Canon 2010 Annual Report Download - page 92
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Please find page 92 of the 2010 Canon annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.CANON ANNUAL REPORT 201090
Income taxes have not been accrued on undistributed earn-
ings of domestic subsidiaries as the tax law provides a means
by which the dividends from a domestic subsidiary can be
received tax free.
Canon has not recognized deferred tax liabilities of ¥26,406
million ($326,000 thousand) for a portion of undistributed earn-
ings of foreign subsidiaries that arose for the year ended
December 31, 2010 and prior years because Canon currently
does not expect to have such amounts distributed or paid as
dividends to the Company in the foreseeable future. Deferred
tax liabilities will be recognized when Canon expects that it will
realize those undistributed earnings in a taxable manner, such
as through receipt of dividends or sale of the investments. At
December 31, 2010, such undistributed earnings of these sub-
sidiaries were ¥816,317 million ($10,077,988 thousand).
A reconciliation of the beginning and ending amount of
unrecognized tax benefi ts is as follows:
The total amounts of unrecognized tax benefi ts that would
reduce the effective tax rate, if recognized, are ¥6,035 million
($74,506 thousand) and ¥4,746 million at December 31, 2010
and 2009, respectively.
Although Canon believes its estimates and assumptions of
unrecognized tax benefi ts are reasonable, uncertainty regard-
ing the fi nal determination of tax audit settlements and any
related litigation could affect the effective tax rate in the future
period. Based on each of the items of which Canon is aware at
December 31, 2010, no signifi cant changes to the unrecognized
tax benefi ts are expected within the next twelve months.
Canon recognizes interest and penalties accrued related to
unrecognized tax benefi ts in income taxes. Both interest and
penalties accrued at December 31, 2010 and 2009, and interest
and penalties included in income taxes for the years ended
December 31, 2010, 2009 and 2008 are not material.
Canon fi les income tax returns in Japan and various foreign
tax jurisdictions. In Japan, Canon is no longer subject to regular
income tax examinations by the tax authority for years before
2006. While there has been no specifi c indication by the tax
authority that Canon will be subject to a transfer pricing exami-
nation in the near future, the tax authority could conduct a
transfer pricing examination for years after 2003. In other major
foreign tax jurisdictions, including the United States and
Netherlands, Canon is no longer subject to income tax exami-
nations by tax authorities for years before 2004 with few
exceptions. The tax authorities are currently conducting income
tax examinations of Canon’s income tax returns for years after
2005 in Japan and for certain years after 2003 in major foreign
tax jurisdictions.
Years ended December 31
Millions of yen
Thousands of
U.S. dollars
2010 2009 2008 2010
Balance at beginning of year ¥13,235 ¥12,689 ¥15,791 $163,395
Additions for tax positions of the current year 73 — 8,700 901
Additions for tax positions of prior years 805 1,442 1,354 9,938
Reductions for tax positions of prior years (8,354) (1,106) (8,512) (103,136)
Settlements with tax authorities (2,471) — (1,208) (30,506)
Additions from acquisitions 4,066 ——50,198
Other (1,319) 210 (3,436) (16,284)
Balance at end of year ¥ 6,035 ¥13,235 ¥12,689 $ 74,506
For the year ended December 31, 2008, the Company issued
127,254 shares of common stock in connection with the con-
version of convertible debt. In accordance with the Corporation
Law of Japan, conversion into common stock of convertible
14. Common Stock
debt is accounted for by crediting one-half or more of the con-
version price to the common stock account and the remainder
to the additional paid-in capital account.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
CANON INC. AND SUBSIDIARIES