Nintendo 2014 Annual Report Download - page 45

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- 43 -
Income taxes
1. Significant components of deferred tax assets and liabilities
Previous fiscal year
(As of March 31, 2013)
Current fiscal year
(As of March 31, 2014)
Deferred tax assets
Research and development expenses ¥ 28,866 million ¥ 34,794 million U.S.$ 337 million
Operating loss carryforwards for tax purposes 16,643 17,527 170
Unrealized intra-group profit and write-downs on
inventory 5,828 13,620 132
Accounts payable - other and accrued expenses 10,409 7,588 73
Provision for retirement benefits 6,374 – –
Net defined benefit liability – 6,846 66
Revenue recognition for tax purposes 5,790 5,274 51
Other 15,049 16,628 161
Deferred tax assets subtotal 88,961 102,280 993
Valuation allowance (2,969) (30,133) (292)
Total deferred tax assets 85,992 72,146 700
Deferred tax liabilities
Undistributed retained earnings of subsidiaries
and associates (6,934) (7,143) (69)
Valuation difference on available-for-sale
securities (4,272) (6,685) (64)
Other (5,422) (7,200) (69)
Total deferred tax liabilities (16,629) (21,029) (204)
Net deferred tax assets ¥ 69,363 ¥ 51,116 U.S.$ 496
2. Significant factors in the difference between the statutory tax rate and effective tax rate
Previous fiscal year
(As of March 31, 2013)
Current fiscal year
(As of March 31, 2014)
Statutory tax rate 37.9% 37.9%
(Reconciliations)
Valuation allowance 9.0 243.4
Effect of change in the statutory tax rate – 20.0
Different tax rates applied to the consolidated subsidiaries 9.9 9.6
Foreign tax credit on retained earnings of the overseas
consolidated subsidiaries 5.0 3.1
Special deduction applied to the gross research and
development expenses (8.7) (8.9)
Unrecognized tax effect for unrealized profit (27.2) –
Other 3.8 7.2
Effective tax rate after tax effect accounting 29.7 312.3
3. Amendment to deferred tax assets and liabilities due to change in corporation tax rates
Following the promulgation on March 31, 2014 of the “Act for Partial Revision of the Income Tax Act, etc.” (Act
No. 10 of 2014), the special reconstruction corporation tax, a surtax for reconstruction funding after the Great East
Japan Earthquake, will no longer be levied from the fiscal year beginning on or after April 1, 2014. In line with this
change, the statutory effective tax rate used to measure deferred tax assets and liabilities will be changed from the
previous rate of 37.9% to 35.5% for temporary differences expected to be reversed in the fiscal year beginning on
April 1, 2014.
As a result of this tax rate change, deferred tax assets, net of deferred tax liabilities, decreased by ¥2,065 million
(U.S.$20 million), and valuation difference on available-for-sale securities and income taxes-deferred increased by
¥120 million (U.S.$1 million) and ¥2,185 million (U.S.$21 million), respectively.