Pioneer 2009 Annual Report Download - page 31

Annual Report 2009 29
g. Property, Plant and Equipment
Property, plant and equipment are stated at cost. Depreciation
of property, plant and equipment of the Company and its
domestic consolidated subsidiaries is computed principally
using the declining-balance method based on the estimated
useful lives of the assets, while the straight-line method is
applied to property, plant and equipment of foreign
consolidated subsidiaries (excluding leased property in 2009).
Property, plant and equipment of the Company and its
domestic consolidated subsidiaries acquired on and after April
1, 2007 are depreciated by the declining-balance method in
accordance with the revised corporate tax law, which is
effective for fiscal years beginning on or after April 1, 2007.
The effect of this change on the accompanying consolidated
financial statements is immaterial.
Property, plant and equipment of the Company and its
domestic consolidated subsidiaries had been depreciated up to
95% of acquisition cost with 5% of residual value carried until
previous fiscal years. However, such 5% portion of property,
plant and equipment is systematically amortized over five years
starting in the following year in which the carrying value of
property, plant and equipment reaches 5% of the acquisition
cost in accordance with the revised Corporate Tax Law.
The effect of this change on the accompanying
consolidated financial statements is immaterial.
h. Long-lived Assets
The Group reviews its long-lived assets for impairment
whenever events or changes in circumstance indicate that the
carrying amount of an asset or asset group may not be
recoverable. An impairment loss would be recognized if the
carrying amount of an asset or asset group exceeds the sum
of the undiscounted future cash flows expected to result from
the continued use and eventual disposition of the asset or
asset group. The impairment loss would be measured as the
amount by which the carrying amount of the asset exceeds its
recoverable amount, which is the higher of the discounted
cash flows from the continued use and eventual disposition of
the asset or the net selling price at disposition.
i. Stock Issuance Costs
Stock issuance costs are amortized by the straight-line
method over three years.
j. Warranty Reserve
Provisions for warranty costs are recognized at the date of
sale of the relevant products, at the best estimate of the
expenditure required to settle the Company’s after-sales
service obligation.
k. Retirement and Pension Plans
The Group sponsors both defined benefit pension plans and
defined contribution pension plans.
With respect to the defined benefit pension plan, the
Group accounts for the liability for retirement benefits based on
projected benefit obligations and plan assets at the balance
sheet date. Part of the changes in projected benefit obligations
and plan assets are not recognized when incurred, but
deferred and amortized on predetermined assumptions. Net
transitional obligation is being amortized in equal amounts
mainly over 15 years. Prior service cost is amortized using the
straight-line method over the average of the estimated
remaining service years (mainly 10 –15 years). Actuarial gain or
loss is primarily amortized using the straight-line method over
the average of the estimated remaining service years. The
Group records net periodic pension costs consisted of service
cost, interest cost, expected return on plan assets and
amortization of such deferred amounts.
With respect to the defined contribution plans, the Group
records net pension cost as the amount the contribution is
called for.
l. Research and Development Costs and
Intangible Assets
Research and development costs are charged to income as
incurred. Software for sale is amortized by the straight-line
method over 2– 3 years, while software used by the Company
is amortized by the straight-line method over the estimated
useful life of five years. Intangible assets other than software
are amortized using the straight-line method.