Canon 2012 Annual Report Download - page 88

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Strategy Business Units Management System FINANCIAL SECTION
86
The following methods and assumptions are used to esti-
mate the fair value in the above table.
Long-term debt
Canon’s long-term debt instruments are classified as Level
2 instruments and valued based on the present value of
future cash flows associated with each instrument dis-
counted using current market borrowing rates for similar
debt instruments of comparable maturity. The levels are
more fully described in Note 21.
Foreign exchange contracts
The fair values of foreign exchange contracts are measured
based on the market price obtained from financial institutions.
Limitations of fair value estimates
Fair value estimates are made at a specific point in time,
based on relevant market information and information
about the financial instruments. These estimates are sub-
jective in nature and involve uncertainties and matters of
significant judgment and therefore cannot be determined
with precision. Changes in assumptions could significantly
affect the estimates.
Concentrations of credit risk
At December 31, 2012 and 2011, one customer accounted
for approximately 18% and 17% of consolidated trade receiv-
ables, respectively. Although Canon does not expect that the
customer will fail to meet its obligations, Canon is poten-
tially exposed to concentrations of credit risk if the customer
failed to perform according to the terms of the contracts.
20. DISCLOSURES ABOUT THE FAIR VALUE OF FINANCIAL INSTRUMENTS AND CONCENTRATIONS OF
CREDIT RISK
Fair value of financial instruments
The estimated fair values of Canon’s financial instruments at December 31, 2012 and 2011 are set forth below. The follow-
ing summary excludes cash and cash equivalents, trade receivables, finance receivables, noncurrent receivables, short-term
loans, trade payables and accrued expenses for which fair values approximate their carrying amounts. The summary also
excludes investments which are disclosed in Note 3.
Long-term debt, including current installments
Foreign exchange contracts:
Assets
Liabilities
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
¥ (3,664)
831
(25,493)
¥ (3,654)
831
(25,493)
¥ (7,070)
4,718
(2,610)
¥ (7,053)
4,718
(2,610)
$ (42,115)
9,552
(293,023)
$ (42,000)
9,552
(293,023)
2011
Millions of yen Thousands of U.S. dollars
20122012
December 31