Fujitsu 2001 Annual Report Download - page 34

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(g) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount deemed sufficient to cover estimated future losses.
(h) Inventories
Finished goods are mainly stated at cost determined by the moving average method.
Work in process is mainly stated at cost determined by the specific identification method and the average cost
method.
Raw materials are mainly stated at cost determined by the moving average method and the most recent purchase
price method.
(i) Property, plant and equipment and depreciation
Property, plant and equipment, including renewals and additions, are carried at cost.
Depreciation is computed principally by the declining-balance method at rates based on the estimated useful lives
of the respective assets, which vary according to their general classification, type of construction and function.
Maintenance and repairs, including minor renewals and improvements, are charged to income as incurred.
(j) Intangible assets
Goodwill is amortized by the straight-line method over periods not exceeding 20 years
Computer software to be sold is amortized based on the current years’ sales units to the projected total products’
sales units. Computer software for internal use is amortized by the straight-line method over the estimated useful life.
Other intangible assets are amortized by the straight-line method at the rates based on the estimated useful lives of
the respective assets.
(k) Leases
Receivable accounts recognized by the lessors in finance lease transactions are recorded as lease receivables and, assets
acquired by lessees in finance lease transactions are recorded in the corresponding asset accounts.
(l) Retirement benefits
The Company and the majority of the consolidated subsidiaries have retirement benefit plans.
Under the defined benefit plans, in principle, the costs are determined by the projected unit credit actuarial valuation
method.
The Company and consolidated subsidiaries in Japan have adopted a new accounting standard in Japan for
retirement benefits, effective April 1, 2000.
The adoption of this standard did not have a material impact on net income, as indicated in Note 10.
(m) Provision for loss on repurchase of computers
Certain computers manufactured by the Group are sold to Japan Electronic Computer Company Limited (“JECC”),
other leasing companies and financial institutions for leasing to the ultimate users under contracts which require that
the Group repurchase the computers if they are returned by the users after a certain period. Based on past experience,
an estimated amount for the loss arising from such repurchases is provided at the point of sale and is charged to
income.
(n) Income taxes
The Group has adopted the balance sheet liability method of tax effect accounting in order to recognize the effect of
all temporary differences in the recognition of assets and liabilities for tax and financial reporting purposes.
(o) Earnings per share
Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding
during the respective years.
Diluted earnings per share is computed based on the weighted average number of shares after consideration of
the dilutive effect of the shares of common stock issuable upon the exercise of warrants and the conversion of
convertible bonds.
(p) Derivative financial instruments
The Group uses derivative financial instruments for the purpose of hedging against the risk of fluctuations in interest
rates and foreign exchange rates on receivables and payables denominated in foreign currencies.
All derivative financial instruments are stated at fair value. The Group defers gain or loss on changes in the fair
values of the derivative financial instruments on the balance sheet until the recognition of gain or loss on the hedged
items.
The Group has adopted a new accounting standard in Japan for financial instruments, effective April 1, 2000. The
Notes to C onsolidated Financial S tatements