Casio 2003 Annual Report Download - page 25

1BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The Company and its consolidated domestic subsidiaries maintain their official accounting records in Japanese yen, and
in accordance with the provisions set forth in the Japanese Commercial Code and accounting principles and practices
generally accepted in Japan (“Japanese GAAP”). The accounts of overseas consolidated subsidiaries are based on their
accounting records maintained in conformity with generally accepted accounting principles and practices prevailing in the
respective countries of domicile. Certain accounting principles and practices generally accepted in Japan are different from
International Accounting Standards and standards in other countries in certain respects as to application and disclosure
requirements. Accordingly, the accompanying consolidated financial statements are intended for use by those who are
informed about Japanese accounting principles and practices.
The accompanying consolidated financial statements have been restructured and translated into English (with some
expanded descriptions and the inclusion of consolidated statements of shareholders’ equity) from the consolidated finan-
cial statements of the Company prepared in accordance with Japanese GAAP and filed with the appropriate Local Finance
Bureau of the Ministry of Finance as required by the Securities and Exchange Law. Some supplementary information
included in the statutory Japanese language consolidated financial statements, but not required for fair presentation, is
not presented in the accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside
Japan, using the prevailing exchange rate at March 31, 2003, which was ¥120 to U.S.$1. The convenience translations
should not be construed as representations that the Japanese yen amounts have been, could have been, or could in the
future be converted into U.S. dollars at this or any other rate of exchange.
2SIGNIFICANT ACCOUNTING POLICIES
Consolidation The accompanying consolidated financial statements include the accounts of the Company and significant
subsidiaries (together with the Company, the “Group”) which the Company controls through majority voting right or exis-
tence of certain conditions. Investments in affiliates of which the Company has the ability to exercise significant influence
over operating and financial policies are accounted for using the equity method.
In the elimination of investments in subsidiaries, the portion of assets and liabilities of a subsidiary attributable to the
subsidiary’s shares acquired by the Company are recorded based on the fair value as of the respective dates when such
shares were acquired. The amounts of assets and liabilities attributable to minority shareholders of the subsidiary are
determined using the financial statements of the subsidiary.
Material intercompany balances, transactions and profits have been eliminated in consolidation.
The difference between the cost and underlying fair value of the net equity of investments in subsidiaries at acquisition
is included in other assets and is amortized on a straight-line basis over five years.
Cash flow statements In preparing the consolidated statements of cash flows, cash on hand, readily available deposits
and short-term highly liquid investments with maturities of not exceeding three months at the time of purchase are con-
sidered to be cash and cash equivalents.
Foreign currency translation All monetary assets and liabilities denominated in foreign currencies are translated at the
current exchange rates at the balance sheet date, and the translation gains and losses are credited or charged to income.
Assets and liabilities of foreign subsidiaries are translated into yen at the current exchange rate at the balance sheet
date while their revenue and expenses are translated at the average exchange rate for the period. Differences arising from
such translation are included in minority interests and shareholders’ equity as foreign currency translation adjustments.
Securities Debt securities designated as held-to-maturity are carried at amortized cost. Other securities except for trading
securities (hereafter, “available-for-sale securities”) for which market value is readily determinable are stated at market
value as of the end of the period with unrealized gains and losses, net of applicable deferred tax assets or liabilities, not
reflected in earnings but directly reported as a separate component of shareholders’ equity. The cost of such securities sold
is determined primarily by the moving-average method. Available-for-sale securities for which market value is not readily
determinable are stated primarily at moving-average cost except for debt securities, which are stated at amortized cost.
Derivatives and hedge accounting The accounting standard for financial instruments requires companies to state
derivative financial instruments at fair value and to recognize changes in the fair value as gains or losses unless derivative
financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meet certain hedging criteria, the Group defers recognition of
gains or losses resulting from changes in the fair value of derivative financial instruments until the related losses or gains
on the hedged items are recognized.
Also, if interest rate swap contracts are used as hedges and meet certain hedging criteria, the net amount to be paid
or received under the interest rate swap contract is added to or deducted from the interest on the assets or liabilities for
which the swap contract was executed.
The Group uses forward foreign currency contracts and interest rate swaps as derivative financial instruments only for
the purpose of mitigating future risks of fluctuations of foreign currency exchange rates with respect to foreign currency
assets and liabilities and of interest rate increases with respect to cash management.
Notes to Consolidated Financial Statements
Years ended March 31, 2003 and 2002
Casio Computer Co., Ltd. and Subsidiaries
Annual Report 2003 23