Epson 2015 Annual Report Download - page 59

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58
(C) Joint Ventures
Joint venture is a joint arrangement whereby Epson and the other parties that have joint control of the arrangement
which is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the
activities that significantly affect the investee’s returns require the unanimous consent of the parties sharing control,
have rights to the net assets of the arrangement. Epson accounts for that investment using the equity method.
(2) Business Combinations
Business combinations are accounted for using the acquisition method. Consideration transferred in a business
combination is measured as the sum of the acquisition-date fair value of the assets transferred, the liabilities
assumed, all non-controlling interests and equity instruments issued by the Company in exchange for control over
an acquiree. Any excess of the consideration of acquisition over the fair value of identifiable assets and liabilities is
recognised as goodwill in the consolidated statement of financial position. If the consideration of acquisition is
lower than the fair value of the identifiable assets and liabilities, the difference is immediately recognised as profit
in the consolidated statement of comprehensive income. Acquisition related costs incurred are recognised as
expenses. The additional acquisition of non-controlling interests after obtaining control is accounted for as a capital
transaction and no goodwill is recognised with respect to such transaction.
(3) Foreign Currency Translation
Consolidated financial statements of Epson are presented in Japanese yen, which is the functional currency of the
Company. Each company in Epson specifies its own functional currency and measures transactions based on it.
Foreign currency transactions are translated into the functional currency at the rates of exchange prevailing at the
dates of transactions or an approximation of the rate. Monetary assets and liabilities denominated in foreign
currencies are translated into the functional currency at the rates of exchange prevailing at the fiscal year end date.
Differences arising from the translation and settlement are recognised as profit or loss. However, exchange
differences arising from the translation of financial instruments designated as hedging instruments for net
investments in foreign operations (foreign subsidiaries), financial assets measured at fair value through other
comprehensive income, and cash flow hedges are recognised as other comprehensive income.
The assets and liabilities of foreign operations are translated into Japanese yen at the rates of exchange prevailing at
the fiscal year end date, while income and expenses of foreign operations are translated into Japanese yen at the
rates of exchange prevailing at the dates of transactions or an approximation to the rate. The resulting translation
differences are recognised as other comprehensive income. In cases where foreign operations are disposed of, the
cumulative amount of translation differences related to the foreign operations is recognised as profit or loss in the
period of disposition.
(4) Financial Instruments
Epson accounts for financial instruments in accordance with IFRS 9 “Financial Instruments” (announced in
November 2009, revised in October 2010), which Epson has early adopted.
(A) Financial Assets
(i) Initial Recognition and Measurement
Financial assets are classified into financial assets measured at fair value and amortised cost at initial recognition.
Financial assets are classified as financial assets measured at amortised cost if both of the following conditions
are met. Otherwise, they are classified as financial assets measured at fair value.
(a) The asset is held within a business model whose objective is to hold assets in order to collect contractual
cash flows.
(b) The contractual terms of the financial asset give rise on specified dates to cash flows that are solely
payments of principal and interest on the principal amount outstanding.
For financial assets measured at fair value, each equity instrument is designated as measured at fair value through
profit or loss or as measured at fair value through other comprehensive income, except for equity instruments
held for trading purposes that must be measured at fair value through profit or loss. Such designations are applied
continuously.
All financial assets are initially measured at fair value plus transaction costs that are directly attributable to the
financial assets, except when classified in the category of financial assets measured at fair value through profit or
loss.
Epson recognises trade and other receivables on the date they are originated. All other financial assets are
recognised on the trade date when Epson becomes a party to the contractual provisions of the instrument.