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36 Nikon Annual Report 2008
leases are permitted to be accounted for as operating lease
transactions if certain “as if capitalized” information is
disclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all
finance lease transactions shall be capitalized recogniz-
ing lease assets and lease obligations in the balance sheet.
The revised accounting standard for lease transactions is
effective for fiscal years beginning on or after April 1, 2008
with early adoption permitted for fiscal years beginning
on or after April, 2007.
Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements—
Under Japanese GAAP, a company currently can use the
financial statements of foreign subsidiaries which have
been prepared in accordance with generally accepted
accounting principles in their respective jurisdictions for
its consolidation process unless they are clearly unrea-
sonable. On May 17, 2006, the ASBJ issued ASBJ Practi-
cal Issues Task Force (PITF) No.18, “Practical Solution
on Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements.”
The new task force prescribes: 1) the accounting poli-
cies and procedures applied to a parent company and its
subsidiaries for similar transactions and events under
similar circumstances should in principle be unified for
the preparation of the consolidated financial statements,
2) financial statements prepared by foreign subsidiaries
in accordance with either International Financial Report-
ing Standards or the generally accepted accounting prin-
ciples in the United States tentatively may be used for
the consolidation process, 3) however, the following items
should be adjusted in the consolidation process so that
net income is accounted for in accordance with Japanese
GAAP unless they are not material;
(1) Amortization of goodwill
(2) Actuarial gains and losses of defined benefit plans
recognized outside profit or loss
(3) Capitalization of intangible assets arising from
development phases
(4) Fair value measurement of investment properties,
and the revaluation model for property, plant and
equipment, and intangible assets
(5) Retrospective application when accounting policies
are changed
(6) Accounting for net income attributable to a minority
interest
The new task force is effective for fiscal years beginning
on or after April 1, 2008 with early adoption permitted.
3. Accounting Change
Exchange Method for Foreign Currency
Financial Statements
Prior to April 1, 2007, the Company had translated the
foreign currency financial statements of its overseas
subsidiaries into Japanese yen at the current rate as of
the balance sheet date. Effective from April 1, 2007, the
Company changed its method of translating the foreign
currency of accounts regarding revenues and expenses of
overseas subsidiaries into Japanese yen from the method
of using the current rate as of the balance sheet date to
using the average rate in the year, due to the increasing
of ratio of their sales and production and to present more
fairly their financial position. The effect of this change
was to increase net sales by ¥49,284 million ($491,908
thousand). The effect of this change on profit or loss was
not material.