Nikon 2014 Annual Report Download - page 59

Notes to Consolidated Financial Statements
Nikon Corporation and Consolidated Subsidiaries
Year ended March 31, 2014
1. Basis of Presentation of Consolidated Financial Statements
The accompanying consolidated financial 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 cer-
tain respects as to application and disclosure requirements of
International Financial Reporting Standards.
In preparing these consolidated financial statements, certain
reclassifications and rearrangements have been made to the consol-
idated financial statements issued domestically in order to present
them in a form that is more familiar to readers outside of Japan.
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 of Japan and have been
made at the rate of ¥102.92 to US$1, the approximate rate of
exchange at March 31, 2014. Such translations should not be con-
strued 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, 2014 include
the accounts of the Company and its 70 (71 in 2013) significant
subsidiaries (together, the “Group”). Changes include the addition of
HIKARI GLASS (HK) LIMITED; Hikari Glass (Changzhou) Optics Co.,
Ltd.; Nikon Sales (Thailand) Co., Ltd.; exclusion of Nikon Precision
Singapore Pte Ltd due to the merger by Nikon Singapore Pte Ltd.;
and completion of liquidation of three subsidiaries of Nikon
Metrology NV. Under the control or influence concept, those compa-
nies 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 significant influence
are accounted for by the equity method.
Investments in two associated companies (two associated compa-
nies in 2013) 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 accompany-
ing 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 subsidiaries 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 principally over 10 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 has
also been eliminated.
The fiscal year-end of Nikon Imaging (China) Co., Ltd.; Nikon
Precision Shanghai Co., Ltd.; Nikon Imaging (China) Sales Co., Ltd.;
Nikon (Russia) LLC.; Nikon Mexico S.A. de C.V.; NIKON DO BRASIL
LTDA.; Nikon Instruments (Shanghai) Co., Ltd.; and Hikari Glass
(Changzhou) Optics Co., Ltd. is December 31. In preparing the con-
solidated financial statements, the Group used financial statements
of those companies that had been prepared on the basis of the provi-
sional closing of their accounts as of the consolidated closing date.
(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 Statements.”
PITF No. 18 prescribes (1) the accounting policies and procedures
applied to a parent company and its subsidiaries for similar transac-
tions 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 accor-
dance with either International Financial Reporting Standards or the
generally accepted accounting 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 consolida-
tion 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 pen-
sions that has been directly recorded in equity; 3) expensing capital-
ized development costs of R&D; 4) cancellation of the fair value
model of accounting for property, plant and equipment and invest-
ment properties and incorporation of the cost model of accounting;
and 5) exclusion of minority interests from net income, if contained
in net income.
(c) Cash Equivalents
Cash equivalents are short-term investments that are readily con-
vertible into cash and that are exposed to insignificant risk of
changes in value.
Cash equivalents include time deposits, certificates of deposit,
commercial paper and mutual funds invested in bonds that repre-
sent short-term investments, all of which mature or become due
within three months of the date of acquisition.
(d) Inventories
Inventories are stated at the lower of cost, determined by the first-
in, first-out method, or net selling value.
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NIKON REPORT 2014