Epson 2010 Annual Report Download - page 61

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60
The differences between Epson’s statutory income tax rate and the income tax rate reflected in the consolidated
statements of income were reconciled as follows:
Year ended March 31
2009 2010
Statutory income tax rate 40.4% 40.4%
Reconciliation:
Changes in valuation allowance (99.0) (3,168.4)
Reversal of deferred income taxes on undistributed earnings of
overseas subsidiaries due to corporate tax reform 21.8 -
Tax rate differences in overseas subsidiaries - 532.9
Entertainment expenses, etc. permanently non-tax deductible (1.5) 204.0
Unrecognized tax benefit for inter-company profit elimination 7.8 -
Other 1.3 15.8
Income tax rate per statements of operations (29.2%) (2,375.4%)
14. Selling, general and administrative expenses
The significant components of selling, general and administrative expenses for the years ended March 31, 2009
and 2010, were as follows:
Thousands of
Millions of yen U.S. dollars
Year ended
Year ended March 31 March 31,
2009 2010 2010
Salaries and wages ¥75,978 ¥73,239 $787,177
Advertising 22,075 15,303 164,477
Sales promotion 22,881 16,052 172,527
Shipping costs 16,333 14,325 153,966
Research and development costs 43,948 32,316 347,334
Allowance for doubtful accounts 276 517 5,556
Other 109,540 89,485 961,848
Total ¥291,031 ¥241,241 $2,592,885
15. Research and development costs
Research and development costs, which are included in the cost of sales and selling, general and administrative
expenses, totaled ¥82,058 million and ¥68,849 million ($739,993 thousand) for the years ended March 31, 2009
and 2010, respectively.
16. Impairment loss
Epson’s business assets are generally grouped by business segment under the Company’s management
accounting system, and their cash flows are continuously monitored. Assets that Epson plans to sell and idle
assets are separately assessed for impairment on the individual asset level. Impairment tests are performed for
both types of assets. The net book value of a business asset is reduced to its recoverable amount when there is
substantial deterioration in the asset’s future earning potential due to adverse changes in the marketplace
resulting in lower product prices or due to a change in the utilization plan for the assets. The carrying value of