Nikon 2007 Annual Report Download - page 34

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
32 NIKON ANNUAL REPORT 2007
(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.
(g) Retirement and Pension Plans
The Company has a defined benefit corporate pension plan (cash balance plan) and its consolidated domestic subsidiaries have non-contributory
funded pension plans. 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.
Certain foreign subsidiaries (about the United States etc.) record unrecognized actuarial gains and losses to which cost is not processed to
balance sheet in this fiscal year.
(h) 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.
(i) Stock Options
On December 27, 2005, the ASBJ issued ASBJ Standard No.8, “Accounting Standard for Stock Options” and related guidance. The new
standard and guidance are applicable to stock options newly granted on and after May 1, 2006.
This standard requires companies to recognize compensation expense for employee stock options based on the fair value at the date of
grant and over the vesting period as consideration for receiving goods or services. The standard also requires companies to account for stock
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 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.
The Company applied the new accounting standard for stock options to those granted on and after May 1, 2006. The effect of adoption
of this accounting standard for the year ended March 31, 2007 was to decrease income before income taxes and minority interests by ¥83
million ($704 thousand).
(j) Presentation of Equity
On December 9, 2005, the ASBJ published a new accounting standard for presentation of equity. Under this accounting standard, certain
items which were previously presented as liabilities are now presented as components of equity. Such items include stock acquisition rights,
minority interests, and any deferred gain or loss on derivatives accounted for under hedge accounting. This standard is effective for fiscal years
ending on or after May 1, 2006. The consolidated balance sheet as of March 31, 2007 is presented in line with this new accounting standard.
(k) Research and Development Costs
The Group is active in research and development, and such costs are charged to income as incurred.
(l) 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.