Nikon 2008 Annual Report Download - page 35

Nikon Annual Report 2008 33
Notes to Consolidated Financial Statements
Nikon Corporation and Consolidated Subsidiaries
Years ended March 31, 2008 and 2007
1. Basis of Presenting Consolidated Financial Statements
2. Summary of Signifi cant Accounting Policies
The accompanying consolidated fi nancial statements
have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and
Exchange Law (formerly, the Japanese Securities and
Exchange Law) and its related accounting regulations,
and in conformity with accounting principles generally
accepted in Japan, which are different in certain respects
as to application and disclosure requirements of Interna-
tional Financial Reporting Standards.
In preparing these consolidated fi nancial statements,
certain reclassifi cations and rearrangements have been
made to the consolidated fi nancial statements issued
domestically in order to present them in a form which is
more familiar to readers outside Japan. In addition, cer-
tain reclassifi cations have been made in the 2007 fi nancial
statements to conform to the classifi cations used in 2008.
The consolidated fi nancial statements are stated in
Japanese yen, the currency of the country in which Nikon
Corporation (the “Company”) is incorporated and oper-
ates. The translations of Japanese yen amounts into U.S.
dollar amounts are included solely for the convenience of
readers outside Japan and have been made at the approxi-
mate rate of ¥100.19 to U.S. $1, the rate of exchange at
March 31, 2008. Such translations should not be construed
as representations that the Japanese yen amounts could
be converted into U.S. dollars at that or any other rate.
(a) Consolidation
The consolidated fi nancial statements as of March 31,
2008 include the accounts of the Company and its 48 sig-
nifi cant (49 in 2007) subsidiaries (collectively, the “Group”).
Under the control or infl uence concept, those companies
in which the Company, directly or indirectly, is able to
exercise control over operations are fully consolidated,
and those companies over which the Company has the
ability to exercise signifi cant infl uence are accounted for
by the equity method.
Investments in 2 associated companies (2 associated com-
panies in 2007) are accounted for by the equity method.
Investments in the remaining unconsolidated sub-
sidiaries and associated companies are stated at cost. If
the equity method of accounting had been applied to the
investments in these companies, the effect on the accom-
panying consolidated fi nancial statements would not be
material.
The excess of the cost of an acquisition over the fair
value of the net assets of the acquired subsidiary at the
date of acquisition (“Goodwill”) is charged to income
when incurred, if the amounts are immaterial, otherwise
the amounts are amortized on a straight-line basis over
5 years.
All signifi cant intercompany balances and transactions
have been eliminated in consolidation. All material unre-
alized profi t included in assets resulting from transac-
tions within the Group is eliminated.
(b) Business Combination
In October 2003, the Business Accounting Council (the
“BAC”) issued a Statement of Opinion, “Accounting
for Business Combinations”, and on December 27, 2005,
the ASBJ issued ASBJ Statement No.7, “Accounting
Standard for Business Divestitures” and ASBJ Guidance
No.10, “Guidance for Accounting Standard for Business
Combinations and Business Divestitures”. These new
accounting pronouncements were effective for fi scal
years beginning on or after April 1, 2006.
The accounting standard for business combinations
allows companies to apply the pooling of interests
method of accounting only when certain specifi c criteria
are met such that the business combination is essentially
regarded as a uniting-of-interests.
For business combinations that do not meet the unit-
ing-of-interests criteria, the business combination is con-
sidered to be an acquisition and the purchase method of
accounting is required. This standard also prescribes the
accounting for combinations of entities under common
control and for joint ventures.
(c) Cash Equivalents
Cash equivalents are short-term investments that are
readily convertible into cash and that are exposed to
insignifi cant risk of changes in value.
Cash equivalents include time deposits, certifi cates of
deposit, commercial paper and mutual funds invested in
bonds that represent short-term investments, all of which
mature or become due within three months of the date of
acquisition.
(d) Investment Securities
Investment securities are classifi ed and accounted for,
depending on management’s intent, as follows:
i) held-to-maturity debt securities, which are expected
to be held to maturity with the positive intent and
ability to hold to maturity, are reported at amortized
cost and
ii) available-for-sale securities, which are not classifi ed as
held to maturity securities, are reported at fair value,
with unrealized gains and losses, net of applicable
taxes, reported in a separate component of equity.