Epson 2015 Annual Report Download - page 104

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(3) Credit Risk
Receivables, such as notes and trade receivables, resulting from the operating activities of Epson are exposed to
customer credit risks.
Epson holds mainly bonds receivable as investments of surplus funds and equity securities of customers and
suppliers to strengthen relationships with them; those securities are exposed to the issuers’ credit risks.
In addition, through derivative transactions that Epson conducts in order to hedge foreign exchange fluctuation
risks and interest rate fluctuation risks, Epson is exposed to the credit risks of the financial institutions which are
counterparties to these transactions.
In principle, Epson sets credit lines or transaction conditions with respect to trade receivables for counterparties
based on Epson’ s Credit Control Regulation in order to prevent credit risks relating to counterparties. In addition,
the receivable balances of counterparties are monitored in order to mitigate the credit risks. The financial and
general accounting department of the Company regularly monitors the status of the occurrence and collection of
bad debts, and reports them to the Executive Committee of the Company. There is no over-concentrated credit risk
for a single customer.
With regard to the investment of cash surpluses and derivatives, Epson invests in bonds receivable and other
financial instruments with a certain credit rating and transacts with financial institutions with a high credit rating in
principle in order to prevent credit risks based on Epson’ s Capital Management Regulation. In addition, the
financial and general accounting department of the Company regularly monitors the performances of these
transactions and reports the results to the Executive Committee of the Company.
The analysis of the aging of “Trade and other receivables” that are past due but not impaired as of March 31, 2015
was as follows. It includes amounts considered recoverable by credit insurance and collateral.
Epson uses an allowance account for credit losses to record impairment losses on the uncollectible amounts of
individually significant trade receivables at the end of the reporting period and to record impairment losses on trade
receivables that are not individually significant at an amount based on the historical loan loss ratio at the end of the
reporting period. The allowance account for credit losses against the financial assets is included in “Trade and other
receivables” in the consolidated statement of financial position.
The schedule of the allowance account for credit losses of “Trade and other receivables” was as follows:
(Note) Trade and other receivables for which impairment was recognised individually at March 31, 2014 and 2015
were ¥250 million and ¥52 million ($432 thousand), respectively; and their corresponding allowance account for
credit losses were ¥250 million and ¥52 million ($432 thousand), respectively.
Millions of yen
Thousands of
U.S. dollars
March 31,
March 31,
2015
2015
Within 30 days
9,174
76,368
Over 30 days, within 60 days
713
5,933
Over 60 days, within 90 days
229
1,905
Over 90 days
752
6,257
Total
10,871
90,463
Millions of yen
Thousands of
U.S. dollars
March 31
March 31,
2014
2015
2015
Balance at the beginning of the year
1,454
1,758
14,629
Addition (Note)
455
478
3,961
Decrease (utilised)
(160)
(483)
(4,019)
Decrease (reversal)
(158)
(311)
(2,588)
Other
167
145
1,206
Balance at the end of the year
1,758
1,586
13,189