securities and Exchange Law of
Japan and its related accounting regulations, and in
conformity with accounting principles and practices
generally accepted in Japan, which are dierent in
certain respects as to the application and disclosure
requirements of International Financial Reporting
Standards.

In preparing these consolidated nancial statements,
certain reclassications and rearrangements have
been made to the consolidated nancial statements
issued in Japan in order to present these statements in
a form which is more familiar to readers of these
statements outside Japan. Some information, provided
in the notes to the consolidated nancial statements,
is not required under accounting principles generally
accepted in Japan, but is presented for the
convenience of the readers.

The consolidated nancial statements are stated in
Japanese yen, the currency of the country in which the
Company is incorporated and principally operates.
The translation of Japanese yen amounts into U.S.
dollar amounts is included solely for the convenience
of readers outside Japan and has been calculated at
the rate of JP¥118.05 = U.S.$1.00, the approximate rate
of exchange on March 31, 2007. Such translations
should not be construed as representations that the
Japanese yen amounts could have been or could be
converted into U.S. dollars at that or any other rate.

2.Summary of signicant accounting policies:
(1) Consolidation -
The consolidated nancial statements include the
accounts of the Company and all of its majority-owned
subsidiaries.

The assets and liabilities of its subsidiaries are
incorporated into the nancial statements at fair value,
and the dierence between the net assets at fair value
and the investment amounts is accounted for as
goodwill, which is amortized on straight-line basis
over the reasonable period not exceeding 20 years.

All signicant intercompany balances and transactions,
and unrealized prot, included in assets, have been
eliminated on consolidation.

Consolidated subsidiaries overseas have applied
generally accepted accounting principles in each
country to their own nancial statements and no
adjustments have been made to their nancial
statements on consolidation, as allowed under
accounting principles and practices generally
accepted in Japan.

There are no unconsolidated subsidiaries or aliates
accounted for by the equity method in the previous
scal year and this scal year for consolidation.

Regarding the scal year of consolidated subsidiaries,
December 31 is the consolidated closing date for
Wacom China Corporation. The consolidated nancial
statements are based upon provisional settlement of
accounts as of the ocial consolidated closing date.

(2)Cash and cash equivalents -
Cash and cash equivalents include all highly liquid
investments, generally with original maturities of three
months or less, that are readily convertible to known
amounts of cash and, thus, are near maturity and
present an insignicant risk of changes in value.
(3) Financial instrument -
(a)Derivatives:
All derivatives are stated at fair value, with changes in
fair value included in net prot or loss in the period in
which they arise.
(b)Securities:
Securities held by the Company and its subsidiaries are
classied as follows:
Other securities for which market price or quotations
are not available are stated at cost based on
moving-average method.
(4) Allowance for doubtful accounts -
An allowance for doubtful accounts is provided in an
amount sucient to cover probable losses on
collection. It consists of the estimated uncollectable
amount with respect to certain identied doubtful
receivables and an amount calculated using the actual
percentage of collection losses.
(5) Inventories -
Inventories held by the Company are stated at cost,
which is mainly determined by the average method.
Inventories held by consolidated subsidiaries overseas
are stated at the lower of cost or market value, which is
determined by the rst-in, rst-out (“FIFO”) method.
(6) Property, plant and equipment and depreciation -
Property, plant and equipment are stated at cost.
Depreciation, except for buildings, is computed by the
declining-balance method at rates based on the
estimated useful lives of the assets. Depreciation of
buildings at consolidated subsidiaries overseas and
those acquired by the Company on or after April 1,
1998 is computed primarily by the straight-line method.
Useful lives of major classes of property, plants and
equipment are as follows:

Buildings and facilities 3 to 65 years
Machinery, equipment and vehicles 5 to 13 years
Tools and furniture 2 to 20 years
Wacom Co., Ltd. and Its Subsidiaries
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