Olympus 2008 Annual Report Download - page 43

OLYMPUS 2008 41
(g) Property, Plant and Equipment
Property, plant and equipment are stated at cost. 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, 2008, 2007 and 2006 were as follows:
2008 2007 2006
Buildings and structures .............................................................................................. 10.4% 7.9% 8.7%
Machinery and equipment ............................................................................................ 39.5% 32.0% 33.0%
(h) Allowance for Doubtful Accounts
The Company and consolidated subsidiaries provide allowance for doubtful accounts in an amount sufficient to cover probable losses on
collection. It consists of the estimated uncollectible amount with respect to certain identified doubtful receivables and an amount calcu-
lated using the actual percentage of collection losses.
(i) Pension and Retirement Allowance Plans
Employees of the Company, certain domestic consolidated subsidiaries and foreign consolidated subsidiaries are covered by funded pension plans.
Employees of domestic consolidated subsidiaries, directors and corporate auditors of the Company and several domestic consolidated
subsidiaries are covered primarily by unfunded retirement allowance plans.
According to the approval at the Company’s Annual Shareholders’ Meeting on June 29, 2006, the Company terminated the policy relating
to retirement benefits to directors and corporate auditors of the Company.
The amounts of pension payments and retirement allowances are generally determined on the basis of length of service and basic sal-
ary at the time of termination of service.
It is the Company’s policy to fund amounts required to maintain sufficient plan assets to provide for accrued benefits based on a cer-
tain percentage of wage and salary costs. The plan assets consist principally of interest-bearing bonds and listed equity securities.
The Company and its consolidated subsidiaries provided allowance for employees’ severance and retirement benefits at March 31, 2008
based on the amounts of projected benefit obligation and the fair value of the plan assets at that date. Allowance for employees’ severance
and retirement benefits was included in the liability section of the consolidated balance sheets together with severance and retirement
allowance for directors and corporate auditors as of March 31, 2008, 2007 and 2006.
(j) Research and Development
Expenses relating to research and development activities are charged to income as incurred. Total amounts charged to income were
¥65,928 million ($627,886 thousand), ¥55,531 million and ¥45,935 million for the years ended March 31, 2008, 2007 and 2006, respectively.
(k) Certain Lease Transactions
Finance leases that do not transfer titles to lessees are accounted for in the same manner as operating leases.
(l) Income Taxes
The Company adopts the accounting standard that recognizes tax effects of temporary differences between the financial statement car-
rying amounts and the tax basis of assets and liabilities. The provision for income taxes is computed based on the pretax income included
in the consolidated statements of income. The asset and liability approach is used to recognize deferred tax assets and liabilities for the
expected future tax consequences of temporary differences.
In the year ended March 31, 2007, the Company adopted the consolidated taxation system designating Olympus Corporation as the par-
ent company. Some subsidiaries have applied the consolidated taxation system since before.
(m) Amounts per Share
Basic earnings per share (EPS) is computed by dividing income available to common shareholders by the weighted-average number of
common shares outstanding for each fiscal year. Diluted EPS is similar to basic EPS except that the weighted-average of common shares
outstanding is increased by the number of additional common shares that would have been outstanding if the potentially dilutive common
shares had been issued. For the year ended for March 31, 2008, there were dilutive potential common shares which have resulted in a dilu-
tive effect. Accordingly, the Company’s dilutive net income per share were ¥214.44 (US$ 2.042). For the years ended for March 31 2007 and
2006, there were no dilutive common shares which have resulted in a dilutive effect. Accordingly, the Company’s basic and dilutive earn-
ings per share computations were the same for the periods presented.
Cash dividends per common share are the amounts applicable to the respective periods.
(n) Translation of Foreign Currency Financial Statements
In accordance with the accounting standards for foreign currency translations, assets and liabilities denominated in foreign functional
currencies are translated at exchange rates at the balance sheet date. Shareholders’ equity accounts are translated at historical exchange
rates. Revenues and expenses denominated in foreign functional currencies are translated at average exchange rates for each correspond-
ing fiscal year. Differences arising from translation are presented as “Foreign currency translation adjustments” in a separate component
of net assets as of March 31, 2008 and 2007, and of shareholders’ equity as of March 31, 2006.