Epson 2013 Annual Report Download - page 59

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58
Japanese tax regulations.
(13) Provision for retirement benefits
The Company and some of its Japanese subsidiaries recognize provision for retirement benefits to
employees based on the actuarial valuation of projected benefit obligation and the fair value of plan assets.
Other Japanese subsidiaries recognize provision for retirement benefits to employees based on the
voluntary retirement benefit payable at the year-end.
Pension benefits are determined based on years of service, basic rates of pay and conditions under which
the termination occurs, and are payable at the option of the retiring employee either in a lump-sum amount
or as an annuity. Contributions to the plans are funded through several financial institutions in accordance
with the applicable laws and regulations.
Unrecognized prior service costs are amortized based on the straight-line method over a period of five
years beginning at the date of adoption of the plan amendment. Unrecognized actuarial gains and losses are
amortized based on the straight-line method over a period of five years starting from the beginning of the
subsequent year.
Most of the Company’s foreign subsidiaries have various retirement plans, which are primarily defined
contribution plans.
(14) Provision for recycling costs
At the time of sale, provision for recycling costs is calculated based on the estimated future returns of
consumer personal computers.
(15) Revenue recognition
Revenue from sale of goods is recognized at the time when goods are shipped. Revenue from services is
recognized when services are rendered and accepted by customers.
(16) Research and development costs
Research and development costs are charged as incurred.
(17) Leases
Epson leases certain office space, machinery and equipment and computer equipment from third parties
using capital leases. Most of the capital leases are other than those under which ownership of the assets will
be transferred to the lessee at the end of the lease term, and are depreciated/amortized in accordance with