Casio 2016 Annual Report Download - page 27

Annual Report 2016 / 4626
CONTENTS
To Our Stakeholders Prole Special Features ESG Information Financial Section Corporate Data
Notes to Consolidated Financial Statements
Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount sufficient to cover probable losses on the
collection of receivables.
The amount of the allowance is determined by an estimated amount of probable bad debt that is based on
past write-off experience and a review of the collectability of individual receivables.
Inventories
Inventories are stated primarily at the lower of cost (first-in, first-out) or net realizable values at year-end.
Property, plant and equipment, except leased assets
Property, plant and equipment is stated at cost. For the Company and its consolidated subsidiaries in Japan,
depreciation is principally determined by the declining-balance method at rates based on estimated useful
lives except for the following items. The building and structures of the head office of the Company as well as,
buildings, excluding building fixtures, acquired on or after April 1, 1998, are depreciated using the straight-line
method. For overseas subsidiaries, depreciation is principally determined by the straight-line method. The
depreciation period ranges from 2 years to 50 years for buildings and structures, from 2 years to 17 years for
machinery, equipment and vehicles, and from 1 year to 20 years for tools, furniture and fixtures.
Software, except leased assets
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 under Investments and other assets in the
consolidated balance sheets.
Leased assets
(Finance leases which do not transfer ownership of the leased property to the lessee)
Leased assets are divided into the two principal categories of property, plant and equipment and intangible
assets included in Other under Investments and other 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.
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.
For employees’ severance and retirement benefits, the Company and some of its consolidated subsidiaries
in Japan provide a defined benefit plan and have established and are participating in the Casio corporate
pension fund, which is a system with multiple business proprietors.
The Company and its consolidated subsidiaries in Japan received permission from the Minister of Health,
Labour 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. Afterwards, the welfare pension insurance
plan was changed to the defined benefit plan.
The Company and some of its consolidated subsidiaries in Japan also provide a defined contribution plan.
On April 1, 2012, the Company and certain consolidated subsidiaries transferred part of the defined benefit
plan to the defined contribution plan. In addition, the Company has established an employee retirement
benefit trust.
The liabilities and expenses for retirement benefits are determined based on the amounts actuarially
calculated using certain assumptions. The liability and expenses for the retirement benefit plan subject to
some of the consolidated subsidiaries are calculated by a simplified method.
Income taxes
Taxes on income consist of corporation, inhabitants’ and enterprise taxes.
The Company and certain consolidated subsidiaries in Japan apply the consolidated tax payment system.
The Group recognizes tax effects of temporary differences between carrying amounts for financial reporting
purposes and amounts for tax purposes. The provision for income taxes is computed based on the profit
before income taxes 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.
Amounts per share of common shares
Earnings per share of common shares is computed based on the weighted average number of common
shares outstanding during each fiscal year (less the treasury shares).
Cash dividends per share represent the actual amount applicable to the respective years.