Olympus 2005 Annual Report Download - page 37

O LYMPUS 20 05 35
1. SUMMARY O F SIG NIFICANT ACCO UNTING PO LICIES
(a) BASIS O F PRESENTING CO NSO LIDATED FINANCIAL STATEMENTS
O lympus Corporation (the “Co mpany”) and its consolidated domestic subsidiaries maintain their accounts and records in accordance with the
provisions set forth in the Commercial Code of Japan (the “Code”), the Japanese Securities and Exchange Law and its related accounting reg-
ulations and in conformity with accounting principles generally accepted in Japan, which are different in certain respects as to application
and disclosure requirements of International Financial Reporting Standards. The accounts o f overseas subsidiaries are based on their account-
ing records maintained in co nformity with generally accepted accounting principles prevailing in the respective countries of domicile.
The accompanying consolidated financial statements are a translation of the audited consolidated financial statements of the Company,
which were prepared in accordance with accounting principles and practices generally accepted in Japan, from the accounts and records
maintained by the Company and its consolidated subsidiaries and were filed with the appropriate Local Finance Bureau of the Ministry of
Finance as required by the Securities and Exchange Law. In preparing the accompanying consolidated financial statements, certain reclassifi-
cations have been made in the statutory Japanese language conso lidated financial statements in o rder to present them in a form that is more
familiar to readers outside Japan.
In the year ended March 31, 2005 , the Company did not adopt early the new accounting standard for impairment o f fixed assets
(“O pinion Concerning Establishment of Accounting Standard for Impairment o f Fixed Assets” issued by the Business Accounting Deliberation
Council on August 9 , 2002) and the implementation guidance for accounting standard for impairment o f fixed assets (the Financial
Acco unting Standard Implementation G uidance No. 6 issued by the Accounting Standards Board of Japan on O ctober 31, 2003). Although
the new accounting standard is required to be adopted effective April 1, 2005, the Company believes that adoption of this new accounting
standard will have no material impact o n its financial statements.
The translatio n of the Japanese yen amounts into U.S. dollars are included solely for the convenience of readers outside Japan, using the
exchange rate of ¥1 10 to US$1.0 0 . The convenience translations should not be construed as representations that the Japanese yen amounts
have been, could have been, or could in the future be, converted into U.S. do llars at this or any other rate of exchange.
(b) PRINCIPLES O F CO NSO LIDATIO N AND ACCO UNTING FO R INVESTMENTS IN UNCONSO LIDATED SUBSIDIARIES AND AFFILIATES
The accompanying consolidated financial statements include the accounts of the Company and its significant subsidiaries. All significant inter-
company balances and transactions have been eliminated in the conso lidation.
The Company consolidates all significant investees which were controlled through substantial ownership of majority voting rights or exis-
tence o f certain conditions.
Investments in certain unconso lidated subsidiaries and affiliated companies in which the Company has significant influence, but less than
a controlling interest, are accounted for using the equity method. Investments in companies in which the Company does not have significant
influence are accounted for at cost. The differences between acquisition cost and underlying net equity at the time of acquisition (“consoli-
dated adjustment accounts”) are generally being amortized on the straight-line method in the range of five to 2 0 years.
Consolidated adjustment accounts, formerly included in lease deposits and other, is sho wn as an independent item. Amount of conso li-
dated adjustment accounts included in lease deposits and other in fiscal 20 0 4 is ¥3,16 2 million.
In the second half of this fiscal year, ITX Corpo ration and its subsidiaries that were previously accounted for by the equity method became
new consolidated subsidiaries of the Company due to the additional acquisition of stock.
(c) CASH AND CASH EQ UIVALENTS
In preparing the consolidated statements o f cash flows, cash on hand, readily-available deposits and short-term highly liquid investments with
maturities not exceeding three months at the time of purchase are considered to be cash and cash equivalents.
(d) MARKETABLE AND INVESTMENT SECURITIES
In accordance with the accounting standard for financial instruments, the Company and its consolidated subsidiaries examined the intent of
holding securities and classified those securities into four categories.
Held-to-maturity debt securities are stated at amortized co st. Equity securities issued by non-consolidated subsidiaries and affiliated com-
panies are stated at moving-average cost. Available-for-sale securities with fair market values are stated at fair market value, and those with
no fair market values at moving-average cost. Unrealized gains and lo sses on these securities are reported, net of applicable income taxes,
as a separate component of the shareholders’ equity. Realized gain on sale of such securities is computed using the mo ving-average cost.
(e) INVENTO RIES
Inventories are principally stated at the lo wer of cost (first-in first-out) or market.
(f) PRO PERTY, PLANT AND EQUIPMENT
Property, plant and equipment are stated at co st. Depreciation is mainly computed by the declining balance method at rates based on the
estimated useful lives of the relevant assets. The effective annual rates of depreciation as of March 31, 200 5 , 2004 and 2003 were as
follows:
2005 2004 2003
Buildings and structures ........................................................................................... 12.2% 8.0% 6.5%
Machinery and equipment........................................................................................ 33.9% 29.9% 28.9%
N O TES TO THE CON SO LIDATED FIN AN CIAL STATEMEN TS
O lympus Corpo ration and Consolidated Subsidiaries