Mitsubishi 2005 Annual Report Download - page 58

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Annual Report 2005
56
MITSUBISHI MOTORS CORPORATION
(c) Cash and cash equivalents
All highly liquid and low-risk investments with 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) Investments in securities
Investments in securities that are expected to be held-to-maturity are not held in current year.
Other securities with a readily determinable market value are stated at fair value. 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” in the accompanying consolidated balance sheets. The cost of other securi-
ties sold is computed based on the moving average method.
Other securities without a readily determinable market value are stated at cost determined by the moving
average method.
(f) Depreciation
Depreciation of property, plant and equipment is principally calculated by the declining-balance method or the
straight-line method over the estimated useful life of the respective assets. The estimated useful life of the assets at
MMC and its domestic consolidated subsidiaries are as provided for in the corporate tax law.
Software intended for use by MMC and its consolidated subsidiaries are amortized by the straight-line method
over the software’s estimated useful life.
(g) Allowance for doubtful accounts
The allowance for doubtful accounts has been provided based on MMC and its consolidated subsidiaries’ historical
experience with respect to write-offs and an estimate of the amount of specific uncollectible accounts.
(h) Allowance for product warranty
The allowance for product warranty has been calculated based on MMC and its consolidated subsidiaries’ historical
experience and estimations with respect to future costs relating to after sales service.
(i) Retirement benefits
Accrued retirement benefits for employees at March 31, 2005 and 2004 have been provided mainly at an amount
calculated based on the retirement benefit obligation and the fair value of the pension plan assets, adjusted for
unrecognized actuarial gains or losses and unrecognized prior service cost. The retirement benefit obligation is
allocated to future years on a straight-line basis.
Prior service cost is being amortized by the straight-line method over periods of 10 to 21 years and 10 to 17
years for the years ended March 31, 2005 and 2004, respectively. These periods are within the estimated
average remaining service years of the employees.
Actuarial gains and losses are amortized from the fiscal year following the year in which they are incurred using
the straight-line method within 10 to 21. These periods are within the estimated average remaining service years of
the employees.