Nikon 2016 Annual Report Download - page 58

56 NIKON REPORT 2016
(i) Transactions with non-controlling interest—A parent’s owner-
ship interest in a subsidiary might change if the parent pur-
chases or sells ownership interests in its subsidiary. The
carrying amount of non-controlling interest is adjusted to reect
the change in the parent’s ownership interest in its subsidiary
while the parent retains its controlling interest in its subsidiary.
Under the previous accounting standard, any difference
between the fair value of the consideration received or paid and
the amount by which the non-controlling interest is adjusted is
accounted for as an adjustment of goodwill or as prot or loss in
the consolidated statement of income. Under the revised
accounting standard, such difference is accounted for as capital
surplus as long as the parent retains control over its subsidiary.
(ii) Presentation of the consolidated balance sheet—In the consoli-
dated balance sheet, “minority interest” under the previous
accounting standard is changed to “non-controlling interest”
under the revised accounting standard.
(iii) Presentation of the consolidated statement of income—In the
consolidated statement of income, “income before minority
interest” under the previous accounting standard is changed to
“net income” under the revised accounting standard, and “net
income” under the previous accounting standard is changed to
“net income attributable to owners of the parent” under the
revised accounting standard.
(iv) Provisional accounting treatments for a business combination—If
the initial accounting for a business combination is incomplete
by the end of the reporting period in which the business combi-
nation occurs, an acquirer shall report in its nancial statements
provisional amounts for the items for which the accounting is
incomplete. Under the previous accounting standard guidance,
the impact of adjustments to provisional amounts recorded in a
business combination on prot or loss is recognized as prot or
loss in the year in which the measurement is completed. Under
the revised accounting standard guidance, during the measure-
ment period, which shall not exceed one year from the acquisi-
tion, the acquirer shall retrospectively adjust the provisional
amounts recognized at the acquisition date to reect new infor-
mation obtained about facts and circumstances that existed as
of the acquisition date and that would have affected the mea-
surement of the amounts recognized as of that date. Such
adjustments shall be recognized as if the accounting for the
business combination had been completed at the acquisition
date.
(v) Acquisition-related costs—Acquisition-related costs are costs,
such as advisory fees or professional fees, which an acquirer
incurs to effect a business combination. Under the previous
accounting standard, the acquirer accounts for acquisition-
related costs by including them in the acquisition costs of the
investment. Under the revised accounting standard, acquisition-
related costs shall be accounted for as expenses in the periods
in which the costs are incurred.
The above accounting standards and guidance for (i), (ii), (iii), (iv),
and (v) are effective for the beginning of annual periods beginning on
or after April 1, 2015. Earlier application is permitted from the begin-
ning of annual periods beginning on or after April 1, 2014, except for
(ii) and (iii). In the case of earlier application, all accounting standards
and guidance above, except for (ii) and (iii), shall be applied
simultaneously.
The revised accounting standards and guidance for (ii) presentation
of the consolidated balance sheet and (iii) presentation of the consoli-
dated statement of income shall be applied to all periods presented in
nancial statements containing the rst-time application of the revised
standards and guidance.
The Company early applied the revised accounting standards and
guidance for (i) and (v) above, effective April 1, 2014, and (iv) for a
business combination occurring after April 1, 2014.
In addition, the method of presentation was changed in the con-
solidated statement of cash ows. The cash ows for purchases or
sales of ownership interests in its subsidiary without a change in
consolidation scope are presented under nancing activities, and
cash ows for acquisition-related costs are presented under operating
activities.
With respect to (ii) presentation of the consolidated balance sheet
and (iii) presentation of the consolidated statement of income, the
applicable line items in the 2015 consolidated nancial statements
have been accordingly reclassied and presented in line with those
in 2016.
The Company acquired 100% of the shares of Optos Plc on May
23, 2015, and accounted for the acquisition by the purchase method
of accounting (see Note 3).
(d) Cash Equivalents
Cash equivalents are short-term investments that are readily convertible
into cash and that are exposed to insignicant risk of changes in value.
Cash equivalents include time deposits, certicates of deposit,
commercial paper, and mutual funds invested in bonds that represent
short-term investments, all of which mature or become due within
three months of the date of acquisition.
(e) Inventories
Inventories of the Company and its domestic subsidiaries are stated at
the lower of cost, determined principally by the average method, or
net selling value. Inventories of foreign subsidiaries are stated at the
lower of cost or market as determined principally using the average
method.
(f) Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation of
property, plant and equipment of the Company and its consolidated
subsidiaries is principally computed by the straight-line method. The
major ranges of useful lives are from 30 to 40 years for buildings and
from 5 to 10 years for machinery. The useful lives for lease assets are
the terms of the respective leases.