Epson 2015 Annual Report Download - page 64

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(14) Provisions
Epson recognises provisions when it has legal obligations or constructive obligations resulting from prior events
and when it is probable that the obligations are required to be settled and the amount of the obligations can be
estimated reliably.
Where the effect of the time value of money is material, the amount of provisions is measured at the present value
of the expenditures expected to be required to settle the obligations.
(15) Revenue
(A) Sale of Goods
Epson sells information-related equipment, devices and precision products, and sensing and industrial solutions.
Revenue from the sale of these goods is recognised when the significant risks and rewards of ownership of the
goods transfer to the buyers, Epson retains neither continuing managerial involvement nor effective control over
the goods sold, it is probable that the future economic benefits will flow to Epson, and the amount of revenue and
the corresponding costs can be measured reliably. Therefore, revenue is usually recognised at the time of delivery
of goods to customers. In addition, revenue is recognised at fair value of the consideration received or receivable
less discounts and rebates.
(B) Interest Income
Interest income is recognised using the effective interest rate method.
(C) Dividend Income
Dividend income is recognised when the shareholder’ s right to receive payment is established.
(D) Royalties
Royalties are recognised on an accrual basis in accordance with the substance of the relevant agreement.
(E) Rendering of Services
Revenues arising from rendering of services are recognised by reference to the stage of completion of the
transaction as of the fiscal year end date when the service is provided.
(16) Government Grants
A government grant is recognised at fair value when there is a reasonable assurance that the entity will comply
with the conditions attaching to it, and that the grant will be received.
Government grants that are related to expense items are recognised in profit on a systematic basis over the periods
in which the entity recognises as expenses the related costs for which the grants are intended to compensate, and
unexpired grants are recognised in liabilities as deferred income. With regard to government grants related to assets,
the amount of the grants is deducted from the cost of the assets.
(17) Borrowing Costs
With respect to assets that require a substantial period of time to get ready for their intended use or sale, the
borrowing costs that are directly attributable to the acquisition, construction or production of the assets are
capitalized as part of the cost of the assets. Other borrowing costs are recognised as an expense in the period when
they are incurred.
(18) Income Taxes
Income taxes in the consolidated statement of comprehensive income are presented as the total of current tax
expense and deferred tax expense.
Current tax expense is measured at the amount that is expected to be paid to or refunded from the taxation
authorities. For the calculation of the tax amount, Epson uses the tax rates and tax laws that have been enacted or
substantively enacted by the fiscal year end date. The current tax expense is recognised in profit or loss, except for
taxes arising from items that are recognised in other comprehensive income or directly in equity and taxes arising
from business combinations.
Deferred tax expense is calculated based on the temporary differences between the tax base and accounting bases
for assets and liabilities at the fiscal year end date. Deferred tax assets are recognised for deductible temporary
differences, carryforward of unused tax credits and unused tax losses to the extent that it is probable that future
taxable profit will be available against which they can be utilized. Deferred tax liabilities are recognised for all
taxable temporary differences.