Mitsubishi 2001 Annual Report Download - page 54

[52] MITSUBISHI MOTORS CORPORATION Annual Report 2001
(g) Retirement benefits
Accrued retirement benefits for employees at March 31, 2001 have been provided mainly at an amount calculated
based on the retirement benefit obligation and the fair value of the pension plan assets as of March 31, 2001, as
adjusted for unrecognized actuarial gain or loss, and unrecognized prior service cost. See Note 3 (a).
The transition difference of ¥128,370 million ($1,036,077 thousand) arising from the adoption of the new
accounting standard is charged to expenses in the year ended March 31, 2001, and the amortization cost is included
in other income and expenses.
Prior service cost is being amortized by the straight-line method over periods of 10 to 18 years, which are within
the estimated average remaining service years of the employees.
Effective the next fiscal year, actuarial gain and loss will be amortized by the straight-line method within 10 to
18 years, which is within the estimated average remaining service years of the employees.
Directors and corporate auditors of MMC and its domestic consolidated subsidiaries are customarily entitled
to lump-sum payments under their respective unfunded severance benefit plans subject to the stockholders’
approval. Provision for severance benefits for those officers has been made at an estimated amount.
Accrued retirement benefits include ¥3,744 million ($30,218 thousand) for directors and corporate auditors of
MMC and its domestic consolidated subsidiaries at March 31, 2001.
(h) Revenue recognition
Revenue is generally recognized on sales of products at the time of shipment.
Certain domestic and foreign subsidiaries recognize revenues by the installment sales method whereby gross
profit on such sales is deferred and credited to income in proportion to the amount of the installment receivables
which become due.
(i) Income taxes
MMC and its consolidated subsidiaries provide for income taxes applicable to all items included in the consolidated
statements of income regardless of when such taxes are payable. Income taxes arising from temporary differences
in the recognition of assets and liabilities for tax and financial reporting purposes are reflected as deferred income
taxes in the consolidated financial statements by the asset and liability method. See Note 3(d).
Deferred tax assets and liabilities were measured using the enacted tax rates which will be in effect when the
temporary differences are expected to reverse.
(j) Translation of foreign currency accounts
The accounts of the consolidated foreign subsidiaries are translated into yen as follows:
a. Asset and liability items are translated at the rate of exchange in effect on the closing date of each subsidiary;
b. Components of stockholders’ equity are translated at their historical rates at acquisition or upon occurrence;
and
c. Revenues, expenses and cash flow items are translated at the average rate for the fiscal year of each subsidiary.
Translation adjustments were classified as assets in the prior year’s consolidated financial statements. In the
current year, they have been included in stockholders’ equity and minority interests, as a result of the amendment
to “Regulations Concerning Terminology, Forms and Method of Preparation of Consolidated Financial Statements.”
See Note 3 (c).
(k) Amounts per share
The computation of basic net income (loss) per share is based on the weighted average number of shares outstand-
ing during each year. Diluted net income (loss) per share is computed based on the weighted average number of
shares of common stock outstanding each year after giving effect to the dilutive potential of common shares to be
issued upon the exercise of warrants and the conversion of convertible bonds. Diluted net income (loss) per share
for the years ended March 31, 2001 and 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 (deficit)
Cash dividends, bonuses to directors and statutory auditors and other appropriations of retained earnings (deficit)
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 consolidated 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 the foreign subsidiaries except for operating leases are capitalized.