Canon 2014 Annual Report Download - page 62

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60
6. FINANCE RECEIVABLES AND OPERATING LEASES
Finance receivables represent financing leases which consist
of sales-type leases and direct-financing leases resulting from
the sales of Canon’s and complementary third-party products
primarily in foreign countries. These receivables typically
have terms ranging from 1 year to 6 years.
The activity in the allowance for credit losses is as follows:
December 31 Millions of yen
2014 2013
Total minimum lease payments receivable ¥ 308,733 ¥ 278,621
Unguaranteed residual values 13,924 9,566
Executory costs (1,680) (2,184)
Unearned income (31,919) (29,875)
289,058 256,128
Less allowance for credit losses (6,276) (7,323)
282,782 248,805
Less current portion (102,920) (91,025)
¥ 179,862 ¥ 157,780
Years ended December 31 Millions of yen
2014 2013
Balance at beginning of year ¥ 7,323 ¥ 6,908
Charge-offs (1,171) (1,278)
Provision 154 212
Other (30) 1,481
Balance at end of year ¥ 6,276 ¥ 7,323
Canon has policies in place to ensure that its products
are sold to customers with an appropriate credit history,
and continuously monitors its customers’ credit quality
based on information including length of period in arrears,
macroeconomic conditions, initiation of legal proceedings
against customers and bankruptcy filings. The allowance
for credit losses of finance receivables are evaluated col-
lectively based on historical experience of credit losses. An
additional reserve for individual accounts is recorded when
Canon becomes aware of a customer’s inability to meet its
financial obligations, such as in the case of bankruptcy fil-
ings. Finance receivables which are past due or individual-
ly evaluated for impairment at December 31, 2014 and 2013
are not significant.
The cost of equipment leased to customers under operat-
ing leases included in property, plant and equipment, net
at December 31, 2014 and 2013 was ¥113,997 million and
¥103,403 million, respectively. Accumulated depreciation on
equipment under operating leases at December 31, 2014 and
2013 was ¥87,338 million and ¥78,821 million, respectively.
The following is a schedule by year of the future minimum lease payments to be received under financing leases and non-
cancelable operating leases at December 31, 2014.
Year ending December 31: Millions of yen
Financing leases Operating leases
2015 ¥ 121,619 ¥ 8,541
2016 90,955 4,585
2017 56,672 3,064
2018 28,688 1,450
2019 10,013 678
Thereafter 786 220
¥ 308,733 ¥ 18,538
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The components of the finance receivables, which are included in prepaid expenses and other current assets, and other
assets in the accompanying consolidated balance sheets, are as follows: