Nintendo 2006 Annual Report Download - page 28

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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” or “Translation adjustments” 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“Cash and cash equivalents” include cash on hand, deposit which can be withdrawn on demand, time deposit with an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 company 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 subsidiary and
affiliate, 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
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
Years ended March 31, 2006 and 2005
Notes to Consolidated Financial Statements