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CANON ANNUAL REPORT 2015
78
Guarantees
Canon provides guarantees for bank loans of its employees,
affiliates and other companies. The guarantees for the employ-
ees are principally made for their housing loans. The guarantees
of loans of its affiliates and other companies are made to ensure
that those companies operate with less financial risk.
For each guarantee provided, Canon would have to per-
form under a guarantee if the borrower defaults on a payment
within the contract periods of 1 year to 30 years, in the case
of employees with housing loans, and 1 year to 5 years, in the
case of affiliates and other companies. The maximum amount
of undiscounted payments Canon would have had to make
in the event of default is ¥7,685 million at December 31,
2015. The carrying amounts of the liabilities recognized for
Canon’s obligations as a guarantor under those guarantees at
December 31, 2015 were not significant.
Legal proceedings
Canon is involved in various claims and legal actions arising
in the ordinary course of business. Canon has recorded pro-
visions for liabilities when it is probable that liabilities have
been incurred and the amount of loss can be reasonably esti-
mated. Canon reviews these provisions at least quarterly and
adjusts these provisions to reflect the impact of the negotia-
tions, settlements, rulings, advice of legal counsel and other
information and events pertaining to a particular case. Based
on its experience, although litigation is inherently unpre-
dictable, Canon believes that any damage amounts claimed
in outstanding matters are not a meaningful indicator of
Canon’s potential liability. In the opinion of management, any
reasonably possible range of losses from outstanding matters
would not have a material adverse effect on Canon’s consoli-
dated financial position, results of operations, or cash flows.
Years ended December 31 Millions of yen
2015 2014
Balance at beginning of year ¥ 11,564 ¥ 10,890
Additions 18,942 15,699
Utilization (12,404) (12,039)
Other (4,088) (2,986)
Balance at end of year ¥ 14,014 ¥ 11,564
19. 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, 2015 and 2014 are set forth below. The following
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 and derivative instruments which are disclosed in Note 2 and Note 17, respectively.
December 31 Millions of yen
2015 2014
Carrying
amount
Estimated
fair value
Carrying
amount
Estimated
fair value
Long-term debt, including current installments ¥(1,543) ¥(1,507) ¥(2,163) ¥(2,146)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Canon also issues contractual product warranties under which it generally guarantees the performance of products delivered
and services rendered for a certain period or term. Changes in accrued product warranty costs for the years ended December 31,
2015 and 2014 are summarized as follows: