Olympus 2008 Annual Report Download - page 52

50 OLYMPUS 2008
Significant components of deferred income tax assets and liabilities as of March 31, 2008 and 2007 were as follows:
Thousands of
Millions of yen U.S. dollars
2008 2007 2008
Deferred income tax assets
Inventories ................................................................................................................. ¥ 9,123 ¥ 7,536 $ 86,886
Prepaid expenses....................................................................................................... 9,478 7,097 90,267
Accrued bonuses ....................................................................................................... 5,877 5,401 55,971
Unrealized intercompany profits ................................................................................ 8,019 7,205 76,371
Depreciation of property, plant and equipment .......................................................... 4,955 4,203 47,190
Depreciation of intangible assets ............................................................................... 11,340 12,631 108,000
Deferred assets ......................................................................................................... 436 257 4,152
Severance and retirement allowances ....................................................................... 3,164 3,126 30,133
Securities .................................................................................................................. 3,175 3,643 30,238
Deficit carried forward ............................................................................................... 16,223 11,499 154,505
Other ......................................................................................................................... 6,025 10,835 57,382
Subtotal ..................................................................................................................... 77,815 73,433 741,095
Allowance for evaluation ............................................................................................ (21,155) (21,475) (201,476)
Total deferred income tax assets ................................................................................. 56,660 51,958 539,619
Net unrealized holding gains on available-for-sale securities, net of taxes ................ (3,715) (8,787) (35,381)
Prepaid pension expenses ......................................................................................... (4,409) (3,390) (41,990)
Basis differences in assets acquired and liabilities assumed upon acquisition .......... (30,918) — (294,457)
Other ......................................................................................................................... (3,726) (7,154) (35,486)
Total deferred income tax liabilities ............................................................................. (42,768) (19,331) (407,314)
Net deferred income tax assets .................................................................................... ¥ 13,892 ¥ 32,627 $ 132,305
14. NET ASSETS
The Japanese Corporate Law (“the Law”) became effective on May 1, 2006, replacing the Japanese Commercial Code (“the Code”). The Law
is generally applicable to events and transactions occurring after April 30, 2006 and for fiscal years ending after that date.
Under Japanese laws and regulations, the entire amount paid for new shares is required to be designated as common stock. However,
a company may, by a resolution of its board of directors, designate an amount not exceeding one-half of the price of the new shares as
additional paid-in capital, which is included in capital surplus.
Under the Law, in cases where a dividend distribution of surplus is made, the smaller of an amount equal to 10% of the dividend or the
excess, if any, of 25% of common stock over the total of additional paid-in capital and legal earnings reserve must be set aside as addi-
tional paid-in capital or legal earnings reserve. Legal earnings reserve is included in retained earnings in the accompanying consolidated
balance sheets.
Under the Code, companies were required to set aside an amount equal to at least 10% of the aggregate amount of cash dividends and
other cash appropriations as legal earnings reserve until the total of legal earnings reserve and additional paid-in capital equaled 25% of
common stock.
Under the Code, legal earnings reserve and additional paid-in capital could be used to eliminate or reduce a deficit by a resolution of
the shareholders’ meeting or could be capitalized by a resolution of the board of directors. Under the Law, both of these appropriations
generally require a resolution of the shareholders’ meeting.
Additional paid-in capital and legal earnings reserve may not be distributed as dividends. Under the Code, however, on condition that
the total amount of legal earnings reserve and additional paid-in capital remained equal to or exceed 25% of common stock, they were
available for distribution by resolution of the shareholders’ meeting. Under the Law, all additional paid-in capital and all legal earnings
reserve may be transferred to other capital surplus and other retained earnings, respectively, which are potentially available for dividends.
The maximum amount that the Company can distribute as dividends is calculated based on the non-consolidated financial statements
of the Company in accordance with Japanese laws and regulations.