Epson 2013 Annual Report Download - page 57

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56
Derivative instruments
Derivative instruments (i.e., forward exchange contracts, interest rate swaps and currency
options) are recognized as either assets or liabilities at their respective fair values at the date of
contract, and gains and losses arising from changes in fair value are recognized in earnings in the
corresponding fiscal period.
Interest rate swaps meeting certain hedging criteria are not recognized at their fair values under
exceptional processes recognized in Japanese accounting standards. The amounts received or
paid for such interest rate swap arrangements are charged or credited to income as incurred.
Allowance for doubtful accounts
Allowance for doubtful accounts is calculated based on the aggregate amount of estimated credit
losses for doubtful receivables plus an amount for receivables other than doubtful receivables
calculated using historical write-off experience from certain prior periods.
(5) Inventories
Inventories are stated at the lower of cost or market value, where cost is primarily determined using the
weighted-average cost method.
(6) Property, plant and equipment
Property, plant and equipment, including significant renewals and improvements, are carried at cost less
accumulated depreciation. Maintenance and repairs, including minor renewals and improvements, are
charged to income as incurred. Depreciation of property, plant and equipment is mainly computed based on
the declining-balance method for the Company and its Japanese subsidiaries, and on the straight-line
method for foreign subsidiaries at rates based on estimated useful lives. For buildings acquired by the
Company and its Japanese subsidiaries on or after April 1, 1998, depreciation is computed based on the
straight-line method, which is prescribed by Japanese income tax laws.
The estimated useful lives of significant depreciable assets principally range from 8 to 50 years for
buildings and structures, and from 2 to 12 years for machinery, equipment and vehicles.
In line with the fiscal year 2012 Japanese tax reforms, effective April 1, 2012, the Company and its
Japanese subsidiaries adopted the 200% declining-balance method for depreciation of property, plant and
equipment (excluding buildings) acquired on or after April 1, 2012. The adoption of the new method did
not have a material effect on Epson’s results of operations and financial position for the year ended March
31, 2013.