Olympus 2007 Annual Report Download - page 38

36 OLYMPUS 2007
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
Olympus Corporation (the ”Company”) and its consolidated domestic subsidiaries maintain their accounts and records in accordance with the
provisions set forth in the Japanese Securities and Exchange Law and its related accounting regulations and in conformity with accounting
principles generally accepted in Japan (“Japanese GAAP”), which are different in certain respects as to application and disclosure require-
ments of International Financial Reporting Standards. The accounts of overseas subsidiaries are based on their accounting records maintained
in conformity 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 (with certain expanded disclosure and the inclusion of the consolidated statements of shareholders’ equity for 2006 and 2005) have
been made in the statutory Japanese language consolidated financial statements in order to present them in a form that is more familiar to
readers outside Japan.
The consolidated balance sheet as of March 31, 2007, which has been prepared in accordance with the new accounting standard as dis-
cussed in Note 2(e), is presented with the consolidated balance sheet as of March 31, 2006 prepared in accordance with the previous presen-
tation rules. Also, as discussed in Note 2(f), the consolidated statement of changes in net assets for the year ended March 31, 2007 has been
prepared in accordance with the new accounting standard. The accompanying consolidated statements of shareholder’s equity for the years
ended March 31, 2006 and 2005 were voluntarily prepared for the purpose of inclusion in the consolidated financial statements, although
such statements were not required to be filed with the Local Finance Bureau.
The translation of the Japanese yen amounts into U.S. dollars is included solely for the convenience of readers outside Japan, using the
exchange rate of ¥120 to US$1.00. 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. dollars at this or any other rate of exchange.
(b) PRINCIPLES OF CONSOLIDATION AND ACCOUNTING FOR INVESTMENTS IN UNCONSOLIDATED 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 consolidation.
The Company consolidates all significant investees which were controlled through substantial ownership of majority voting rights or exis-
tence of certain conditions.
Investments in certain unconsolidated 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 influ-
ence are accounted for at cost. The differences between acquisition cost and underlying net equity at the time of acquisition (“goodwill” for the
year ended March 31, 2007 and “consolidated adjustment accounts” for the year ended March 31, 2006) are generally being amortized on
the straight-line method in the range of mainly 5 to 20 years. In the consolidated balance sheet as of March 31, 2007, consolidation adjustment
account identified as of March 31, 2006 is recorded as goodwill.
In the second half of fiscal 2005, ITX Corporation 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 EQUIVALENTS
In preparing the consolidated statements of 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.
In the year ended March 31, 2006, Amortization of consolidated adjustment accounts, formerly included in other of cash flows from oper-
ating activities, is shown as an independent item. Amount of amortization of consolidated adjustment accounts included in other of cash flows
from operating activities in fiscal 2005 is ¥3,053 million.
In the year ended March 31, 2006, Increase (decrease) in other payable, formerly shown as an independent item, is included in other of
cash flows from operating activities. Amount of increase (decrease) in other payable included in other of cash flows from operating activities
in fiscal 2006 is ¥176 million.
In the year ended March 31, 2007, Amortization of consolidated adjustment accounts and goodwill are shown as “Amortization of good-
will” on the cash flow statement. Amount of amortization of goodwill included in depreciation and amortization expenses in fiscal 2006 was
¥213 million.
In the year ended March 31, 2007, Increase (decrease) in provision for product warranties, formerly included in other of cash flows from
operating activities, is shown as an independent item. The amount of Increase (decrease) in provision for product warranties included in other
of cash flows from operating activities in fiscal 2006 was ¥1,345 million.
Notes to the Consolidated Financial Statements
Olympus Corporation and Consolidated Subsidiaries