Fujitsu 2008 Annual Report Download - page 89

may no longer be required as the result of withdrawal from cer-
tain businesses, in which case their actual useful lives may be
recognized as shorter than their originally estimated useful lives.
Losses may occur as a result.
In addition, impairment losses may be recognized in cases in
which there is a decline in expected future cash flows from assets
due to production facilities becoming idle or a decrease in the
capacity utilization rate associated with rapid changes in the
operating environment or other factors.
Intangible Assets (Software)
Computer software for sale is amortized based on projected unit
sales volume during the period for which the projections are
made. The projected unit sales volume is estimated based on a
feasible sales plan, but one-time losses may occur if anticipated
unit sales fall short of the original sales plan. Computer software
for internal use is amortized by the straight-line method over its
estimated useful life. Losses may occur if the actual useful life
falls short of the initially estimated useful life.
Goodwill
Goodwill arising from the acquisition of a business, including
those purchased by consolidated subsidiaries, is amortized by
the straight-line method over the period corresponding to the
premium of the acquired business. Losses may be recognized if
the business is withdrawn or sold by the Group, or if the profit-
ability of the acquired business decreases during the period the
Group expected the return.
Marketable Securities
Held-to-maturity investments are stated at amortized cost, while
available-for-sale securities with market value are carried at fair
market value as of the balance sheet date. Available-for-sale
securities without market value are carried at cost based primar-
ily on the moving-average method. Fluctuations in the value of
available-for-sale securities with market value cause fluctuations
in the carrying value of investment securities, resulting in
increases or decreases in shareholders’ equity. Impairment loss is
recognized on available-for-sale securities when the market
value or the net worth falls significantly and is considered to be
unrecoverable. If a significant decline in market value or net
worth occurs and is expected to be unrecoverable in the future,
additional impairment losses may need to be recognized.
Deferred Tax Assets
We record an appropriate balance of deferred tax assets against
losses carried forward and temporary differences. Future increases
or decreases in the balance of deferred tax assets may occur if
projected taxable income decreases or increases as a result of
trends in future business results. In addition, changes in the effec-
tive tax rate due to future revisions to taxation systems could
result in increases or decreases of deferred tax assets.
Provision for Product Warranties
Some of the Company’s products are covered by contracts that
require us to repair or exchange them free of charge during a set
period of time. Based on past experience, we record a provision
for estimated repair and exchange expenses at the time of sale.
The Group is taking steps to strengthen quality management
during the product development, manufacturing and procure-
ment stages. However, should product defects or other prob-
lems occur at a level in excess of that covered by the estimated
expenses, additional expenses may be incurred.
Retirement Benefits
Retirement benefit costs and obligations are determined based
on certain actuarial assumptions. These assumptions include the
discount rate, rates of retirement, mortality rates, and the
expected rate of return on the plan assets. When actual results
differ from the assumptions or when the assumptions are
changed, retirement benefit costs and obligations can be
affected. In the event an actuarial loss arises, the actuarial loss is
amortized using a straight-line method over employees’ average
remaining service period. Furthermore, revisions to accounting
standards in countries where overseas subsidiaries are located
and in Japan could potentially impact the Company’s retirement
benefit costs and obligations, as well as net assets.
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 compa-
nies. Contracts with these companies require the buyback of the
computers if lease contracts are terminated. An estimated
amount for the loss arising from such buybacks is provided at
the time of sale and is recorded as a provision. Any future
changes in the usage trends of end-users may result in additions
or reductions to the provision.
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ANNUAL REPORT 2008FUJITSU LIMITED
MANAGEMENT’S DISCUSSION AND ANALYSIS OF OPERATIONS