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64 mitsubishi motors corporation annual report 2008
(d) Notional finance lease depreciation method
Notional depreciation of such finance leases is principally calculated and depreciated with no residual value by the declining-balance
method over the lease term.
(e) Calculation of notional interest expense of finance leases
The notional interest expense of such finance leases is principally regarded as the difference between total minimum lease payments and
acquisition cost, and is allocated to each period using the interest method.
As lessor
Future minimum lease payments required under operating lease transactions entered into by MMC and its consolidated subsidiaries at
March 31, 2008 and 2007 were as follows:
In millions of yen
In thousands of
U.S. dollars
2008 2007 2008
Due within 1 year ¥ 5,337 ¥ 4,664 $ 53,274
Due after 1 year 17,377 17,070 173,443
Total ¥22,714 ¥21,734 $226,717
Future minimum lease revenues from operating lease transactions entered into by MMC and its consolidated subsidiaries as lessor at
March 31, 2008 and 2007 were as follows:
In millions of yen
In thousands of
U.S. dollars
2008 2007 2008
Due within 1 year ¥ 7,513 ¥10,825 $ 74,993
Due after 1 year 12,295 12,307 122,724
Total ¥19,809 ¥23,133 $197,717
14. Derivative Financial Instruments
(a) Nature of and policy for derivative transactions
MMC and its consolidated subsidiaries utilize derivative financial instruments, including forward foreign exchange contracts, cross cur-
rency swaps, interest rate swaps and interest rate options to manage their exposure to fluctuations in foreign currencies and interest rates.
MMC and its consolidated subsidiaries do not utilize derivatives for speculation or trading purposes.
(b) Risk
MMC and its consolidated subsidiaries are exposed to the risk of credit loss in the event of nonperformance by the counterparties to the
derivatives, but any such loss would not be expected to be material because MMC and its consolidated subsidiaries enter into derivative
transactions only with financial institutions with high credit ratings. The notional amounts of the derivative financial instruments do not
necessarily represent the amounts exchanged by the parties and, therefore, are not a direct measure of MMC’s risk exposure in connec-
tion with derivatives.
All the transactions related to derivative financial instruments are for the purpose of hedging. MMC and its consolidated subsidiaries
do not enter into derivative contracts for which significant volatility would have any significant influence on its operations.