Mitsubishi 2001 Annual Report Download - page 53

MITSUBISHI MOTORS CORPORATION Annual Report 2001 [51]
[1. Significant Accounting Policies]
(a) Basis of presentation
Mitsubishi Motors Corporation (“MMC”) and its domestic consolidated subsidiaries maintain their books of account
in conformity with the financial accounting standards of Japan, and its foreign subsidiaries, in conformity with
those of their countries of domicile.
The accompanying consolidated financial statements have been prepared in accordance with accounting
principles and practices generally accepted and applied in Japan and have been compiled from the consolidated
financial statements filed with the Ministry of Finance as required by the Securities and Exchange Law of Japan.
The accompanying consolidated financial statements have been prepared from the accounts maintained by
MMC and its consolidated subsidiaries in accordance with the provisions set forth in Japanese Commercial Code
and in conformity with accounting principles and practices generally accepted in Japan, which may differ in certain
material respects from accounting principles and practices generally accepted in countries and jurisdictions other
than Japan.
In addition, the notes to the consolidated financial statements include information which is not required under
accounting principles generally accepted in Japan but is presented herein as additional information.
Certain reclassifications have been made to the prior year’s financial statements to conform to the current
year’s presentation.
As permitted, amounts of less than one million yen have been omitted. Consequently, the totals shown in the
accompanying financial statements (both in yen and U.S. dollars) do not necessarily agree with the sum of the
individual amounts.
(b) Principles of consolidation
All material companies over which MMC has legal or effective control are consolidated. Significant affiliates which
MMC controls and certain unconsolidated subsidiaries have been accounted for by the equity method.
The accompanying consolidated financial statements include the accounts of MMC and its significant subsid-
iaries controlled directly or indirectly by MMC and companies over which MMC exercises significant influence in
terms of their operating and financial policies have been included in the consolidated financial statements on an
equity basis. All significant intercompany transactions and accounts have been eliminated in consolidation.
The difference at the date of acquisition between the costs and the underlying net equity in investments in
consolidated subsidiaries and other companies accounted for by the equity method is being amortized over a
period of less than 10 years.
(c) Cash and cash equivalents
All highly liquid investments with original maturities of three months or less when purchased are considered
cash equivalents.
(d) Inventories
Inventories of MMC and its domestic consolidated subsidiaries are principally stated at cost determined by the
first-in first-out or specific identification method. Inventories of the foreign consolidated subsidiaries are principally
stated at the lower of cost or market cost being determined by the specific-identification method.
(e) Investments
Held-to-maturity securities are stated at their amortized costs. Other securities with a market value are stated at
fair value. Other securities without a market value are stated at cost determined by the moving average method.
The difference between the acquisition cost and the carrying value of other securities, including unrealized
gain and loss, is recognized in “Unrealized holding gain on securities.” The cost of other securities sold is computed
based on the moving average method. See Note 3 (b).
(f) Depreciation
Depreciation of property, plant and equipment at MMC and its domestic consolidated subsidiaries is principally
calculated by the declining-balance method or the straight-line method over the estimated useful lives of the
respective assets.
The following useful lives are assumed: buildings and structures – 3 to 65 years; machinery and equipment –
2 to 17 years.
Depreciation of property, plant and equipment at the foreign subsidiaries is principally calculated by the
straight-line method over the estimated useful lives of the respective assets.
Significant renewals and additions are capitalized at cost. Maintenance and repairs are charged to income.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Mitsubishi Motors Corporation and Consolidated Subsidiaries
March 31, 2001