Nikon 2004 Annual Report Download - page 28

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(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.
The Group accounted for the liability for retirement benefits based on the projected benefit obligations and plan assets at the balance
sheet date.
(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 asset and
liability approach is used to recognize deferred tax assets and liability for the expected future tax consequences of temporary differences
between the carrying amounts and the tax bases of assets and liabilities. 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 were not hedged by forward exchange contracts.
(m) Foreign Currency Financial Statements
The balance sheet accounts and revenue and expense accounts of the consolidated foreign subsidiaries are translated into Japanese yen at the
current exchange rates except for shareholders’ equity, which is translated at the historical exchange rates.
Differences arising from such translation were shown as “Foreign currency translation adjustments” in a separate component of
Shareholders’ equity.
(n) Derivatives and Hedging Activities
The Group enters into derivative financial instruments (“derivatives”), including contracts of foreign exchange forward, currency option, foreign
currency swap and interest rate swap to hedge foreign exchange risk and interest rate exposures. The Group does not hold or issue derivatives
for trading or speculative purposes.
Derivative financial instruments and foreign currency transactions are classified and accounted for as follows: (a) all derivatives are
recognized principally as either assets or liabilities and measured at fair value, and gains or losses on derivative transactions are recognized