Nikon 2006 Annual Report Download - page 36

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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) Long - lived Assets
In August 2002, the Business Accounting Council (BAC) issued a Statement of Opinion, Accounting for Impairment of Fixed Assets, and in
October 2003 the Accounting Standards Board of Japan (ASBJ) issued ASBJ Guidance No.6, Guidance for Accounting Standard for Impairment
of Fixed Assets. These new pronouncements were effective for fiscal years beginning on or after April 1, 2005 with early adoption permitted
for fiscal years ending on or after March 31, 2004.
The Group adopted the new accounting standard for impairment of fixed assets as of April 1, 2005.
The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate the carrying amount of an
asset or asset group may not be recoverable. An impairment loss would be recognized if the carrying amount of an asset or asset group
exceeds the sum of the undiscounted future cash flows expected to result from the continued use and eventual disposition of the asset or
asset group.
The impairment loss would be measured as the amount by which the carrying amount of the asset exceeds its recoverable amount, which
is the higher of the discounted cash flows from the continued use and eventual disposition of the asset or the net selling price at disposition.
The effect of adoption of the new accounting standard for impairment of fixed assets was to decrease income before income taxes and
minority interests for the year ended March 31, 2006 by ¥245 million ($ 2,090 thousand).
(g) Bond Issue Costs
Bond issue costs are charged to income as incurred.
(h) 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. Retirement allowances for officers are recorded to state the liability at the amount that would be required if all officers retired at
each balance sheet date.
(i) Retirement Allowances for Directors and Corporate Auditors
Retirement allowances for directors and corporate auditors are recorded to state the liability at the amount that would be required if all
directors and corporate auditors retired at each balance sheet date.
(j) Research and Development Costs
The Group is active in research and development, and such costs are charged to income as incurred.
(k) 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.
(l) Income Taxes
The provision for income taxes is computed based on the pretax income included in the consolidated statements of income. The asset and lia-
bility approach is used to recognize deferred tax assets and liabilities 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.
(m) 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.
(n) 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 income to the extent that they are not hedged by forward exchange contracts.
(o) 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.