Mitsubishi 2002 Annual Report Download - page 47

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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 the 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 account-
ing 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 pre-
sentation.
As permitted, amounts of less than one million yen have been omitted. Consequently, the totals shown in the accompa-
nying 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 significant companies for which MMC has effective control are consolidated. Significant companies over which MMC
has the ability to exercise significant influence have been accounted for by the equity method.
All significant intercompany transactions have been eliminated in consolidation.
The difference at the date of acquisition between the acquisition cost and the fair value of the net assets acquired are
amortized over periods that do not exceed 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 value. Cost is determined by the specific-identification method.
(e) Investment in securities
Investments in securities that are expected to be held to maturity are stated at their amortized costs. Other securities with a
readily determinable market value are stated at fair value. Other securities without a readily determinable 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(c).
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Mitsubishi Motors Corporation and Consolidated Subsidiaries
March 31, 2002