Nikon 2010 Annual Report Download - page 35

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Nikon Corporation Annual Report 2010
Notes to Consolidated Financial Statements
Nikon Corporation and Consolidated Subsidiaries
Years ended March 31, 2010 and 2009
1. Basis of Presenting Consolidated Financial Statements
The accompanying consolidated fi nancial statements have been
prepared in accordance with the provisions set forth in the Japanese
Financial Instruments and Exchange Act and its related accounting
regulations and in conformity with accounting principles generally
accepted in Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements of International
Financial Reporting Standards.
In preparing these consolidated fi nancial statements, certain
reclassifi cations and rearrangements have been made to the consoli-
dated fi nancial statements issued domestically in order to present them
in a form which is more familiar to readers outside Japan. In addition,
certain reclassifi cations have been made in the 2009 fi nancial
statements to conform to the classifi cations used in 2010.
The consolidated fi nancial 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 rate of ¥93.04 to $1,
the approximate rate of exchange at March 31, 2010. 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 Signifi cant Accounting Policies
(a) Consolidation
The consolidated fi nancial statements as of March 31, 2010 include
the accounts of the Company and its 69 signifi cant (48 in 2009)
subsidiaries (together, the “Group”). This increase includes Nikon
Metrology NV and its subsidiaries. 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 Group has the ability to exercise
signifi cant infl uence are accounted for by the equity method.
Investments in 2 associated companies (2 associated companies
in 2009) are accounted for by the equity method. Investments 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 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 subsidiaries at the date of acquisition (“good-
will”) is charged to income when incurred, if the amounts are immate-
rial, otherwise the amounts are amortized on a straight-line basis
principally over 10 years.
All signifi cant intercompany balances and transactions have been
eliminated in consolidation. All material unrealized profi t included in
assets resulting from transactions within the Group is eliminated.
(b) Unifi cation 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 Unifi cation of Accounting Policies Applied to Foreign Subsidiaries
for the Consolidated Financial Statements.” 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 unifi ed for the preparation of
the consolidated fi nancial statements, (2) fi nancial statements prepared
by foreign subsidiaries in accordance with either International Financial
Reporting Standards or the generally accepted accounting principles
in the United States of America tentatively may be used for the con-
solidation 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 account-
ing policies in the income statement where retrospective adjustments
to fi nancial statements have been incorporated; and 6) exclusion of
minority interests from net income, if contained. PITF No. 18 was
effective for fi scal years beginning on or after April 1, 2008 with early
adoption permitted.
The Company applied this accounting standard effective April 1,
2008. In addition, the Company adjusted the beginning balance of
retained earnings 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 Combinations”, and
in December 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”.
The accounting standard for business combinations allows compa-
nies 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 uniting-of-interests
criteria, the business combination is considered 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.
For the fi scal year ended March 31, 2010, the Company acquired
100% of the outstanding shares of Metris NV and accounted for it by
the purchase method accounting.The related goodwill is systematically
amortized over 10 years.