Nikon 2003 Annual Report Download - page 28

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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
subsidiaries 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, and from 5 to 10 years for machinery and equipment.
(f) Bond Issue Costs
Bond issue costs are charged to income as incurred.
(g) 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.
Effective April 1, 2000, the Company and domestic subsidiaries adopted a 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 determined as of April 1, 2000 less securities contributed to the pension
fund of ¥6,711 million is being amortized over two years commencing from the fiscal year ended March 31, 2001.
(h) Research and Development Costs
The Group is active in research and development, and such costs are charged to income as incurred.
(i) Leases
All leases are accounted for as operating leases by the Company and its domestic subsidiaries. Under Japanese accounting standards for
leases, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, while other finance leases are
permitted 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.
(j) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements of operations. The Group
provides 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.
(k) Appropriations of Retained Earnings
Appropriations of retained earnings at each year end are reflected in the consolidated financial statements in the following year upon
shareholder’s approval.
(l) Foreign Currency Transactions
All short-term and long-term monetary receivables and payables denominated in foreign currencies are translated into Japanese yen at the
current exchange rates in effect at each balance sheet date. The foreign exchange gains and losses from transactions are recognized in the
statement of operations to the extent that they are not hedged by forward exchange contracts.