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51
Hitachi, Ltd. Annual Report 2010
Notes to Consolidated Financial Statements
Hitachi, Ltd. and Subsidiaries
1. NATURE OF OPERATIONS
Hitachi, Ltd. (the Company) is a Japanese corporation, whose principal office is located in Japan. The Company’s and its
subsidiaries’ businesses are diverse, and include information and telecommunication systems, power systems, social
infrastructure and industrial systems, electronic systems and equipment, construction machinery, high functional materials
and components, automotive systems, components and devices, digital media and consumer products, financial services,
and others including logistics services.
2. BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of Presentation
The Company and its domestic subsidiaries keep their books of account in accordance with the financial accounting standards
of Japan, and its foreign subsidiaries in accordance with those of the countries of their domicile.
The consolidated financial statements presented herein have been prepared in a manner and reflect the adjustments
which are necessary to conform them with accounting principles generally accepted in the United States of America.
Management of the Company has made a number of estimates and assumptions relating to the reporting of assets and
liabilities and the disclosure of contingent assets and liabilities to prepare these financial statements. Actual results could
differ from those estimates.
(b) Accounting Standards Codification issued by the FASB
The Company adopted the Accounting Standards Codification (ASC) issued by the Financial Accounting Standards Board
(the FASB) during the year ended March 31, 2010. The ASC is established as the source of authoritative accounting principles
recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in conformity
with accounting principles generally accepted in the United States. Rules and interpretive releases of the United States
Securities and Exchange Commission (the SEC) under authority of federal securities laws are also sources of authoritative
accounting principles generally accepted in the United States for SEC registrants. The FASB will no longer issue new standards
in the form of Statements, FASB Staff Positions, or Emerging Issues Task Force Abstracts; instead the FASB will issue
Accounting Standards Updates (ASUs). ASUs will not be authoritative. Instead, they will only serve to update the ASC. These
changes and the ASC itself do not change accounting principles generally accepted in the United States. Other than the
manner in which accounting guidance is referenced, the adoption of these changes had no effect on the Company’s
consolidated financial statements.
(c) Principles of Consolidation
The consolidated financial statements include the accounts of the Company, its majority-owned subsidiaries and all variable
interest entities (VIEs) for which the Company or any of its consolidated entities is the primary beneficiary. The definition of a
VIE is included in ASC 810, “Consolidation.” This guidance addresses how a business enterprise should evaluate whether it
has a controlling financial interest in an entity through means other than voting rights and accordingly should consolidate the
entity. The consolidated financial statements include accounts of certain subsidiaries whose closing dates differ from March
31 by 93 days or less to either comply with local statutory requirements or facilitate timely reporting. There have been no
significant transactions, which would materially affect the Company’s financial position and results of operations, with such
subsidiaries during the period from their closing dates to March 31. Intercompany accounts and significant intercompany
transactions have been eliminated in consolidation.
Investments in corporate joint ventures and affiliated companies, where the Company has the ability to exercise significant
influence over operational and financial policies generally by holding 20–50% ownership, are accounted for under the equity
method. Investments where the Company does not have significant influence are accounted for under the cost method.
(d) Cash Equivalents
For the purpose of the statement of cash flows, the Company considers all highly liquid investments with insignificant risk of
changes in value which have initial maturities of three months or less when purchased to be cash equivalents.