Nikon 2001 Annual Report Download - page 24

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(d) Inventories
Inventories of the Company and its domestic subsidiaries are stated at cost as determined principally using the average method, except for
work in process which is determined by the specific identification method. Inventories of foreign subsidiaries are stated at the lower of cost or
market as determined principally using the first-in, first-out method.
(e) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of the Company and domestic subsidiaries is principally computed using the
declining-balance method, while the straight-line method is applied to buildings (excluding facilities incidental to buildings), and foreign sub-
sidiaries apply the straight-line method, using rates based on the estimated useful lives of the assets. The range of useful lives is principally
from 30 to 40 years for buildings and structures, from 5 to 10 years for machinery and equipment.
Accounting Change - In 2000, the Company and domestic subsidiaries adopted the straight-line method of depreciation for the buildings
(excluding facilities incidental to buildings), which, previously, had been depreciated by the declining-balance method. This change was made
to more accurately allocate the cost of the buildings in light of the operations of the Group.
The effect of this change was to decrease depreciation expenses by ¥520 million and to increase income before income taxes by ¥388 mil-
lion for the year ended March 31, 2000.
(f) Retirement and Pension Plans
The Company and major subsidiaries have non-contributory funded pension plans covering substantially all of its employees. Certain foreign
subsidiaries also have contributory pension plans.
Prior to April 1, 2000, the amounts contributed to the fund of the Company and major domestic subsidiaries were charged to income when
paid. And other domestic subsidiaries have unfunded retirement benefit plans and set up a liability for retirement allowance at 40% of the
amount which would be required if all employees voluntarily terminated their employment at the balance sheet date.
Effective April 1, 2000, the Group adopted the new accounting standard for employees’ retirement benefits and accounted for the liability
for retirement benefits based on the projected benefit obligations and plan assets at the balance sheet date.
The full amount of the transitional obligation of ¥26,203 million ($211,482 thousand) less securities contributed to the pension fund of
¥6,711 million ($54,168 thousand), determined as of the beginning of year, are amortized over two years commencing from the current period.
As a result of adopting this new standard, net periodic benefit costs as compared with the prior method, increased by ¥14,232 million ($114,867
thousand) and income before income taxes and minority interests decreased by ¥12,882 million ($103,967 thousand).
(g) Research and Development Costs
The companies are active in research and development, and such costs are charged to income as incurred.
(h) Leases
All leases are accounted for as operating leases by the Company and its domestic subsidiaries. Under Japanese accounting standards for leas-
es, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are per-
mitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the lessee’s
financial statements.
(i) Income Taxes
The Group adopts the accounting method for interperiod allocation of income taxes based on the asset and liability method.
Deferred income taxes are recorded to reflect the impact of temporary differences between assets and liabilities recognized for financial
reporting purposes and such amounts recognized for tax purposes. These deferred taxes are measured by applying currently enacted tax laws
to the temporary differences.
(j) Appropriations of Retained Earnings
Appropriations of retained earnings at each year-end are reflected in the consolidated financial statements in the following year upon share-
holder’s approval.