Olympus 2009 Annual Report Download - page 43

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(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.
2. CHANGES IN ACCOUNTING POLICIES
(a) ACCOUNTING STANDARDS FOR BONUSES TO DIRECTORS AND CORPORATE AUDITORS
In the year ended March 31, 2007, the Company has adopted new accounting standards for the bonuses to directors and corporate auditors
in accordance with “Accounting Standards for the Bonuses to Directors” (Corporate Accounting Standard No. 4 regarding the bonuses to
directors and corporate auditors issued on November 29, 2005).
The effect on net income of the adoption of this new accounting standard was not material.
(b) CHANGE IN ACCOUNTING STANDARDS FOR RETIREMENT BENEFITS IN THE UNITED STATES ADOPTED BY CONSOLIDATED
SUBSIDIARIES IN THE UNITED STATES
In the year ended March 31, 2007, consolidated subsidiaries in the United States, have adopted a new accounting standard for retirement
benefits in the United States.
The effect of this change was to decrease retained earnings by ¥2,443 million since the unrecognized actuarial difference amounting to
¥2,443 million was directly charged to retained earnings for the year ended March 31, 2007. The adoption of this new accounting standard
had no impact on net income.
(c) DEPRECIATION OF FIXED ASSETS
In accordance with the changes of tax code introduced in the 2007 tax reform (Law Concerning Partial Revision of the Income Tax Law (Law
No. 6, March 30, 2007) and the Law Concerning Partial Revision of the Enforcement Regulations of the Corporation Tax Law (Government
Ordinance No. 83, March 30, 2007)), from the current fiscal year concerning the depreciation of tangible fixed assets acquired on and after
April 1, 2007, the method of computing depreciation expenses has been changed to the new regulation.
The effect which this change has on the consolidated statements of operations was not material.
(d) MEASUREMENT OF INVENTORIES
On July 5, 2006, the Accounting Standards Board of Japan issued ASBJ Statement No. 9, “Accounting Standard for Measurement of
Inventories.” Prior to April 1, 2008, the Company and consolidated domestic subsidiaries stated inventories at the lower of market or cost
determined by the first-in-first-out method. The new accounting standard requires that inventories held for sale in the ordinary course of
business be measured at the lower of cost or net realizable value (which is defined as selling price less estimated additional manufactur-
ing costs and estimated direct selling expenses). Replacement cost may be used in lieu of the net realizable value, if appropriate.
The effect which this change has on the consolidated statements of operations was not material.
(e) PRACTICAL SOLUTION ON UNIFICATION OF ACCOUNTING POLICIES APPLIED TO
FOREIGN SUBSIDIARIES FOR CONSOLIDATED FINANCIAL STATEMENTS
On May 17, 2006, the Accounting Standards Board of Japan issued Practical Issues Task Force No.18 “Practical Solution on Unification
of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (“PITF No. 18”). PITF No. 18 requires that
accounting policies and procedures applied by a parent company and its subsidiaries to similar transactions and events under similar
circumstances should, in principle, be unified for the preparation of the consolidated financial statements. PITF No. 18, however, as a
tentative measure, allows a parent company to prepare consolidated financial statements using foreign subsidiaries’ financial statements
prepared in accordance with either International Financial Reporting Standards or U.S. generally accepted accounting principles. In this
case, adjustments for the following six items are required in the consolidation process so that their impact on net income are accounted
for in accordance with Japanese GAAP unless the impact is not material.
(1) Goodwill not subject to amortization
(2) Actuarial gains and losses of defined-benefit retirement plans recognized outside profit or loss
(3) Capitalized expenditures for research and development activities
(4) Fair value measurement of investment properties, and revaluation of property, plant and equipment and intangible assets
(5) Retrospective treatment of a change in accounting policies
(6) Accounting for net income attributable to minority interests
As a result of adopting PITF No. 18, effective April 1, 2008, operating profit decreased by ¥134 million (US$ 1,411 thousand), loss before
provision for income taxes increased by ¥142 million (US$ 1,495 thousand) and net loss increased by ¥1,941 million (US$ 20,432 thousand)
respectively.