Epson 2013 Annual Report Download - page 80

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79
The fair value of financial instruments was calculated based on the following methods and premises:
(1) Cash and deposits, notes and accounts receivable-trade and short-term investment securities
Due to the short terms of these financial instruments, it is assumed that their fair value is equal to the
carrying amounts.
(2) Investment securities
Fair value was measured using exchange market value.
(3) Notes and accounts payable-trade, short-term loans payable, accounts payable-other
Due to the short terms of these financial instruments, it is assumed that their fair value is equal to the
carrying amounts.
(4) Bonds payable
Fair value was measured using market prices.
(5) Long-term loans payable (including current portion)
Because long-term loans payable that are with floating rates are affected in the short term by fluctuations in
market interest rates, and because Epson’s credit status has not changed greatly since they were
implemented, it is assumed that their fair value is equal to the carrying amounts. Among items that are
based on floating interest rates, the fair value of long-term loans payable whose interest rates become fixed
as a result of interest-rate swaps are calculated using the same method as used for determining the fair
value of long-term loans payable based on fixed interest rates. The fair value of loans payable based on
fixed interest rates are calculated by discounting the total amounts of loans payable using estimated interest
rates that would be in effect if similar loan arrangements were entered into.
Limitations
Fair value estimates are based on relevant market information. These estimates involve uncertainties and
therefore changes in assumptions could affect the estimates.
24. Contingent liabilities
Contingent liabilities for guarantee of employees’ housing loans from banks and others were ¥528 million
and ¥391 million ($4,157 thousand) as of March 31, 2012 and 2013, respectively.
25. Related party transactions
Mr. Yasuo Hattori, who was a vice-chairman and director of the Company, and his relatives have owned
26.65% and 52.52% of the outstanding shares of Aoyama Kigyo Kabushiki Kaisha (“Aoyama”),