Mitsubishi 2012 Annual Report Download - page 42

(l) Amounts per share of common stock
The computation of basic net 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 com-
mon 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.
(m) Derivative financial instruments
MMC and its consolidated subsidiaries are exposed to risks arising
from fluctuations in foreign currency exchange rates and interest
rates. In order to manage those risks, MMC and its consolidated
subsidiaries enter into various derivative agreements including
forward foreign exchange contracts and interest rate swaps.
Forward foreign exchange contracts are utilized to manage risks
arising from forecast exports of finished goods and related foreign
currency receivables. Interest rate swaps are utilized to manage
interest rate risk for loans. MMC and its consolidated subsidiaries
do not utilize derivatives for speculation or trading purposes.
Derivative financial instruments are recorded at fair value,
excluding certain instruments described below which are recorded
in accordance with the special hedge provisions of the accounting
standard.
Forward foreign exchange contracts related to forecast exports
of finished goods are accounted for using deferral hedge account-
ing. Deferral hedge accounting requires unrealized gains or losses
to be deferred as liabilities or assets.
MMC and its consolidated subsidiaries have also developed a
hedging policy to control various aspects of the derivative transac-
tions including authorization levels and transaction volumes. Based
on this policy, within certain limits, MMC and its consolidated
subsidiaries hedge the risks arising from the changes in foreign cur-
rency exchange rates and interest rates. Forward foreign exchange
contracts are designated to hedge the exposure to variability in
expected future cash flows.
For interest rate swaps accounted for as special hedges, instead
of measuring hedge effectiveness, confirmation of the conditions
for special hedge accounting is carried out.
(Additional information)
Accounting standard for accounting changes and error corrections
“Accounting Standard for Accounting Changes and Error
Corrections” (ASBJ Statement No.24, issued on December 4, 2009)
and “Guidance on Accounting Standard for Accounting Changes
and Error Corrections” (ASBJ Guidance No.24, issued on December
4, 2009) is applied from this year to accounting changes and correc-
tion of past period errors made on or after the beginning of this year.
2. U.S. Dollar Amounts
The U.S. dollar amounts in the accompanying consolidated financial
statements are included, solely for convenience, at ¥82.19=
U.S.$1.00, the exchange rate prevailing on March 31, 2012. This
translation should not be construed as a representation that the
Yen amounts represent or have been, or could be, converted into
U.S. dollars at that or any other rate.
3. Notes and Accounts Receivable – Trade
The outstanding balances of trade notes and accounts receivable
sold to others which have been deducted from the respective
accounts amounted to ¥7,000 million ($85,168 thousand) and
¥14,300 million as of March 31, 2012 and 2011, respectively.
As March 31, 2012 was a weekend date, some receivables and
payables were not able to be settled by financial institutions on that
date. Accordingly, notes and accounts receivable of ¥4,837 million
($58,863 thousand) and, notes and accounts payable of ¥33,971
million ($413,334 thousand), which were settled on the first follow-
ing business day, were included in the balance at March 31, 2012.
4. Property, Plant and Equipment
Accumulated depreciation of property, plant and equipment at
March 31, 2012 and 2011 was ¥1,068,361 million ($12,998,678
thousand) and ¥1,071,675 million, respectively.
MITSUBISHI MOTORS CORPORATION
Annual Report 2012
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