Hitachi 2010 Annual Report Download - page 59

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Hitachi, Ltd. Annual Report 2010
(r) Shipping and Handling Costs
Shipping and handling costs are expensed as incurred and included in selling, general and administrative expenses.
(s) Advertising
Advertising costs are expensed as incurred.
(t) Research and Development Costs
Research and development costs are expensed as incurred. Costs incurred in connection with the development of software
products for sale or lease to others are accounted for in accordance with ASC 985, “Software.” Development costs incurred
in the research and development of new software products and enhancements to existing products are expensed as incurred
until technological feasibility has been established.
(u) Income Taxes
Deferred income taxes are accounted for under the asset and liability method in accordance with ASC 740, “Income Taxes.”
Deferred tax assets and liabilities are recognized for the future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and their respective tax bases and operating losses and
tax credit carryforwards. Under this method, deferred tax assets and liabilities are measured using enacted tax rates expected
to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. Under
ASC 740, the effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that
includes the enactment date. Valuation allowances are established to reduce deferred tax assets to their net realizable value
if it is more likely than not that some portion or all of the deferred tax assets will not be realized.
Tax positions that are more likely than not to be sustained upon examination by tax authorities are recognized in the financial
statements in accordance with the provisions of ASC 740. Tax positions that meet the more-likely-than-not recognition threshold
are measured as the largest amount of tax benefit that is greater than 50 percent likely of being realized upon ultimate settlement
with tax authorities. Interest accrued related to unrecognized tax benefits and penalties are included in income taxes in the
consolidated statements of operations.
(v) Sales of Stock by Subsidiaries
Prior to the adoption of the provisions regarding noncontrolling interests in a subsidiary of ASC 810, the Company elected to
recognize the change in its proportionate share of a subsidiary’s equity resulting from issuance of stock by the subsidiary in
the consolidated statements of operations.
(w) Consumption Tax
Consumption tax collected and remitted to taxing authorities is excluded from revenues, cost of sales and expenses in the
consolidated statements of operations.
(x) Net Income Attributable to Hitachi, Ltd. stockholders Per Share
Net income attributable to Hitachi, Ltd. stockholders per share is computed in accordance with ASC 260, “Earnings Per
Share.” This guidance requires a dual presentation of basic and diluted net income attributable to Hitachi, Ltd. stockholders
per share amounts on the face of the statements of operations. Under this guidance, basic net income attributable to Hitachi,
Ltd. stockholders per share is computed based upon the weighted average number of shares of common stock outstanding
during each year. Diluted net income attributable to Hitachi, Ltd. stockholders per share reflects the potential dilution that
could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted
in the issuance of common stock that then shared in the earnings of the Company.
(y) Disclosures about Segments of an Enterprise and Related Information
ASC 280, “Segment Reporting,” establishes guidance about how a public business enterprise is required to report financial
and descriptive information about its operating segments. This guidance defines operating segments as components of an
enterprise for which separate financial information is available and evaluated regularly as a means for assessing segment
performance and allocating resources to segments. Measures of profit or loss, total assets and other related information are
required to be disclosed for each operating segment. Furthermore, this guidance requires the disclosure of information
concerning revenues derived from the enterprise’s products or services, countries in which it earns revenue or holds assets
and major customers. Certain foreign private issuers (FPIs) were exempted from the segment disclosure requirements of ASC
280 in filings with the United States Securities and Exchange Commission (SEC) under the Securities Exchange Act of 1934,