Nikon 2015 Annual Report Download - page 56

54 NIKON REPORT 2015
The Company applied the revised accounting standard and guid-
ance for retirement benets for (i) and (ii) above, effective March
31, 2014, and for (iii) above, effective April 1, 2014.
With respect to (iii) above, the Company changed the method of
attributing the expected benet to periods from a straight-line basis
to a benet formula basis, while the method of determining dis-
count rates has been changed from the method where the period for
bonds, which forms the basis for determining the discount rate, is
determined based on the approximate number of years of the aver-
age remaining service period of employees, to the method using a
single weighted average discount rate reecting the period up to the
expected timing of retirement benets payment, as well as the
amount of retirement benets payment for each such period.
As a result, net dened benet asset decreased by ¥18,349
million ($152,695 thousand) and net dened benet liability
increased by ¥237 million ($1,975 thousand), while retained earn-
ings decreased by ¥11,971 million ($99,615 thousand) at the
beginning of the scal year under review. The impact on operating
income and income before income taxes for the year ended March
31, 2015 was minimal.
In addition, the effect on basic net-income per share and diluted net
income per share for the year ended March 31, 2015, was minimal.
(j) Stock Options
In December 2005, the ASBJ issued ASBJ Standard No. 8,
“Accounting Standard for Stock Options,” and related guidance.
The new standard and guidance are applicable to stock options
newly granted on and after May 1, 2006.
This standard requires companies to recognize compensation
expense for employee stock options based on the fair value at the
date of grant and over the vesting period as consideration for receiv-
ing goods or services. The standard also requires companies to
account for stock options granted to nonemployees based on the
fair value of either the stock option or the goods or services
received. In the balance sheet, the stock options are presented as
stock acquisition rights as a separate component of equity until
exercised. The standard covers equity-settled, share-based payment
transactions but does not cover cash-settled, share-based payment
transactions. In addition, the standard allows unlisted companies to
measure options at their intrinsic value if they cannot reliably esti-
mate fair value.
(k) Research and Development Costs
Research and development costs are charged to income as incurred.
(l) Leases
Finance lease transactions are capitalized and recognized as lease
assets and lease obligations in the balance sheet.
All other leases are accounted for as operating leases.
(m) Income Taxes
The provision for income taxes is computed based on the pretax
income included in the consolidated statement of income. The
asset and liability approach is used to recognize deferred tax assets
and liabilities for the expected future tax consequences of tempo-
rary differences between the carrying amounts and the tax bases of
assets and liabilities. Deferred taxes are measured by applying cur-
rently enacted tax laws to the temporary differences.
The Company and some foreign subsidiaries le a tax return
under the consolidated corporate tax system, which allows the com-
panies to base tax payments on the combined prots or losses of
the Company and their wholly owned domestic subsidiaries.
(n) Foreign Currency Transactions
All short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into reporting cur-
rencies, with which the Company and its consolidated subsidiaries
prepare for their separate nancial statements, at the exchange
rate as of the balance sheet date. The foreign exchange gains and
losses from translation are recognized in the consolidated state-
ment of income to the extent that they are not hedged by forward
exchange contracts.
(o) Foreign Currency Financial Statements
The balance sheet accounts of the consolidated foreign subsidiaries
are translated into Japanese yen at the current exchange rate as of
the balance sheet date except for equity, which is translated at the
historical exchange rate. Differences arising from such translation
are shown as “Foreign currency translation adjustments” under
accumulated other comprehensive income in a separate component
of equity.
Revenue and expense accounts of consolidated foreign subsidiar-
ies are translated into Japanese yen at the average exchange rate.
Notes to Consolidated Financial Statements