Mitsubishi 2012 Annual Report Download - page 41

Intangible fixed assets (excluding leased assets):
Intangible fixed assets (excluding leased assets) are amortized
using the straight line method for MMC and its domestic consoli-
dated subsidiaries and using the straight line method primarily over
the period for which each asset is available for use for its overseas
subsidiaries. Software intended for use by MMC and its domestic
consolidated subsidiaries is amortized using the straight line
method over a period of 5 years.
Leased assets:
Assets recognized under finance leases that do not involve trans-
fer of ownership to the lessee are depreciated using the straight
line method based on the contract term of the lease agreement. If
a guaranteed residual value is determined in the lease agreement,
the said guaranteed residual value is deemed as the residual value
of such leased assets. If the residual value is not determined, it is
deemed to be zero.
(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 warranties
The allowance for product warranty claims has been calculated
based on MMC and its consolidated subsidiaries’ historical experi-
ence and estimations with respect to future costs relating to claims.
(i) Provision for retirement benefits
Accrued retirement benefits for employees at March 31, 2012 and
2011 are calculated based on the retirement benefits obligation and
the fair value of the pension plan assets estimated at year end.
Prior service cost is being amortized using the straight line
method over periods of 1 to 15 years. 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 15 years. These periods are within
the estimated average remaining service years of the employees.
(Additional information)
In accordance with the Defined Contribution Pension Act, MMC
and some of its domestic consolidated subsidiaries transferred a
certain part of their retirement benefit plans (tax-qualified pension
plans) to defined contribution pension plans and defined benefit
corporate pension plans this year. Accordingly, “Accounting for
Transfer between Retirement Benefit Plans” (ASBJ Implementation
Guidance No.1) has been applied. The effect of this transfer is
considered to be immaterial.
(j) Accrual for retirement benefits for directors and corporate
auditors
Before the termination of the retirement benefits plan for directors
and corporate auditors in the year ended March 2007, certain direc-
tors and corporate auditors of MMC and its domestic consolidated
subsidiaries had been customarily entitled to lump-sum payments
under their respective unfunded severance benefit plans, subject to
shareholders’ approval. Due to the termination of the plan and par-
tial deduction of the provision, further provision is no longer needed
and the outstanding balance of the provision at March 31, 2012 and
2011 represents benefits reserved before the plan’s termination.
(k) Translation of foreign currency accounts
Receivables and payables denominated in foreign currencies are
translated into Yen at the rates of exchange in effect at the balance
sheet date, and differences arising from the translation are included
in the statements of income.
The accounts of the consolidated foreign subsidiaries are trans-
lated into Yen as follows:
a. Asset and liability items are translated at the rate of exchange in
effect on March 31;
b. Components of shareholders’ 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 “Net assets”.
MITSUBISHI MOTORS CORPORATION
Annual Report 2012 39