Nintendo 2016 Annual Report Download - page 33

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(6) Amortization method of goodwill and period thereof
Goodwill is mainly amortized on a straight-line basis over five years. Immaterial goodwill is amortized in full
in the same fiscal year in which it is incurred.
(7) Scope of cash and cash equivalents in the consolidated statements of cash flow
“Cash and cash equivalents” include cash on hand, time deposit which can be withdrawn on demand and
short-term investments, with little risk of fluctuation in value and maturity of three months or less of the
acquisition date, which are promptly convertible to cash.
(8) Other important matters in preparing the consolidated financial statements
Accounting for consumption taxes
Consumption taxes and local consumption taxes are accounted for by the tax exclusion method.
Changes in accounting policies
Application of accounting standards for business combinations, etc.
Effective beginning the fiscal year ended March 31, 2016, Nintendo has adopted the "Revised Accounting Standard
for Business Combinations (ASBJ Statement No. 21 of September 13, 2013; hereafter the "Business Combinations
Accounting Standard")," the "Revised Accounting Standard for Consolidated Financial Statements (ASBJ
Statement No. 22 of September 13, 2013; hereafter the "Consolidation Accounting Standard")," the "Revised
Accounting Standard for Business Divestitures (ASBJ Statement No. 7 of September 13, 2013; hereafter the
"Business Divestitures Accounting Standard")" and other standards. Accordingly, the accounting method was
changed to record the difference arising from changes in equity in subsidiaries which Nintendo continues to control
as a capital surplus, and business acquisition costs as expenses for the fiscal year in which they occurred. Regarding
business combinations implemented on or after April 1, 2015, the accounting method was changed to reflect
adjustments to the allocation of acquisition cost under provisional accounting treatment on the consolidated
financial statements of the fiscal year in which the relevant business combinations became or will become effective.
In addition, the changes in the presentation of net income and the changes in the presentation from minority
interests to non-controlling interests have been implemented. In connection with the changes in the presentation of
the consolidated financial statements, reclassifications have been made on the consolidated financial statements of
the fiscal year ended March 31, 2015.
The Business Combinations Accounting Standard and other standards were applied in accordance with the
transitional treatments stated in Article 58-2 (4) of the Business Combinations Accounting Standard, Article 44-5
(4) of the Consolidation Accounting Standard and Article 57-4 (4) of the Business Divestitures Accounting Standard
from the beginning of the fiscal year ended March 31, 2016.
Changes in description method have been implemented for cash flow statement of the fiscal year ended March 31,
2016, as cash flows related to acquisition or sale of subsidiaries without changes in consolidation scope were
provided in the section of cash flows from financing activities while cash flows related to the cost incurred from
acquisition or sale of subsidiaries entailing changes in consolidation scope were provided in the section of cash
flows from operating activities.
There is no impact on consolidated financial statements or per share information in the fiscal year ended March 31,
2016.
Unapplied accounting standards and guidance
“Revised Implementation Guidance on Recoverability of Deferred Tax Assets” (ASBJ Guidance No. 26 of March
28, 2016) (“ Revised Implementation Guidance”)
1. Overview
The Revised Implementation Guidance basically follows the framework used in the JICPA Guidance No. 66
“Auditing Treatment for Judgment of Recoverability of Deferred Tax Assets” where entities are classified into five
categories and the amount of deferred tax assets to be posted is assessed based on such categories whereas
necessary revisions are made regarding the following treatments:
(i) treatment of entities which do not satisfy any of criteria for category 1 to category 5;
(ii) criteria for the classification of the category 2 and the category 3;
(iii) treatment of deductible temporary differences unable to be scheduled for entities in the category 2;
(iv) treatment of reasonable estimable periods for taxable income before adding or deducting deductible temporary