Mitsubishi 2006 Annual Report Download - page 65

63
MITSUBISHI MOTORS CORPORATION ANNUAL REPORT 2006
(i) Retirement benefits
Accrued retirement benefits for employees at March 31, 2006 and 2005 are calculated based on the retirement
benefits obligation and the fair value of the pension plan assets estimated at year end. The full amount of the tran-
sition difference, arising from the adoption of the new accounting standard for retirement benefits was expensed
entirely in FY2000 when the new accounting standard was adopted.
Prior service cost is being amortized using the straight line method over periods of 5 to 21 years, and 10 to 21
years for the years ended March 31, 2006 and 2005, respectively. These periods are within the estimated average
remaining service years of the employees.
Actuarial gains and losses are being amortized using the straight line method over the periods of 5 to 21 years
and 10 to 21 years for the years ended March 31, 2006 and 2005, respectively. These periods are within the esti-
mated average remaining service years of the employees.
(j) Accrual for retirement benefits for directors and corporate auditors
Certain 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 directors and corporate auditors has been made at the estimated amount
which would be paid if all directors and corporate auditors resigned as of the balance sheet dates.
(k) 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.
(l) 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 March 31;
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 financial period. Translation
adjustments are included in “Stockholders’ equity.”
(m) Amounts per share of common stock
The computation of basic net (loss) income per share of common stock is based on the weighted average number of
shares of common stock outstanding during each year. Diluted net income per share of common stock 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 stock to be issued upon the conversion of preferred stock and stock purchase warrants.
(n) Appropriations (dispositions) of retained earnings (accumulated deficit)
Cash dividends, bonuses to directors and corporate auditors and other appropriations or dispositions of retained
earnings (accumulated deficit) are recorded in the financial year in which the appropriations (dispositions) are
approved at the general meeting of the stockholders.
Notes to Consolidated Financial Statements