Alpine 2007 Annual Report Download - page 22

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(7) Property, plant, equipment and depreciation
Property, plants and equipment are stated at cost except for certain
land. The Companies compute depreciation of property, plant and
equipment, except for certain buildings, using the declining-balance
method at rates based on the useful lives prescribed by Japanese tax
regulations, while overseas consolidated subsidiaries use the straight-
line method over the estimated useful lives.
Depreciation of buildings purchased after March 31, 1998, is computed
using the straight-line method by the Company and its domestic
subsidiaries, because of an amendment to Japanese tax regulations.
Estimated useful lives are as follows:
Buildings 2 – 50 years
Machinery 2 – 15 years
Equipment 2 – 20 years
(Dies 1 year)
(8) Land revaluation
Pursuant to “Law Concerning Revaluation of Land” and the revisions
thereof, the Company elected one-time revaluation of land used for
business operations at fair value as of March 31, 2002. Due to the
revaluation, book value of the land was reduced by ¥1,395 million to
¥3,212 million as of March 31, 2002, and the related unrealized loss
is reported as a separate component of net assets. According to the
revised Law, the Company is not permitted to revalue the land at any
time for subsequent declines or appreciation in the fair values of the
land. The excess of the revalued amounts of the revalued land over the
fair values as of March 31, 2007 and 2006 amounted to ¥963 million
(US$8,158 thousand) and ¥873 million, respectively.
(9) Certain lease transactions
Finance leases which do not transfer ownership of leased assets to
lessees are not capitalized and are accounted for in the same manner as
operating leases.
(10) Employees’ bonuses
Liabilities for employees’ bonuses are mainly provided based on the
estimate of the amounts to be paid in the future, based on the accrual
basis at the balance sheet date.
(11) Directors’ bonuses
Liabilities for directors’ bonuses are mainly provided based on the
estimate of the amounts to be paid in the future, based on the accrual
basis at the balance sheet date.
Effective from the year ended March 31, 2007, the Company adopted
the new accounting standard for directors’ bonuses (“Accounting
Standard for Directors’ Bonuses” issued by the Accounting Standards
Board of Japan). Under this standard, directors’ bonuses are expensed
as incurred and shown under selling, general and administrative
expenses, whereas the Company previously accounted for them as a
deduction of retained earnings.
As a result of adopting the standard and guidance, operating income
and income before income taxes and minority interests for the fi scal year
ended March 31, 2007 decreased by ¥63 million ($534thousand).
(12) Employees’ severance and retirement benefi ts
The Company and its fi ve domestic subsidiaries have unfunded lump-
sum benefit and funded pension plans covering all employees. Under
the terms of the plans, eligible employees are entitled, upon reaching
mandatory retirement age or earlier voluntary severance, to severance
and retirement benefi t payments based on the length of their services,
base salary at the time of termination and cause of termination.
Allowances and expenses for severance and retirement benefits are
determined based on the amounts actuarially calculated using certain
assumptions. The Companies provide allowance for employees’
severance and retirement benefits based on the estimated amount of
projected benefi t obligation and the fair value of the plan assets at the
balance sheet date.
Return of substitutional portion of Welfare Pension Insurance
Employees of Japanese companies compulsorily join the Welfare
Pension Insurance Scheme operated by the government. Employers
are legally required to deduct employees’ welfare pension insurance
contributions from their payroll and to pay them to the government
together with employers’ own contributions. For companies that have
established their own Employees’ Pension Fund which meets certain
legal requirements, it is possible to transfer a part of their welfare
pension insurance contributions (so-called substitutional portion of
the government’s Welfare Pension Insurance Scheme) to their own
Employees’ Pension Fund under the government’s permission and
supervision.
Based on the newly enacted Defi ned Benefi t Corporate Pension Law, the
Company decided to restructure its Employees’ Pension Fund and was
permitted by the Minister of Health, Labour and Welfare on September
1, 2004 to transfer back the obligation for payments for prior service
in the substitutional portion of the Welfare Pension Insurance Scheme.
On June 27, 2005, the Company transferred back the obligation to the
government.
In the year ended March 31, 2006, the Company recognized a gain
on return of the substitutional portion of the Welfare Pension Insurance
amounting to ¥10 million (US$85 thousand).
Also, on February 28, 2005, the Company made further changes
in the retirement pension scheme, by introducing a new business
annuity scheme, called the Cash Balance Plan. Based on the Defi ned
Contribution Corporate Pension Law, the Company shifted a part of
its pension scheme, on April 2, 2005, to the alternatives of defined
contribution or prepaid retirement benefits. As a result, in the year
ended March 31, 2005, the Company recognized a gain on return of
the substitutional portion of the Welfare Pension Insurance amounting
to ¥1,091 million and loss on change in the retirement pension scheme
amounting to ¥199 million.
(13) Directors’ severance and retirement benefi ts
The Company and its domestic consolidated subsidiaries provide for
retirement benefi ts for directors, based on the bylaws and on the accrual
basis at the balance sheet date.
(14) Foreign currency translation
Receivables, payables and investments denominated in foreign
currencies are translated into Japanese yen using the exchange rate
at the balance sheet date, except that investments in unconsolidated
subsidiaries and affi liated companies are translated using the historical
rates. The Company and its domestic subsidiaries include foreign
currency translation adjustments in the net assets in the consolidated
balance sheets.