Nintendo 2005 Annual Report Download - page 47

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46
Nintendo Co., Ltd. and consolidated subsidiaries
B. Translation of Foreign Currency Items
In accordance with the Japanese accounting standard, short-term and long-term monetary receivables and payables
denominated in foreign currencies are translated into Japanese yen at the exchange rate in effect at the balance sheet date. The
foreign exchange gains and losses from translation are recognized in the statements of income to the extent that they are not
hedged by forward exchange contracts.
With respect to financial statements of overseas subsidiaries, the balance sheet accounts are translated into Japanese yen at
the exchange rates in effect at the balance sheet date except for shareholders’ equity, which are translated at the historical
rates. The average exchange rates for the fiscal period are used for translation of revenue and expenses. The differences
resulting from translation in this manner are included in “Minority Interests” and “Translation adjustments” which is listed in
Shareholders’ Equity in the accompanying consolidated balance sheets.
C. Cash and Cash Equivalents
Cash and cash equivalents include cash on hand, deposit which can be withdrawn on demand, time deposit with an original
maturity of three months or less and certain investments. Investments are defined as those that are easily accessible, with little
risk of fluctuation in value and the maturity date is within three months of the acquisition date.
D. Financial Instruments
Derivatives
All derivatives are stated at fair value, with changes in fair value included in net profit or loss for the period in which they arise.
Securities
Held-to-maturity debt securities are stated at cost after accounting for premium or discount on acquisition, which is amortized
over the period to maturity.
Equity securities of non-consolidated subsidiary and affiliated companies with equity method non-applied are stated at cost.
Other securities for which market quotations are available are stated at fair value. Unrealized gains on other securities are
reported as “Unrealized gains on other securities” in Shareholders’ Equity at a net-of-tax amount, while unrealized losses on
other securities are included in net profit or loss for the period.
Other securities for which market quotations are unavailable are stated at cost, determined by the moving average method
except as stated in the paragraph below.
In case where the fair value of held-to-maturity debt securities, equity securities issued by non-consolidated subsidiaries and
affiliates, or other securities has declined significantly and such impairment of the value is not deemed temporary, those
securities are written down to the fair value and the resulting losses are included in net profit or loss for the period.
Under the Japanese accounting standard, trading securities and debt securities due within one year are presented as
“current” and all the other securities are presented as “non-current.”
E. Inventories
Inventories are stated at the lower of cost, determined by the moving average method, or market.
F. Property, Plant and Equipment
Property, plant and equipment are stated at cost. The Company and its consolidated subsidiaries in Japan compute depreciation
by the declining balance method over the estimated useful lives. The straight-line method of depreciation is used for buildings,
except for structures, acquired on or after April 1, 1998. Overseas consolidated subsidiaries compute depreciation of assets by
applying the straight-line method over the period of estimated useful lives. Estimated useful lives of the principal assets are as
follows:
Buildings and structures: 3 to 60 years
From the year ended March 31, 2004, the Company promptly adopted the new Japanese Accounting Standards for
impairment on fixed assets. The effect on net profit or loss of this application for the year ended March 31, 2004, was minor,
whereas during the year ended March 31, 2005, net profit or loss was not effected by this application.
Years ended March 31, 2005 and 2004
Notes to Consolidated Financial Statements