Nikon 2009 Annual Report Download - page 35

Nikon Annual Report 2009 33
Notes to Consolidated Financial Statements
Nikon Corporation and Consolidated Subsidiaries
Years ended March 31, 2009 and 2008
1. BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements have been
prepared in accordance with the provisions set forth in the Japa-
nese Financial Instruments and Exchange Law and its related
accounting regulations, and in conformity with accounting prin-
ciples 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 financial statements, certain
reclassifications and rearrangements have been made to the con-
solidated financial statements issued domestically in order to
present them in a form which is more familiar to readers outside
Japan. In addition, certain reclassifications have been made in the
2008 financial statements to conform to the classifications used
in 2009.
The consolidated financial statements are stated in Japanese
yen, the currency of the country in which Nikon Corporation
(the “Company”) is incorporated and operates. 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 approximate rate of ¥98.23 to U.S.$1, the rate of
exchange at March 31, 2009. 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.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Consolidation
The consolidated financial statements as of March 31, 2009
include the accounts of the Company and its 48 significant (48 in
2008) subsidiaries (collectively, the “Group”). Under the control
or influence 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 significant influence are accounted for
by the equity method.
Investments in 2 associated companies (2 associated compa-
nies in 2008) are accounted for by the equity method. Invest-
ments in the remaining unconsolidated subsidiaries 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 accompanying consolidated financial 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 significant intercompany balances and transactions have
been eliminated in consolidation. All material unrealized profit
included in assets resulting from transactions within the Group
is eliminated.
(b) Unification of Accounting Policies Applied to Foreign
Subsidiaries for the Consolidated Financial Statements
In May 2006, the Accounting Standards Board of Japan (the
“ASBJ”) issued ASBJ Practical Issues Task Force (PITF) No.18,
“Practical Solution on Unification of Accounting Policies Applied
to Foreign Subsidiaries for the Consolidated Financial State-
ments”. PITF No.18 prescribes: (1) the accounting policies 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 consoli-
dated financial statements, (2) financial statements prepared by
foreign subsidiaries in accordance with either International
Financial Reporting Standards or the generally accepted account-
ing principles in the United States of America 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)
scheduled amortization of actuarial gain or loss of pensions that
has been directly recorded in the equity; 3) expensing capitalized
development costs of R&D; 4) cancellation of the fair value
model of accounting for property, plant, and equipment and
investment properties and incorporation of the cost model of
accounting; 5) recording the prior years’ effects of changes in
accounting policies in the income statement where retrospective
adjustments to financial statements have been incorporated; and
6) exclusion of minority interests from net income, if contained.
PITF No.18 was effective for fiscal years beginning on or after
April 1, 2008 with early adoption permitted.
The Company applied this accounting standard effective April
1, 2008. The effect of this change was to increase operating
income by ¥6,029 million ($61,372 thousand) and income before
income taxes by ¥5,981 million ($60,891 thousand). In addition,
the Company adjusted the beginning balance of retained earn-
ings at April 1, 2008 as if this accounting standard had been
retrospectively applied.
(c) Business Combination
In October 2003, the Business Accounting Council (the “BAC”)
issued a Statement of Opinion, “Accounting for Business Combi-
nations”, and on December 27, 2005, the ASBJ issued ASBJ State-
ment No.7, “Accounting Standard for Business Divestitures” and
ASBJ Guidance No.10, “Guidance for Accounting Standard for
Business Combinations and Business Divestitures”.
The accounting standard for business combinations allows
companies to apply the pooling of interests method of accounting
only when certain specific criteria are met such that the business
combination is essentially regarded as a uniting-of-interests.
For business combinations that do not meet the uniting-of-
interests criteria, the business combination is considered to be an