Olympus 2011 Annual Report Download - page 42

40 OLYMPUS 2011
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.
Effective April 1, 2008, the Company adopted the "Practical Solution on Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements" (PITF No.18). In accordance with PITF No.18, the accompanying consolidated financial
statements for the years ended March 31, 2011, 2010 and 2009 have been prepared by using, the accounts of foreign consolidated
subsidiaries prepared in accordance with either International Financial Reporting Standards (IFRS) or accounting principles generally
accepted in the United States as adjusted for certain items including those for goodwill, actuarial differences and capitalized development
costs. Prior to the year ended March 31, 2009, the accounts of foreign consolidated subsidiaries had been 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 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 ¥80 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, 2011, the accounts of 179 (167 in 2010, and 189 in 2009) 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.
The financial statements of some subsidiaries are consolidated by using their financial statements as of the parent fiscal year end
which are prepared solely for consolidation purposes. Some subsidiaries are consolidated using their financial statements as of their
respective fiscal year end, which falls on December 31 and necessary adjustments are made to their financial statements to reflect
any significant transactions from January 1 to March 31. All significant intercompany balances and transactions have been eliminated
in consolidation. 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, 2011, 4 (7 in 2010, and 18 in 2009) affiliates and 0 (1
in 2010, and 2 in 2009) unconsolidated subsidiaries were accounted for by the equity method. Investments in subsidiaries and affiliates which
are not consolidated or accounted for by the equity method are carried at cost or less. 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 and subject to little risk of change in value 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 values are stated at fair value and those with no fair
values at cost. Unrealized gains and losses on vailable-for-sale securities are reported, net of applicable income taxes, as a separate
component of net assets. Realized gain or less on sale of securities is computed using the moving-average cost method.
(e) DERIVATIVE AND HEDGE ACCOUNTING
Accounting standard for financial instruments requires companies to state derivative financial instruments at fair value and to recognize
changes in the fair value as gains and losses unless derivative financial instruments meet the criteria for hedge accounting.
If derivative financial instruments are used as hedges and meets hedging criteria, the Company and consolidated subsidiaries defer
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.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Olympus Corporation and Consolidated Subsidiaries