Casio 2004 Annual Report Download - page 30

28 CASIO COMPUTER CO., LTD.
The derivative transactions are executed and managed by the Company’s Finance Department in accordance with the estab-
lished policies and within the specified limits on the amounts of derivative transactions allowed.
Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount sufficient to cover probable losses on the collection of receivables.
For the Group, the amount of the allowance is determined based on past write-off experience and an estimated amount of proba-
ble bad debt based on a review of the collectibility of individual receivables.
Inventories
Inventories are stated principally at the lower of cost (first-in, first-out) or market (replacement cost or net realizable value).
Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is principally determined by the declining-balance method at rates
based on estimated useful lives except for the following buildings. The building of the head office of the Company and buildings,
excluding building fixtures, acquired after March 31, 1998 are depreciated using the straight-line method.
In the year ended March 31, 2004, the Company and its domestic consolidated subsidiaries did not adopt early the new
accounting standard for impairment of fixed assets (“Opinion Concerning Establishment of Accounting Standard for Impairment of
Fixed Assets” issued by the Business Accounting Deliberation Council on August 9, 2002) and the implementation guidance for
accounting standard for impairment of fixed assets (the Financial Accounting Standard Implementation Guidance No. 6 issued by
the Accounting Standards Board of Japan on October 31, 2003). The new accounting standard is required to be adopted in periods
beginning on or after April 1, 2005, but the standard does not prohibit earlier adoption.
Software costs
Software is categorized by the following purposes and amortized using the following two methods.
Software for market sales: The production costs for the master product are capitalized and amortized over no more than 3
years on a projected revenue basis.
Software for internal use: The acquisition costs of software for internal use are amortized over 5 years using the straight-line
method.
The amount of software costs capitalized is included in other assets in the consolidated balance sheets.
Bond issuance expenses and bond premium
Bond issuance expenses are charged to income as incurred. Bond issuance expenses are included in other expenses in the consoli-
dated statements of income.
Bond premium is amortized using the straight-line method over the life of the bond (6 years and 10 months).
Employees’ severance and retirement benefits
Under the terms of the employees’ severance and retirement plan, eligible employees are entitled under most circumstances, upon
mandatory retirement or earlier voluntary severance, to severance payments based on compensation at the time of severance and
years of service.
Employees’ severance and retirement benefits of the Company and some of its consolidated subsidiaries are covered by two
kinds of pension plans. And those of some of its consolidated subsidiaries in Japan are covered by lump-sum indemnities.
The liabilities and expenses for severance and retirement benefits are determined based on the amounts actuarially calculated
using certain assumptions.
The Company and its consolidated subsidiaries in Japan provided liabilities for severance and retirement benefits at March 31,
2001 based on the estimated amounts of projected benefit obligation and the fair value of the plan assets at that date.
The excess of the projected benefit obligation over the total of the fair value of pension assets as of April 1, 2000 and the liabil-
ities for severance and retirement benefits recorded as of April 1, 2000 (the “net transition obligation”) amounted to ¥19,576 mil-
lion. The net transition obligation is recognized in expenses in equal amounts over 10 years commencing with the year ended
March 31, 2001.
Retirement benefits for directors and corporate auditors
The annual provision for accrued retirement benefits for directors and corporate auditors of the Company and certain subsidiaries is
calculated to state the liability at the amount that would be required if all directors and corporate auditors had retired at each bal-
ance sheet date. The provisions for the retirement benefits are not funded.
Accounting for certain lease transactions
Finance leases, which do not transfer titles to lessees, are accounted for in the same manner as operating leases under accounting
principles generally accepted in Japan.
Income taxes
Taxes on income consist of corporation, inhabitants and enterprise taxes.
Deferred income taxes are provided for the items relating to intercompany profit elimination in connection with the calculation
of the consolidated results of operations. In addition, some foreign subsidiaries recognize deferred income taxes in accordance with
accounting practices prevailing in their respective countries of domicile.
The Group recognizes tax effects of temporary differences between the financial statement and the tax basis of assets and lia-
bilities. The provision for income taxes is computed based on the income before income taxes and minority interests included in the
statements of income of each company of the Group. The asset and liability approach is used to recognize deferred tax assets and
liabilities for the expected future tax consequences of temporary differences.
Appropriations of retained earnings
Appropriations of retained earnings are accounted for and reflected in the accompanying consolidated financial statements when
approved by the shareholders.