Fujitsu 2006 Annual Report Download - page 61

59
Annual Report 2006
1. Significant Accounting Policies
(a) Basis of presenting consolidated financial statements and the principles of consolidation
The accompanying consolidated financial statements of Fujitsu Limited (the “Company”) and its con-
solidated subsidiaries (together, the “Group”) have been prepared in accordance with the regulations
under the Securities and Exchange Law of Japan and accounting principles and practices generally accepted
in Japan. The consolidated subsidiaries outside Japan have adopted the accounting principles and prac-
tices in their respective countries. In presenting the accompanying consolidated financial statements, cer-
tain items have been reclassified for the convenience of readers outside Japan.
Certain accounting principles and practices generally accepted in Japan are different from International
Financial Reporting Standards (“IFRS”) and accounting principles and practices in other countries in
certain respects as to applications and disclosure requirements. The differences between the accounting
principles and practices adopted by the Group and those prescribed by IFRS are set forth in Note 2.
The consolidated financial statements include the accounts of the Company and, with minor exceptions,
those of its majority-owned subsidiaries.
The acquisition of companies is accounted for by the purchase method. Goodwill represents the
excess of the acquisition cost over the fair value of the net assets of the acquired companies.
Investments in affiliates, with minor exceptions, are accounted for by the equity method.
<Changes in accounting principles and practices for the year ended March 31, 2006>
For the year ended March 31, 2006, Fujitsu Services Holdings PLC, a UK subsidiary, and its consoli-
dated subsidiaries (“FS”) have voluntarily adopted IFRS in line with listed companies in the EU.
Prior to the adoption of IFRS, FS had been applying the accounting principles and practices generally
accepted in the UK. The amounts in the consolidated financial statements prior to and for the year ended
March 31, 2005, have not been restated.
The adoption of IFRS had the effect to decrease net sales by ¥5,032 million ($42,644 thousand) and
increased operating income and income before income taxes and minority interests by ¥6,109 million
($51,771 thousand) and ¥5,192 million ($44,000 thousand), respectively. The impact of this change to
the segment information is set forth in Note 19.
For the year ended March 31, 2006, Fujitsu Telecommunications Europe Limited, another UK sub-
sidiary recognized pension obligation which had not been recognized before in conformity with the new
UK accounting standard for the retirement benefits (Financial Reporting Standard 17). The adoption of
this standard, however, did not have a material impact on net income for the year ended March 31, 2006.
As a result of the above changes, cumulative effect as of April 1, 2005 of ¥85,980 million ($728,644
thousand) had been charged to retained earnings (deficit).
(b) Cash equivalents
Cash equivalents are considered to be short-term highly liquid investments with a maturity of three months or
less from the date of acquisition and an insignificant risk of fluctuation in value.
(c) Translation of foreign currency accounts
Receivables and payables denominated in foreign currencies are translated into Japanese yen at the for-
eign currency exchange rates in effect at the respective balance sheet dates.
The assets and liabilities accounts of the consolidated subsidiaries outside Japan are translated into Japa-
nese yen at the exchange rates in effect at the respective balance sheet dates. Income and expense accounts
앮 Notes to Consolidated Financial Statements
Fujitsu Limited and Consolidated Subsidiaries