Canon 2011 Annual Report Download - page 94

92 F I N A N C I A L S E C T I O N >N O T E S T O C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
2011: Assets:
Cash and cash equivalents
Available-for-sale (current):
Corporate bonds
Available-for-sale (noncurrent):
Government bonds
Corporate bonds
Fund trusts
Equity securities
Derivatives
Total assets
Liabilities:
Derivatives
Total liabilities
Level 3 TotalLevel 2
$2,619,321
—
—
1,333
21,474
—
60,487
$2,702,615
$ 33,462
$ 33,462
Level 1
$ —
256
1,923
—
1,936
227,231
—
$231,346
$ —
$ —
$ —
—
—
5,821
—
—
—
$5,821
$ —
$ —
$2,619,321
256
1,923
7,154
23,410
227,231
60,487
$2,939,782
$ 33,462
$ 33,462
Thousands of U.S. dollars
Balance at beginning of year
Total gains or losses (realized or unrealized):
Included in earnings
Included in other comprehensive income (loss)
Purchases, issuances, and settlements
Balance at end of year
2010
Millions of yen
Thousands of
U.S. dollars
20112011
¥ 1,950
(2)
(12)
(1,482)
¥ 454
¥1,340
(79)
(7)
696
¥1,950
$25,000
(25)
(154)
(19,000)
$ 5,821
Years ended December 31
Level 1 investments are comprised principally of Japanese
equity securities, which are valued using an unadjusted
quoted market price in active markets with sufficient volume
and frequency of transactions. Level 2 cash and cash equiva-
lents are valued based on market approach, using quoted
prices for identical assets in markets that are not active. Level
3 investments are mainly comprised of corporate bonds,
which are valued based on cost approach, using unobservable
inputs as the market for the assets was not active at the meas-
urement date.
Derivative financial instruments are comprised of foreign
exchange contracts. Level 2 derivatives are valued using
quotes obtained from counterparties or third parties, which
are periodically validated by pricing models using observable
market inputs, such as foreign currency exchange rates and
interest rates, based on market approach.
The following table presents the changes in Level 3 assets
measured on a recurring basis, consisting primarily of corpo-
rate bonds, for the years ended December 31, 2011 and 2010.
Gains and losses included in earnings are mainly related
to corporate bonds still held at December 31, 2011 and 2010,
and are reported in !Other, net"in the consolidated state-
ments of income.
Assets and liabilities measured at fair value on a
nonrecurring basis
During the year ended December 31, 2011, equity securities
accounted for by the equity method with a carrying amount of
¥3,577 million ($45,859 thousand) were written down to their
fair value of zero, resulting in an other-than-temporary impair-
ment charge of ¥3,577 million ($45,859 thousand), which was
included in earnings. Equity securities accounted for by the
equity method were classified as Level 3 instruments and val-
ued based on an income approach using unobservable inputs
such as projected income of the investment.
During the year ended December 31, 2010, non-marketable
equity securities with a carrying amount of ¥5,000 million
were written down to their fair value of ¥2,422 million and
equity securities accounted for by the equity method with a
carrying amount of ¥33,984 million were written down to
their fair value of ¥15,164 million, resulting in an other-than-
temporary impairment charge totaling ¥21,398 million,
which was included in earnings. The non-marketable equity
securities were classified as Level 2 instruments and valued
based on a market approach using observable inputs such as
unadjusted quoted prices for similar instruments in active
markets at the measurement date. Equity securities accounted
for by the equity method were classified as Level 3 instru-
ments and valued based on a combination of income
approach and market approach using both unobservable and
observable inputs including the use of inputs such as financial
metrics, ratios and projected income of the investees and
appropriate comparable public companies.