Nintendo 2005 Annual Report Download - page 48

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47 Nintendo Co., Ltd. and consolidated subsidiaries
G. Income Taxes
Deferred income taxes are recorded to reflect the impact of temporary differences between assets and liabilities recognized for
financial reporting purposes and such amounts recognized for tax purposes. These deferred taxes are measured by applying
currently enacted tax laws to the temporary differences.
The enterprise taxes levied in proportion to added value and capital were recognized as “Selling, general and administrative
expenses” effective as of the year ended March 31, 2005.
H. Retirement and Severance Benefits and Pension Plan
The Company and certain consolidated subsidiaries are calculating the reserve for employee retirement and severance benefits
with actuarially projected amounts on the basis of the cost of retirement benefit and plan assets at the end of fiscal year.
Benefits under the plan are generally based on the current rate of base salary, length of service and certain other factors when
the termination occurs.
Directors and corporate auditors customarily receive lump-sum payments upon termination of their services subject to
shareholders’ approval. The Company provides for the reserve for lump-sum severance benefits for directors and corporate
auditors at the estimated amount required if all retired at the fiscal year-end.
I. Research and Development and Computer Software
Expenses relating to research and development activities are charged to income as incurred.
Computer software for the internal use included in other assets is amortized using the straight-line method over the
estimated useful lives.
J. Leases
All leases are accounted for as operating leases. Under Japanese accounting standards for leases, finance leases that are
deemed to transfer ownership of the leased assets to the lessee are to be capitalized, while other finance leases are permitted
to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the notes to the
lessee’s financial statements.
K. Appropriations of Retained Earnings
Appropriations of retained earnings are reflected in the consolidated financial statements for the following year upon
shareholders’ approval.
L. Per Share Information
The computations of net income per share of common stock are based on the weighted average number of shares outstanding
excluding the number of treasury stock during each fiscal year. The average number of common stock used in the computation
for the years ended March 31, 2005 and 2004 were 131,600 thousand and 133,741 thousand, respectively.
Cash dividends per share represent the amounts applicable to the respective years including dividends to be paid after end of
the fiscal year.