Mitsubishi 2008 Annual Report Download - page 53

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51
annual report 2008 mitsubishi motors corporation
Notes to Consolidated Financial Statements
Mitsubishi Motors Corporation and Consolidated Subsidiaries
1. Significant Accounting Policies
(a) Going concern
The financial statements of the Mitsubishi Motors Corporation (MMC) group for the year ended March 31, 2007 included a note describ-
ing the basis on which the going concern premise had been applied due to the existence of significant doubts as to going concern. Due to
the resolution of the significant doubts as to going concern, the MMC group has not presented that note in these financial statements.
(b) Basis of preparation
MMC and its domestic consolidated subsidiaries maintain their books of account in conformity with the financial accounting standards of
Japan. Foreign subsidiaries maintain their books of account in conformity with standards in their countries of domicile.
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting principles
in Japan which are different in certain respects as to the application and disclosure requirements of International Financial Reporting
Standards. These financial statements have been compiled from the consolidated financial statements filed with the Financial Services
Agency as required by the Financial Instruments Law of Japan.
In addition, the notes to the consolidated financial statements include information, which is not required under generally accepted
accounting principles 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 ¥1 million 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.
(c) Principles of consolidation
All significant companies over 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 inter-company transactions have been eliminated in consolidation.
Any differences at the date of acquisition between acquisition cost and the fair value of the net assets acquired are expensed when
incurred or are amortized over periods between 3 to 7 years.
(d) Cash and cash equivalents
All highly liquid and low risk investments with maturities of three months or less when purchased are considered to be cash equivalents.
(e) 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.
(f) Investments
Investments in securities are classified either as held-to-maturity, investments in unconsolidated subsidiaries and affiliated companies, or
other securities. Held-to-maturity securities are stated at their amortized cost. No investments classified as held-to-maturity were held
during the years ended March 31, 2008 and 2007. Other securities with a readily determinable market value are stated at fair value and
the cost of such securities sold is computed based on the moving average method. The difference between the acquisition cost and the
carrying value of other securities, including unrealized gains and losses, is recognized in “Unrealized holding gain on securities” in the
accompanying consolidated balance sheets. Other securities without a readily determinable market value are stated at cost determined by
the moving average method.