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42 Annual Report 2014
2014 2013
Statutory tax rates 38.0 % 38.0 %
Additions to (deductions from) income taxes resulting from:
Permanent differences not recognized for tax purposes such as dividends received (0.5) (0.5)
Permanent nondeductible differences such as entertainment expenses 2.8 2.1
(Decrease) increase in valuation allowance for deferred tax assets (26.1) 4.4
Per capita portion of inhabitants’ taxes 1.0 1.6
Downward adjustment of deferred tax assets at the end of the year due to tax rate change 2.1 —
Other, net (4.0) (20.0)
Effective tax rates 13.3 % 25.6 %
9. INCOME TAXES
Deferred tax assets and liabilities at March 31, 2014 and 2013 consisted of the following:
Millions of yen
Thousands of U.S.
dollars
2014 2013 2014
Deferred tax assets:
Loss carryforwards ¥ 27,363 ¥ 33,369 $ 268,264
Nondeductible retirement benefi ts — 12,159 —
Liability for retirement benefi ts 17,523 — 171,794
Excess of allowance for doubtful receivables and nondeductible bad debts expenses
7,543 6,205 73,950
Nondeductible accounts payable for revision of retirement payment plan 7,302 9,365 71,588
Nondeductible accrued bonuses 4,591 4,211 45,009
Nondeductible write-downs of inventories 3,081 2,983 30,205
Nondeductible write-downs of investments on securities 2,159 2,158 21,166
Nondeductible loss on impairment of fi xed assets 1,546 1,578 15,156
Other 7,059 6,992 69,205
Gross deferred tax assets 78,172 79,024 766,392
Less: Valuation allowance (67,262) (68,065) (659,431)
Total deferred tax assets 10,909 10,959 106,950
Deferred tax liabilities:
Asset for retirement benefi ts (15,448) — (151,450)
Nondeductible unrealized gain on contribution of securities to a pension trust (3,830) (3,830) (37,549)
Net unrealized holding gain on other securities (2,362) (1,222) (23,156)
Other (364) (490) (3,568)
Total deferred tax liabilities (22,006) (5,543) (215,745)
Net deferred tax (liabilities) assets ¥ (11,096) ¥ 5,415 $ (108,784)
Net deferred tax assets are included in the consolidated balance sheets as follows:
Millions of yen
Thousands of U.S.
dollars
2014 2013 2014
Other current assets ¥ 6,503 ¥ 6,634 $ 63,754
Other assets 707 723 6,931
Other current liabilities — — —
Other long-term liabilities 18,307 1,942 179,480
Net deferred tax (liabilities) assets ¥ (11,096) ¥ 5,415 $ (108,784)
Income taxes applicable to the Company and domestic consolidated subsidiaries comprised corporation tax, inhabitants’ taxes and enterprise
tax, which, in the aggregate, resulted in statutory tax rates of approximately 38% for the years ended March 31, 2014 and 2013, respec-
tively. Income taxes of the overseas consolidated subsidiaries are based generally on the tax rates applicable in their respective countries of
incorporation. A reconciliation between the statutory tax rates and the effective tax rates as a percentage of income before income taxes and
minority interests for the years ended March 31, 2014 and 2013 were summarized as follows: