Casio 2009 Annual Report Download - page 32

30 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 prob-
able bad debt based on a review of the collectibility of individual receivables.
Inventories
Prior to April 1, 2008, inventories of the Company and consolidated subsidiaries in Japan were stated at the lower of cost (first-in,
first-out) or market (replacement cost or net realizable values), determined using the weighted-average method. As discussed in
Note 3. (3), effective April 1, 2008, the Company and its consolidated subsidiaries in Japan adopted the new accounting standard
for measurement of inventories and stated the inventories at the lower of cost or net realizable values at year-end.
Consolidated overseas subsidiaries state inventories at the lower of market or cost, determined using the weighted-average
method.
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. The depreciation period
ranges from 2 years to 65 years for buildings and structures and 1 year to 20 years for machinery and equipment.
(Additional information)
Accompanying the recent amendments to the Income Tax Law, a new method of depreciation has been applied to property, plant
and equipment acquired on or prior to March 31, 2007. Under the new method, the difference between the amount equivalent to
5% of the acquisition cost and the remainder value is depreciated over a period of five years in equal amounts, beginning with the
term that follows a term during which the book value of the asset is depreciated to 5% of the acquisition cost. The reported figure is
included in depreciation expenses. As a result, operating income and income before income taxes and minority interests for the year
ended March 31, 2008 were each reduced by ¥636 million ($6,490 thousand) compared with the amount calculated by the previous
method.
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.
(Additional explanation)
The Company has shortened the useful lives of metal molds and other manufacturing equipment as well as software used in our
cell phone business to respond to the rapid shrinkage of cell phone markets and intensified competition. Accordingly, the Company
has made a non-recurring depreciation in the amount of ¥11,345 million ($115,765 thousand) for non-recurring depreciation on
noncurrent assets. Loss before income taxes and minority interests increased by the same amounts.
Lease assets
(Finance leases which do not transfer ownership of the leased property to the lessee)
Lease assets are divided into the two principal categories of property, plant and equipment and intangible assets. The former con-
sists primarily of facilities (machinery and equipment, tools, furniture and fixtures) while the latter consists of software. The assets
are depreciated on a straight-line basis on the assumption that the lease term is the useful life and the residual value is zero.
Accounting for lease transactions as lessee
The Company and its consolidated subsidiaries in Japan account for finance leases commenced prior to the year ended March 31,
2009 which do not transfer the ownership of the leased property to the lessee as operating leases with disclosures of certain “as
if capitalized” information. As discussed in Note 3. (4), the Company and its consolidated subsidiaries in Japan adopted the new
accounting standards and capitalized finance leases which commenced on or after April 1, 2008 except for certain immaterial or
short-term finance leases, which are accounted for as operating leases.
Stock issuance expenses
Stock issuance expenses are charged to income as incurred. Stock issuance expenses are included in other expenses in the consoli-
dated statements of income.
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 was amortized using the straight-line method over the life of the bond (6 years and 10 months).
Notes to Consolidated Financial Statements Years ended March 31, 2009 and 2008 Casio Computer Co., Ltd. and Subsidiaries