Mitsubishi 2014 Annual Report Download - page 53

(interest rate swaps) are used as hedging instruments on an
individual loan contract basis to hedge the interest payable fluctua-
tion risk. Such transactions meet the criteria of special accounting
provisions for interest rate swaps, and therefore hedge effectiveness
assessment is not required.
Certain intercompany loans are exposed to foreign currency risk,
however derivative transactions are used as hedging instruments for
some of these loans.
In order to mitigate counterparty risks, the Group enters into
derivative transactions only with highly rated financial institutions.
Trade payables and bank borrowings are exposed to liquidity
risk. Each group company manages these risks, by preparing cash
flow projections and other similar tools.
(c) Supplementary information about the fair value of financial
instruments
The notional amount with respect to the derivative transactions
presented in “Fair value of financial instruments” does not
represent the amount of market risk associated with the relevant
derivative transactions.
Fair value of financial instruments
The carrying amount, fair value, and the difference between the car-
rying amount and the fair value of the financial instruments at March
31, 2014 and 2013 were as follows. These financial instruments do
not include any financial instrument for which it is extremely difficult
to reasonably measure fair value. (Refer to Note 15.2)
(In millions of yen)
March 31, 2014
Carrying
amount Fair value Difference
Cash and bank deposits ¥450,063 ¥450,063 ¥ —
Notes and accounts
receivable–trade 173,535 173,535 —
Finance receivables 69,579
Allowance for doubtful
accounts (*1) (2,673)
66,905 66,022 (883)
Investment (*2) 18,572 18,572 —
Total assets ¥709,077 ¥708,194 ¥(883)
Notes and accounts
payable–trade ¥355,724 ¥355,724 ¥ —
Short-term loans payable 121,074 121,074 —
Long-term loans payable 101,283 101,696 412
Accounts payable – other and
accrued expenses (*3) 113,893 113,893 —
Total liabilities ¥691,976 ¥692,389 ¥ 412
Derivative transactions (*4) (468) (468) —
(In thousands of U.S. dollars)
March 31, 2014
Carrying
amount Fair value Difference
Cash and bank deposits
$4,372,947 $4,372,947 $ —
Notes and accounts
receivable–trade
1,686,124 1,686,124 —
Finance receivables 676,056
Allowance for doubtful
accounts (*1)
(25,979)
650,077 641,494 (8,582)
Investment (*2) 180,450 180,450 —
Total assets $6,889,599 $6,881,017 $(8,582)
Notes and accounts
payable–trade
$3,456,325 $3,456,325 $ —
Short-term loans payable 1,176,398 1,176,398 —
Long-term loans payable 984,100 988,112 4,012
Accounts payable – other and
accrued expenses (*3)
1,106,621 1,106,621 —
Total liabilities $6,723,445 $6,727,457 $ 4,012
Derivative transactions (*4) (4,554) (4,554) —
(*1) Allowance for doubtful accounts recognized for individual financial
receivable is deducted from the carrying amounts directly.
(*2) Investments presented in the consolidated balance sheets consist of:
investment securities of ¥71,759 million ($697,237 thousand), which
include securities with market value of ¥18,572 million ($180,450
thousand) and non-listed stocks and stocks of unconsolidated subsidiar-
ies and affiliates of ¥53,187 million ($516,787 thousand) (refer to Note
15.2); and other investments in unconsolidated subsidiaries and affiliates
of ¥41,038 million ($398,742 thousand) at March 31, 2014.
(*3) Accounts payable – other and accrued expenses presented in the
balance sheets consist of accrued expenses and accounts payable of
¥113,893 million ($1,106,621 thousand) and allowance for product
warranties of ¥31,993 million ($310,859 thousand) at March 31, 2014.
(*4) The amount of the receivable/payable derived from derivative transac-
tions is presented on a net basis.
MITSUBISHI MOTORS CORPORATION
Annual Report 2014 51