Fujitsu 2007 Annual Report Download - page 66

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(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
Japanese yen at the exchange rates in effect at the respective balance sheet dates. Income and expense
accounts are translated at the average exchange rate during the year. The resulting translation adjust-
ments are recorded in a separate component of net assets 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.
For the year ended March 31, 2006, as a result of this change, sales and cost of sales increased ¥10,399
million and ¥8,833 million, respectively; operating income and income before income taxes and minority
interests both increased ¥1,566 million. 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 net assets.
(f) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount deemed sufficient to cover estimated
future losses.
64 Fujitsu Limited