Mitsubishi 2000 Annual Report Download - page 51

Notes to consolidated financial statements
49
mon stock outstanding each year after giving effect to the dilutive potential of common shares to be issued upon the exer-
cise of warrants and the conversion of convertible bonds. Fully diluted net loss per share for the year ended March 31,
2000 is not presented as a loss was recorded. Cash dividends per share represent cash dividends declared and paid in
each respective year.
(l) Appropriation of retained earnings
Cash dividends, bonuses to directors and statutory auditors and other appropriations of retained earnings are recorded in
the financial year in which the appropriations are approved at a general meeting of the stockholders.
(m) Leases
Noncancelable lease transactions at MMC and its domestic subsidiaries are accounted for as operating leases regardless of
whether such leases are classified as operating or capital leases, except that lease agreements which stipulate the transfer
of ownership of the leased property to the lessee are accounted for as capital leases.
Noncancelable lease transactions at foreign subsidiaries are capitalized except for operating lease.
(n) Research and development costs
Research and development costs are charged to income when incurred.
A new accounting standard for research and development costs become effective the fiscal year ended March 31, 2000.
However, the adoption of this new standard had no effect on the consolidated statement of operations for the year ended
March 31, 2000.
(o) Reclassifications
Certain amounts previously reported for the year ended March 31, 1999 have been reclassified to conform to the current
year. The significant items are as follows:
a. Deferred tax assets of ¥12,403 million in current assets and deferred tax liabilities of ¥522 million were classified sep-
arately.
b. Accrued expenses of ¥96,127 million ware reclassified to other current liabilities.
c. Change in time deposit with a maturity over three month of ¥1,149 million, which had been classified as cash flow
provided operating activities, were reclassified as cash flow used in investing activities.
2. Changes in accounting policies
a. Effective April 1, 1998, certain domestic subsidiaries changed their method of computing depreciation on buildings
from the declining-balance method to the straight-line method in order to achieve a more appropriate allocation of
cost reflecting their long-term stable usage. This effect of this change was to decrease ordinary loss by ¥1,769 million
($14,674 thousand) and to increase income before income taxes by the same amount for the year ended March 31,
1999.
b. Most of MMC's domestic subsidiaries calculated the accrual for employees' bonuses based on the actual amount paid
in the prior period. For the year ended March 31, 1999, however, due to a recent revision to the Corporation Tax Law
of Japan as well as to the implementation of the current compensation scheme which is more dependent on perfor-
mance, these subsidiaries began calculating accrued bonuses based on their best estimate of the amounts to be paid.
Given the current business circumstances, this change was made to achieve a more accurate accrual of employees'
bonuses. The effect of this change was to decrease ordinary loss by ¥2,400 million ($19,909 thousand) and to in-
crease income before income taxes by the same amount for the year ended March 31, 1999.
c. Until the year ended March 31, 1999, marketable securities held by the domestic consolidated subsidiaries had been
stated at cost. Effective April 1, 1999, they have been stated at the lower of cost or market method in order to conform
to MMC. The effect of this change in method of accounting is minor.
d. Until the year ended March 31, 1999, severance payment to directors and corporate auditors of the domestic consoli-
dated subsidiaries had been charged to income when paid. Effective April 1, 1999, it has been accrued at an estimated
amount that would be required to be paid if those eligible officers terminated as of March 31, 2000 in order to con-
form to MMC. The cumulative effect of this change amounted to ¥3,767 million ($35,458 thousand) at April 1, 1999