Fujitsu 2006 Annual Report Download - page 62

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60 Fujitsu Limited
are translated at the average exchange rate during the year. The resulting translation adjustments are recorded
in a separate component of shareholders’ equity as “foreign currency translation adjustments.”
(d) Revenue recognition
Revenue from sales of IT systems and products excluding customized software under development con-
tracts (the “customized software”) is recognized upon acceptance by the customers, whereas, revenue
from sales of personal computers, other equipment and electronic devices is recognized when the prod-
ucts are shipped.
Revenue from sales of the customized software is recognized by reference to the percentage-of-
completion method.
<Changes in accounting principles and practices for the year ended March 31, 2006>
The Group changed the revenue recognition of the customized software from recognition at the time of
acceptance by the customers to the percentage-of-completion method for the year ended March 31, 2006.
The amounts in the consolidated financial statements prior to and for the year ended March 31, 2005,
have not been restated.
As a result of this change, sales and cost of sales increased ¥10,399 million ($88,127 thousand) and
¥8,833 million ($74,856 thousand), respectively; operating income and income before income taxes and
minority interests both increased ¥1,566 million ($13,271 thousand). The impact of this change to the
segment information is set forth in Note 19.
(e) Marketable securities
Marketable securities included in “short-term investments” and “investments and long-term loans” are
classified as either held-to-maturity investments, which are the debt securities which the Group has the
positive intent and ability to hold to maturity, or available-for-sale securities, which are “equity securities”
or “debt securities not classified as held-to-maturity.”
Held-to-maturity investments are stated at amortized cost, adjusted for the amortization of premium
or accretion of discounts to maturity. The cost of available-for-sale securities sold is calculated by the
moving average method.
Available-for-sale securities are carried at fair market value, with the unrealized gains or losses, net of
taxes, reported in a separate component of shareholders’ equity.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount deemed sufficient to cover estimated
future losses.
(g) 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 or the
average cost method.
Raw materials are mainly stated at cost determined by the moving average method or the most recent
purchase price method.
(h) Property, plant and equipment and depreciation
Property, plant and equipment, including renewals and additions, are carried at cost. Maintenance and
repairs, including minor renewals and improvements, are charged to income as incurred.