Epson 2015 Annual Report Download - page 63

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In operating lease transactions, lease payments are recognised as an expense using the straight-line method over the
lease terms in the consolidated statement of comprehensive income. Contingent rents are recognised as an expense
in the period in which they are incurred.
Determining whether an arrangement is, or contains, a lease is based on the substance of the arrangement in
accordance with the terms of that, whether fulfilment of the arrangement is dependent on the use of a specific asset
or assets (the asset) and the arrangement conveys a right to use the asset, even if the arrangement does not take the
legal form of a lease.
(10) Investment Property
Investment property is property held to earn rentals or for capital appreciation or both.
Investment property is measured by using the cost model and is stated at cost less accumulated depreciation and
accumulated impairment losses.
The estimated useful life of major investment property is 35 years.
(11) Impairment of Non-financial Assets
Epson assesses for each fiscal year whether there is any indication that an asset may be impaired. If any such
indication exists, or in cases where the impairment test is required each fiscal year, the recoverable amount of the
asset is estimated. If the recoverable amount cannot be estimated for each asset, it is estimated by the
cash-generating unit to which the asset belongs. The recoverable amount of an asset or a cash-generating unit is
determined at the higher of its fair value less sales costs or its value in use. If the carrying amount of the asset or
cash-generating unit exceeds the recoverable amount, impairment losses are recognised and the carrying amount is
reduced to the recoverable amount. In determining the value in use, estimated future cash flows are discounted to
the present value, using pretax discount rates that reflect current market assessments of the time value of money
and the risks specific to the asset.
Epson assesses whether there is any indication that impairment losses recognised in prior years for an asset other
than goodwill may no longer exist or may have decreased, such as any changes in assumptions used for the
determination of the recoverable amount. If any such indication exists, the recoverable amount of the asset or cash-
generating unit is estimated. If the recoverable amount exceeds the carrying amount of the asset or cash-generating
unit, impairment losses are reversed up to the lower of the estimated recoverable amount or the carrying amount
(net of depreciation) that would have been determined if no impairment losses had been recognised in prior years.
(12) Non-current Assets Held-for-Sale and Discontinued Operations
An asset or asset group whose value is expected to be recovered through a sales transaction rather than through
continuing use is classified into a non-current asset and disposal group held-for-sale when the following conditions
are met: it is highly probable that the asset or asset group will be sold within one year, the asset or asset group is
available for immediate sale in its present condition, and Epson management commits to the sale plan. In such
cases, the non-current asset is not depreciated or amortised and is measured at the lower of its carrying amount or
its fair value less sales costs.
Assets and asset groups that have already been disposed of or that are classified as held-for-sale are recognised as
discontinued operations when they meet any of the following:
• Separate major line of business or geographical area of operations
• Part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of
operations
• Subsidiary acquired exclusively with a view to resale
(13) Post-employment Benefits
Epson sponsors defined benefit plans and defined contribution plans as post-employment benefits plans. For each
defined benefit plan, Epson calculates the present value of defined benefit obligations, related current service cost
and past service cost using the projected unit credit method. For a discount rate, a discount period is determined
based on the period until the expected date of benefit payment in each fiscal year, and the discount rate is
determined by reference to market yields for the period corresponding to the discount period at the fiscal year end
date on high quality corporate bonds. Net of liabilities or assets for defined benefit plans are calculated by the
present value of the defined benefit obligation, deducting the fair value of any plan assets (including adjustments
for the asset ceiling for defined benefit plans and minimum funding requirements, if necessary). Net interest costs
derived from net of liabilities or assets for defined benefit plans are recognised as finance costs.
Remeasurements of net of liabilities or assets for defined benefit plans are recognised in full as other
comprehensive income in the period when they are incurred and transferred to retained earnings immediately. Past
service costs are recognised as profit or loss at the earlier of when a plan amendment or scale down occurs and
when any related restructuring costs or termination benefits are recognised. The expenses for post-employment
benefits for defined contribution plans are recognised as expenses at the time of contribution.