Casio 2012 Annual Report Download - page 25

The derivative transactions are executed and managed by the Company’s Finance Department in
accordance with the established 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 probable bad debt based on a review of the collectibility
of individual receivables.
Inventories
The Company and its consolidated subsidiaries state inventories at the lower of cost (first-in, first-out) or
net realizable values at year-end.
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 60
years for buildings and structures, from 2 years to 12 years for machinery, equipment and vehicles, and
from 1 year to 20 years for tools, furniture and fixtures.
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.
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 consists 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.
Provision for 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 subsidiar-
ies in Japan are covered by two kinds of pension plans: defined benefit corporate pension fund plan and
tax-qualified pension plan. And those of the Company and some of its consolidated subsidiaries in Japan
are covered by lump-sum indemnities.
The Company and its consolidated subsidiaries in Japan received permission from the Minister of
Health, Labor and Welfare, for release from the obligation of paying benefits for employees’ prior services
relating to the substitutional portion of the Welfare Pension Insurance Scheme. Concurrently, the employ-
ees’ pension fund plan was changed to defined benefit corporate pension fund plan.
The Company and some of its consolidated subsidiaries in Japan provide defined contribution plans. In
addition, the Company has established an employee retirement benefits trust.
The liabilities and expenses for provision for retirement benefits are determined based on the amounts
actuarially calculated using certain assumptions.
Provision for directors’ retirement benefits
The annual provision for accrued retirement benefits for directors and statutory auditors of the Company
and certain subsidiaries is calculated to state the liability at the amount that would be required if all direc-
tors and corporate auditors had retired at each balance sheet date.
Income taxes
Taxes on income consist of corporation, inhabitants’ and enterprise taxes.
The Group recognizes tax effects of temporary differences between the financial statement and the
tax basis of assets and liabilities. 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.
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CASIO Annual Report 2012
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