Wacom 2009 Annual Report Download - page 30

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(Additional information)
Useful lives of Machinery and equipment have been
changed in conformity with the Corporate Tax Law
revised in 2008. The impact on the consolidated
statement of income is not significant.
(b) Intangible assets:
The Company adopted the straight-line method for
computing amortization. Software for in-house use is
amortized based on the straight-line method over the
expected useful economic life of 5 years. Software for
sale is amortized based on an estimated volume of sales,
with the minimum amortization amount calculated based
on a useful life of 3 years.
(4) Basis of provision -
(a) Allowance for doubtful accounts:
An allowance for doubtful accounts is provided in an
amount sufficient to cover probable losses on collection.
The allowance for doubtful accounts of the Company is
computed based on the past bad debt experience ratio
for normal receivables, plus the estimated irrecoverable
amount of doubtful receivables on an individual account
basis.
Foreign consolidated subsidiaries mainly compute the
allowance for doubtful accounts based on the estimated
irrecoverable amount of doubtful receivables on an
individual account basis.
(b) Provisions for bonuses:
The provisions for bonuses to employees are provided
based on the estimated amounts expected to be paid to
the employees.
(c) Provisions for directors’ and statutory corporate
auditors’ bonuses
The provisions for directors’ and statutory corporate
auditors’ bonuses are provided based on the estimated
amounts expected to be paid for directors and statutory
corporate auditors.
(d) Provision for retirement benefits:
The provision for retirement benefits for employees is
provided based on the actuarially calculated present
value of projected benefit obligations except for, as
permitted under the accounting standard for employees’
retirement benefits, the unrecognized actuarial differ-
ences. The unrecognized actuarial differences are
amortized on a straight-line basis over 5 years beginning
in the year after they arise.
(e) Provision for directors’ and statutory corporate
auditors’ retirement benefits:
The Company provides an accrued lump-sum severance
indemnity for directors’ and statutory corporate auditors’
at the full amount which would be required to be paid if
all directors and statutory corporate auditors retired at
the balance sheet date based on the Company’s internal
regulations.
(5) Foreign currency translation -
The Company’s functional currency is Japanese Yen.
The translation of assets and liabilities denominated in
foreign currency at the year-end is made at the current
exchange rate. Exchange gains and losses resulting
from foreign currency transactions and translation of
assets and liabilities denominated in foreign currencies
are included in the consolidated statements of income.
All assets, liabilities, income and expense accounts of
foreign subsidiaries are translated using the current
exchange rates at the respective balance sheet dates.
Foreign currency translation adjustments resulting from
such procedures are recorded in the consolidated
balance sheets as a separate component of net assets.
(6) Consumption taxes -
The consumption tax withheld upon sale and consump-
tion tax paid by the Companies on their purchases of
goods and services is not included in revenue and cost
or expense items in the accompanying consolidated
statements of income.
(7) Valuation method for assets and liabilities of subsidiar-
ies -
Assets and liabilities of subsidiaries are measured at fair
value when consolidated.
(8) Amortization of goodwill -
Goodwill is amortized equally over the effective periods.
(9) Cash and cash equivalents -
Cash and cash equivalents include all highly liquid
investments, generally with original maturities of three
months or less, those that are readily convertible to
known amounts of cash and, thus, present an insignifi-
cant risk of changes in value.
3. Accounting changes:
(1)Practical solution on unification of accounting policies
applied to foreign subsidiaries for the consolidated
financial statements -
“Practical Solution on Unification of Accounting Policies
Applied to Foreign Subsidiaries for the Consolidated
Financial Statements” (Accounting Standards Board of
Japan Practical Issues Task Force No. 18 issued on May
17, 2006) has been adopted effective for the fiscal year
ended March 31, 2009. As a result, operating profit,
ordinary income and income before income taxes are
decreased by ¥17,576 thousand ($179 thousand)
compared with what would have been reported under the
previous accounting policy that consolidated subsidiaries
overseas had applied generally accepted accounting
principles in each country to their own financial
statements and no adjustments had been made to their
financial statements on consolidation. The impact on
segment information is explained in Note 20.
(2)Lease accounting -
Finance lease transactions that do not transfer ownership
of the assets had been accounted for using the same
method as for operating leases. However, “Accounting
Standard for Lease Transactions” (Accounting Standards
Board of Japan Statement No. 13, originally issued on
June 17, 1993 and revised on March 30, 2007) and
“Guidance on Accounting Standard for Lease Transac-
tions” (Accounting Standards Board of Japan Guidance
No. 16, originally issued on January 18, 1994 and revised