Mitsubishi 2014 Annual Report Download - page 60

Some of the consolidated subsidiaries adopt the simplified
method for the calculation of retirement benefits obligation.
Retirement benefit expenses for MMC and its consolidated
subsidiaries’ employees’ retirement defined benefit plans for the
year ended March 31, 2013 consisted of the following:
(In millions of
yen)
For the
years ended
March 31,
2013
Service cost ¥ 8,136
Interest cost 4,311
Expected return on plan assets (3,570)
Amortization of actuarial losses 2,703
Amortization of prior service costs (30)
Pension expenses ¥11,550
Retirement benefit expenses of consolidated subsidiaries, which
adopt the simplified method, are included in service cost.
18. Income Taxes
MMC and its domestic consolidated subsidiaries are subject to cor-
porate, resident and enterprise taxes based on their taxable income.
Income taxes of the foreign consolidated subsidiaries are generally
calculated based on the tax rates applicable in their countries of
incorporation. The consolidated tax payment system is applied in
Japan for the years ended March 31, 2014 and 2013.
The effective tax rates reflected in the accompanying consolidat-
ed statements of income for the years ended March 31, 2014 and
2013 differ from the statutory tax rates for the following reasons:
(%)
For the years ended
March 31,
2014 2013
Statutory income tax rate for MMC 37.6 37.6
Equity in earnings of affiliates (2.4) (2.6)
Dividends received deduction (0.5) 1.3
Difference in tax rate of overseas
subsidiaries and others (9.0) (10.3)
Effect of valuation allowance changes (17.2) 14.0
Income taxes as a percentage of income
before income taxes and minority interests 8.6 40.0
The significant components of deferred tax assets and liabilities
as of March 31, 2014 and 2013 consisted of the following:
(In millions of yen)
(In thousands
of U.S. dollars)
March 31,
2014 2013 2014
Deferred tax assets:
Net operating losses
carried forward
¥ 126,416 ¥ 170,449 $ 1,228,295
Accrued retirement benefits —40,304 —
Net defined benefit liability 40,429 —392,828
Allowance for doubtful
accounts
3,115 3,494 30,269
Allowance for product
warranties
10,811 9,713 105,046
Accounts payable
– warranties
19,432 11,577 188,812
Fixed assets
(incl. impairment losses)
32,456 31,159 315,359
Others 26,884 34,840 261,221
Less valuation allowance (210,563) (271,377) (2,045,891)
Total deferred tax assets 48,984 30,160 475,942
Deferred tax liabilities:
Unrealized holding gain on
securities
(3,100) (2,783) (30,127)
Fair value adjustments
relating to land
(3,739) (3,840) (36,333)
Reserves under the Special
Taxation Measures Law
(230) (244) (2,237)
Accelerated depreciation
in overseas consolidated
subsidiaries
(20,418) (17,411) (198,393)
Others (24,220) (28,437) (235,332)
Total deferred tax liabilities (51,709) (52,716) (502,425)
Net deferred tax liabilities ¥ (2,725) ¥ (22,556) $ (26,482)
Deferred tax assets and liabilities at March 31, 2014 and 2013 are
included in the accompanying consolidated balance sheets as follows:
(In millions of yen)
(In thousands
of U.S. dollars)
March 31,
2014 2013 2014
Current assets ¥ 15,445 ¥ 3,543 $ 150,069
Non-current assets 9,898 4,349 96,175
Current liabilities (15) (346) (149)
Non-current liabilities (28,053) (30,103) (272,577)
Net deferred tax liabilities ¥ (2,725) ¥(22,556) $ (26,482)
The “Act for Partial Amendment of the Income Tax Act, etc.” (Act
No. 10 of 2014) was promulgated on March 31, 2014 and, as a
result, MMC is no longer subject to the Special Reconstruction
Corporation Tax effective for fiscal years beginning on or after April
1, 2014. As result, the effective statutory tax rate used to measure
MMC’s deferred tax assets and liabilities was changed from 37.6%
MITSUBISHI MOTORS CORPORATION
Annual Report 2014
58