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62 Fujitsu Limited
<Changes in accounting principles and practices for the year ended March 31, 2006>
Certain consolidated subsidiaries outside Japan changed their accounting principles and practices on
retirement benefits, for the year ended March 31, 2006. Details of this change are described in (a) Basis of
presenting consolidated financial statements and the principles of consolidation and in Note 10.
(m) Provision for loss on repurchase of computers
Certain computers manufactured by the Group are sold to Japan Electronic Computer Co., Ltd. (“JECC”)
and other leasing companies for leasing to ultimate users under contracts which require the Group to
repurchase the computers if they are returned by the users after a certain period. Based on past experi-
ence, an estimated amount for the loss arising from such repurchases is provided at the point of sales and
is charged to income.
(n) Income taxes
The Group has adopted the asset and liability method of tax effect accounting in order to recognize
income tax effect of all temporary differences in the recognition of assets and liabilities for tax and finan-
cial 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 consid-
eration of the dilutive effect of the shares of common stocks 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 market value.
The Group defers gain or loss on changes in the fair market values of the derivative financial instru-
ments on the balance sheet until gain or loss on the hedged items are recognized.
2. Differences with International Financial Reporting Standards
A brief description of the material differences between IFRS and Japanese GAAP relevant to the Group
is set out below. The Group has not completed the assessment to identify or quantify the impact of all
such differences. The description below is therefore prepared based on the Group’s current assessment
and consideration at March 31, 2006. Additionally, the Group has not made any attempts to identify or
quantify any differences between IFRS and Japanese GAAP, which may result from changes in both or
either accounting principles and practices in the future.
This note is out of scope of the audit.
Inventories
Under IAS 2, inventories should be stated at the lower of their historical cost or net realizable value. The
Group evaluates inventories mainly at cost as indicated in Note 1. (g) Inventories. The effects on the
aggregate value of inventories based on IAS 2 are not calculated. However, the Group takes into consid-
eration the recoverability of inventories based on future business environments.