JVC 1999 Annual Report Download - page 26

24 JVC 1999
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL
STATEMENTS
Victor Company of Japan, Limited (the “Company”) and its consoli-
dated domestic subsidiaries maintain their accounts and records in ac-
cordance with the provisions set forth in the Japanese Commercial
Code and the Securities and Exchange Law and in conformity with ac-
counting principles and practices generally accepted in Japan, which
are different from the accounting and disclosure requirements of
International Accounting Standards. The accounts of overseas consoli-
dated subsidiaries are based on their accounting records maintained in
conformity with generally accepted accounting principles and practices
prevailing in the respective countries of domicile.
The accompanying consolidated financial statements are a transla-
tion of the audited consolidated financial statements of the Company
which were prepared in accordance with accounting principles and
practices generally accepted in Japan from the accounts and records
maintained by the Company and its consolidated subsidiaries and were
filed with the Ministry of Finance (“MOF”) as required by the Securities
and Exchange Law.
In preparing the accompanying consolidated financial statements,
certain reclassifications have been made in the consolidated financial
statements issued domestically in order to present them in a form
which is more familiar to readers outside Japan. The consolidated
statements of cash flows have been prepared for the purpose of inclu-
sion in the consolidated financial statements, although such statements
are not customarily prepared in Japan and are not required to be filed
with MOF.
The translation of the Japanese yen amounts into U.S. dollars are in-
cluded solely for the convenience of the reader, using the prevailing ex-
change rate at March 31, 1999, which was ¥121 to U.S.$1.00. The
convenience translations should not be construed as representations
that the Japanese yen amounts have been, could have been, or could
in the future be, converted into U.S. dollars at this or any other rate of
exchange.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of consolidation
The consolidated financial statements include the accounts of the
Company and its significant subsidiaries. All significant intercompany
transactions and accounts have been eliminated.
Investments in certain unconsolidated subsidiaries and affiliated
companies are, with minor exceptions, stated at their underlying net
equity value after elimination of unrealized intercompany profits and
losses. The Company’s investments in its remaining subsidiaries and af-
filiated companies are immaterial in the aggregate, and are stated at
cost or less.
The differences between acquisition cost and underlying net equity
at the time of acquisition are generally being amortized on the straight-
line method over five years.
Foreign currency translation
Current assets and liabilities denominated in foreign currencies are
translated into Japanese yen at exchange rates prevailing at the bal-
ance sheet dates, and non-current assets and liabilities denominated in
foreign currencies are translated at historical exchange rates. Resulting
exchange gains or losses are credited or charged to income for the
respective periods. Foreign currency items with forward exchange con-
tracts are translated at the contracted rates. Gains on long-term for-
ward exchange contracts are allocated to income over the life of the
forward exchange contract. The related tax effect on the gains is also
recognized.
Translation of foreign currency financial statements
In accordance with the Accounting Standards for Foreign Currency
Translations, assets and liabilities are translated at exchange rates pre-
vailing at the balance sheet dates. Stockholders’ equity is translated at
historical exchange rates.
Revenue and expenses are translated at the average exchange
rates during the respective years.
Differences resulting from translation of the balance sheet of foreign
consolidated subsidiaries are debited or credited to “foreign currency
translation adjustments” in the accompanying balance sheets.
Inventories
Inventories are stated at cost, which is determined by the average cost
method, or less.
Marketable securities and investment securities
Securities quoted on stock exchanges are stated at the lower of mov-
ing average cost or market. All other securities are valued at cost or
less, reflecting write-downs based on impairment of the underlying eq-
uity. Securities held by the consolidated subsidiaries in the United
States are accounted for based on the Statement of Financial
Accounting Standards No. 115, Accounting for Certain Investments in
Debts and Equity Securities.
Property, plant and equipment
Property, plant and equipment is stated at cost. Depreciation is com-
puted primarily by the declining-balance method based on the
estimated useful lives of the assets.
The ranges of useful lives for computing depreciation are generally
as follows:
Buildings ...................................................................... 20 to 50 years
Machinery and equipment............................................ 3 to 7 years
Expenditures for maintenance and repairs are charged to income as
incurred.
Finance leases
Finance leases, except those leases for which the ownership of the
leased assets is considered to be transferred to the lessee, are ac-
counted for in the same manner as operating leases.
Notes to Consolidated Financial Statements
Victor Company of Japan, Limited
Years ended March 31, 1999, 1998 and 1997