Epson 2013 Annual Report Download - page 58

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57
(7) Intangible assets
Amortization of intangible assets is computed using the straight-line method. Amortization of software for
internal use is computed using the straight-line method over its estimated useful life, ranging from three to
five years.
(8) Impairment of long-lived assets
Long-lived assets are reviewed for impairment whenever events or changes in circumstances indicate that
the carrying amount of an asset may not be recoverable. This review is performed using estimates of future
cash flows. If the carrying value of a long-lived asset is considered to be impaired, an impairment charge is
recorded for the excess of the carrying value of the long-lived asset over its recoverable amount.
(9) Provision for bonuses
Provision for bonuses to employees is calculated on the basis of the estimated amounts that Epson is
obligated to pay its employees after the fiscal year-end for services provided up to the balance sheet dates.
Provision for bonuses to directors and statutory auditors are provided for the estimated amounts that the
Company is obligated to pay to directors and statutory auditors subject to the resolution of the general
shareholders’ meeting held subsequent to the fiscal year-end.
(10) Provision for product warranties
Epson provides an accrual for estimated future warranty costs based on the historical relationship of
warranty costs to net sales. Specific warranty provisions are made for those products where warranty
expenses can be specifically estimated.
(11) Provision for loss on litigation
Provision for loss on litigation is mainly provided for the estimated future compensation payment and
litigation expenses.
(12) Income taxes
The provision for income taxes is computed based on income before income taxes and minority interest in
the consolidated statements of income. The asset and liability approach is used to recognize deferred tax
assets and liabilities for the expected future tax consequences of temporary differences between the
carrying amounts and the tax basis of assets and liabilities.
The Company applies the consolidated tax return system for the calculation of income taxes. Under the
consolidated tax return system, the Company consolidates all wholly-owned domestic subsidiaries based on