Olympus 2009 Annual Report Download - page 41

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1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTING CONSOLIDATED FINANCIAL STATEMENTS
The accompanying consolidated financial statements of Olympus Corporation (the “Company”) and its consolidated subsidiaries have
been prepared in accordance with the provisions set forth in the Japanese Financial Instruments 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 requirements from International Financial Reporting Standards.
Prior to the year ended March 31, 2009, the accounts of consolidated overseas subsidiaries are based on their accounting records main-
tained in conformity with generally accepted accounting principles prevailing in the respective countries of domicile.
The accompanying consolidated financial statements have been reformatted and translated into English (with some expanded
descriptions) from the consolidated financial statements of the Company prepared in accordance with Japanese GAAP and filed with the
appropriate Finance Bureau of the Ministry of Finance as required by the Financial Instruments and Exchange Law. Certain supplementary
information included in the statutory Japanese language consolidated financial statements is not presented in the accompanying
consolidated financial statements.
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 ¥95 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. For the year
ended March 31, 2009, the accounts of 189 (205 in 2008) subsidiaries have been included in the consolidated financial statements. 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
existence of certain conditions.
Gyrus Group Limited and other subsidiaries, whose accounting settlement date had been December 31, changed their settlement
date to March 31 for the year ended March 31, 2009. Consequently, their statements of operations were consolidated for 14 months (from
February 1, 2008 to March 31, 2009) in fiscal 2009.
Investments in certain unconsolidated subsidiaries and affiliated companies in which the Company has significant influence, but less
than a controlling interest, are accounted for by the equity method. For the year ended March 31, 2009, 20 (15 in 2008) affiliates were
accounted for by 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 (“goodwill”) are generally being
amortized on the straight-line method in the range of mainly 5 to 20 years.
(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.
(d) 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 cost. Equity securities issued by non-consolidated subsidiaries and affiliated
companies 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 losses on these securities are reported, net of applicable
income taxes, as a separate component of net assets. Realized gain on sale of such securities is computed using the moving-average cost
method.
(e) DERIVATIVE AND HEDGE ACCOUNTING
The accounting standard for financial instruments requires companies to state derivative financial instruments at fair value and to recog-
nize changes in the fair value as gains and losses unless derivative financial instruments are used for hedging purposes.
If derivative financial instruments are used as hedges and meets hedging criteria, the Company and consolidated subsidiaries defer the
recognition of gains and losses resulting from changes in fair value of derivative financial instruments until the related losses and gains on
the hedged items are recognized.
(f) INVENTORIES
Prior to April 1, 2008, inventories were stated at the lower of cost (first-in-first-out) or market. As discussed in Note 2 (d), effective April
1, 2008, the Company adopted a new accounting standard for measurement of inventories and stated the inventories at the lower of cost
(first-in-first-out) or net realizable value at March 31, 2009.
Notes to the Consolidated Financial Statements
Olympus Corporation and Consolidated Subsidiaries