Alpine 2007 Annual Report Download - page 21

19
Notes to Consolidated Financial Statements
March 31, 2007, 2006 and 2005
ALPINE ELECTRONICS, INC.
1. Basis for Presenting Consolidated Financial Statements
Alpine Electronics, Inc. (“the Company”), a Japanese corporation, is
a subsidiary of Alps Electric Co., Ltd. (40.7% owned), a Japanese
listed company. The accompanying consolidated financial statements
have been prepared in accordance with the provisions set forth in the
Japanese Securities and Exchange Law and its related accounting
regulations, and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects as to
application and disclosure requirements of International Financial
Reporting Standards. The accounts of overseas subsidiaries are based
on their accounting records maintained in conformity with generally
accepted accounting principles prevailing in the respective countries of
domicile.
The accompanying consolidated financial statements have been
restructured and translated into English (with some expanded
descriptions and the inclusion of consolidated statements of changes in
net assets) from the consolidated fi nancial statements of the Company
prepared in accordance with Japanese GAAP and filed with the
appropriate Local Finance Bureau of the Ministry of Finance as required
by the Securities and Exchange Law. Some supplementary information
included in the statutory Japanese language consolidated financial
statements, but not required for fair presentation, is not presented in the
accompanying consolidated fi nancial statements.
The accompanying consolidated balance sheet as of March 31, 2007
has been prepared in accordance with the new accounting standard
as discussed in Note 2 (21). The consolidated balance sheet as of
March 31, 2006 has been prepared in accordance with the previous
presentation rules.
Also, as discussed in Note 2 (22), the consolidated statement of changes
in net assets for the year ended March 31, 2007 has been prepared
in accordance with the new accounting standard. The accompanying
consolidated statement of shareholders’ equity for the year ended March
31, 2006 and 2005 were voluntarily prepared for the purpose of inclusion
in the consolidated fi nancial statements although such statements were
not required to be fi led with the Local Finance Bureau.
The translations of the Japanese yen amounts into U.S. dollars are
included solely for the convenience of readers outside Japan, using
the prevailing exchange rate at March 31, 2007, which was ¥118.05
to U.S.$1. The convenience translations should not be construed as
representations that the Japanese yen amounts have been, could have
been, or could in the future be, converted into U.S. dollars at this or any
other rate of exchange.
2. Summary of Signifi cant Accounting Policies
(1) Consolidation
The consolidated financial statements include the accounts of the
Company and substantially all of its subsidiaries (“the Companies”) which
are controlled through substantial ownership of majority voting rights or
existence of certain conditions. All signifi cant intercompany transactions
and account balances are eliminated in consolidation.
During the fi scal year ended March 31, 2007, one subsidiary was added
in consolidation.
(2) Equity method
Investments in affi liated companies (all companies 20% to 50% owned
and certain others 15% to 20% owned) are accounted for by the equity
method in the consolidated financial statements for 2007, 2006 and
2005.
(3) Cash and cash equivalents
In preparing the consolidated statements of cash fl ows, cash on hand,
readily-available deposits and short-term highly liquid investments with
maturities of not exceeding three months at the time of purchase are
considered to be cash and cash equivalents.
(4) Securities
The intent of holding each security is examined and securities are
classifi ed as (a) securities held for trading purposes (hereafter, “trading
securities”), (b) debt securities intended to be held to maturity (hereafter,
“held-to-maturity debt securities”), (c) equity securities issued by
subsidiaries and affi liated companies, and (d) for all other securities that
are not classifi ed in any of the above categories (hereafter, “available-for-
sale securities”).
The Companies had no trading securities or held-to-maturity debt
securities. Equity securities issued by subsidiaries and affiliated
companies which are not consolidated or accounted for using the equity
method are stated at moving-average cost. Available-for-sale securities
with fair market value are stated at fair market value. Unrealized holding
gains and losses on these securities are reported, net of applicable
income taxes, as a separate component of the net assets. Realized
gain on sale of such securities is computed using the moving-average
cost. Available-for-sale securities with no fair market value are stated at
moving-average cost.
If the market value of equity securities issued by subsidiaries and
affi liated companies which are not consolidated or on the equity method
and available-for-sale securities declines signifi cantly, such securities are
stated at fair market value and the difference between the fair market
value and the carrying amount is recognized as loss in the period of the
decline. If the fair market value of equity securities issued by subsidiaries
and affi liated companies is not readily available, such securities should
be written down to net asset value in the event net asset value has
signifi cantly declined. Unrealized losses on these securities are reported
in the income statements.
(5) Allowance for doubtful accounts
The Companies provide allowance for doubtful accounts to cover
probable losses on collection by estimating uncollectible amounts
individually in addition to amounts for possible losses on collection in the
past.
(6) Inventories
Inventories held by the Company and its consolidated subsidiaries
except for those in America and Europe are principally stated at cost
determined by the weighted-average method.
Inventories held by the consolidated subsidiaries in America and
Europe are principally stated at the lower end of market or cost, mainly
determined by the moving-average method.