Fujitsu 2006 Annual Report Download - page 63

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Annual Report 2006
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 construc-
tion and function.
Certain property, plant and equipment are impaired based on consideration of their future usefulness.
Accumulated impairment loss is subtracted directly from each asset.
<Changes in accounting principles and practices for the year ended March 31, 2006>
In Japan, the Group has adopted a new accounting standard, effective April 1, 2005, for impairment of
non-current assets. The adoption of this standard, however, did not have a material impact on net income
for the year ended March 31, 2006.
(i) Intangible assets
Goodwill is amortized by the straight-line method over periods not exceeding 20 years. In the consoli-
dated financial statements, the Group consistently amortizes goodwill acquired by consolidated subsid-
iaries outside Japan where goodwill is not amortized in accordance with the accounting principles and
practices in their respective countries.
Computer software for sale is amortized based on the current year 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 lives.
Other intangible assets are amortized by the straight-line method at the rates based on the estimated
useful lives of the respective assets.
(j) Leases
Assets acquired by lessees in finance lease transactions are recorded in the corresponding asset accounts.
(k) Provision for product warranties
Provision for product warranties is provided at the time of sales of the products at an amount which
represents the estimated cost, based on past experience, to repair or exchange certain products within the
warranty period.
<Changes in accounting principles and practices for the year ended March 31, 2006>
For the year ended March 31, 2006, the Group has started to provide for product warranties as noted
above in connection with increased sales of products under warranty and the increase in warranty related
costs. Prior to and for the year ended March 31, 2005, the Group had charged costs for repair or exchange
under warranty to selling, general and administrative expenses at the time the warranty costs were incurred.
The amounts in the consolidated financial statements prior to and for the year ended March 31, 2005,
have not been restated.
In comparison with previous methods, the adoption of this policy represents a reduction in operating
income of ¥3,029 million ($25,670 thousand) and, as a result of recording provision for prior product
warranties of ¥7,413 million ($62,822 thousand) as an expense in “other income (expenses),” a reduction
of ¥10,442 million ($88,492 thousand) in income before income taxes and minority interests. The impact
of this change to the segment information is set forth in Note 19.
(l) Retirement benefits
The Company and the majority of the consolidated subsidiaries have retirement benefit plans.
Under the significant defined benefit plans, the actuarial valuation used to determine the pension
costs is the projected unit credit method.