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36
options granted to non-employees based on the fair value of either the stock option or the goods or services received. In the balance sheet, the
stock option is presented as a stock acquisition right as a separate component of shareholders’ equity until exercised. The standard covers equity-
settled, share-based payment transactions, but does not cover cash-settled, share-based payment transactions. In addition, the standard allows
unlisted companies to measure options at their intrinsic value if they cannot reliably estimate fair value.
Bonuses to directors and corporate auditors
Prior to the fiscal year ended March 31, 2005, bonuses to directors and corporate auditors were accounted for as a reduction of retained earnings
in the fiscal year following approval at the general shareholders’ meeting. The ASBJ issued ASBJ Practical Issues Task Force (PITF) No.13,
“Accounting Treatment for Bonuses to Directors and Corporate Auditors,” which encouraged companies to record bonuses to directors and
corporate auditors on the accrual basis with a related charge to income, but still permitted the direct reduction of such bonuses from retained
earnings after approval of the appropriation of retained earnings.
The ASBJ replaced the above accounting pronouncement by issuing a new accounting standard for bonuses to directors and corporate
auditors on November 29, 2005. Under the new accounting standard, bonuses to directors and corporate auditors must be expensed and are no
longer allowed to be directly charged to retained earnings. This accounting standard is effective for fiscal years ending on or after May 1, 2006.
The companies must accrue bonuses to directors and corporate auditors at the year end to which such bonuses are attributable.
3. INVESTMENT SECURITIES
Investment securities at March 31, 2006 and 2005 consisted of the following:
Non-Current :
Equity securities
Trust bonds, debentures and other
Total
Thousands of
U.S. Dollars
2006
$ 679,853
19
$ 679,872
2005
¥ 54,771
2
¥ 54,773
2006
¥ 79,862
2
¥ 79,864
Millions of Yen
The carrying amounts and aggregate fair values of investment securities at March 31, 2006 and 2005 were as follows:
March 31, 2006
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Total
Fair Value
¥ 79,328
1
¥ 79,329
Unrealized
Losses
¥15
0
¥15
Unrealized
Gains
¥ 41,228
¥ 41,228
Cost
¥ 38,115
1
¥ 38,116
Millions of Yen
March 31, 2005
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Total
Fair Value
¥ 52,376
1
¥ 52,377
Unrealized
Losses
¥ 232
0
¥ 232
Unrealized
Gains
¥ 12,477
¥ 12,477
Cost
¥ 40,131
1
¥ 40,132
Millions of Yen
March 31, 2006
Securities classified as:
Available-for-sale:
Equity securities
Debt securities
Total
Fair Value
$ 675,303
5
$ 675,308
Unrealized
Losses
$ 127
0
$ 127
Unrealized
Gains
$ 350,964
$ 350,964
Cost
$ 324,466
5
$ 324,471
Thousands of U.S. Dollars