Pioneer 2010 Annual Report Download - page 34

Derivative financial instruments and foreign currency
transactions are classified and accounted for as follows: a) all
derivatives are recognized as either assets or liabilities and
measured at fair value, and gains or losses on derivative
transactions are recognized in the statements of operations
and b) for derivatives used for hedging purposes, if deriva-
tives qualify for hedge accounting because of high correlation
and effectiveness between the hedging instruments and the
hedged items, gains or losses on derivatives are deferred
until maturity of the hedged transactions.
The foreign currency forward contracts, currency options
and currency swaps are utilized to hedge foreign currency
exposures in export sales and procurements from overseas
suppliers. Trade receivables and trade payables denominated
in foreign currencies are translated at the contracted rates if
the foreign currency forward contracts, currency options and
currency swaps qualify for hedge accounting.
r. Per Share Information
Basic net income (loss) per share is computed by dividing net
income (loss) available to common shareholders by the
weighted-average number of shares of common stock out-
standing for the period, after deduction of treasury stock,
retroactively adjusted for stock splits. Diluted net income
(loss) per share is not disclosed because of the Group’s net
loss position.
Cash dividends per share presented in the accompanying
consolidated statements of operations are dividends appli-
cable to the respective years including dividends to be paid
after the end of the year.
s. New Accounting Pronouncements
Business Combinations—
In December 2008, the ASBJ issued a revised accounting
standard for business combinations, ASBJ Statement No. 21,
“Accounting Standard for Business Combinations.” Major
accounting changes under the revised accounting standard
are as follows:
(1) The current accounting standard for business combinations
allows companies to apply the pooling of interests method
of accounting when certain specific criteria are met such
that the business combination is essentially regarded as a
uniting-of-interests. The revised standard requires to
account for such business combination by the purchase
method, and the pooling of interests method of accounting
is no longer allowed.
(2) The current accounting standard requires that the research
and development costs be charged to income as incurred.
Under the revised standard, an in-process research and
development (IPR&D) acquired by the business combina-
tion is capitalized as an intangible asset.
(3) The current accounting standard accounts for a bargain
purchase gain (negative goodwill) to be systematically
amortized within 20 years. Under the revised standard, the
acquirer recognizes a bargain purchase gain in profit or loss
on the acquisition date after reassessing whether it has
correctly identified all of the assets acquired and all of the
liabilities assumed with a review of such procedures used.
This standard is applicable to business combinations
undertaken on or after April 1, 2010 with early adoption
permitted for fiscal years beginning on or after April 1, 2009.
Asset Retirement Obligations—
In March 2008, the ASBJ published a new accounting stan-
dard for asset retirement obligations, ASBJ Statement No. 18
“Accounting Standard for Asset Retirement Obligations” and
ASBJ Guidance No. 21 “Guidance on Accounting Standard for
Asset Retirement Obligations.” Under this accounting stan-
dard, an asset retirement obligation is defined as a legal
obligation imposed either by law or contract that results from
the acquisition, construction, development and the normal
operation of a tangible fixed asset and is associated with the
retirement of such tangible fixed asset.
The asset retirement obligation is recognized as the sum
of the discounted cash flows required for the future asset
retirement and is recorded in the period in which the obliga-
tion is incurred if a reasonable estimate can be made. If a
reasonable estimate of the asset retirement obligation cannot
be made in the period the asset retirement obligation is
incurred, the liability should be recognized when a reasonable
estimate of asset retirement obligation can be made. Upon
initial recognition of a liability for an asset retirement obliga-
tion, an asset retirement cost is capitalized by increasing the
carrying amount of the related fixed asset by the amount of
the liability. The asset retirement cost is subsequently
allocated to expense through depreciation over the remaining
useful life of the asset. Over time, the liability is accreted to
its present value each period. Any subsequent revisions to
the timing or the amount of the original estimate of undis-
counted cash flows are reflected as an increase or a decrease
in the carrying amount of the liability and the capitalized
amount of the related asset retirement cost. This standard is
effective for fiscal years beginning on or after April 1, 2010
with early adoption permitted for fiscal years beginning on or
before March 31, 2010.
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PIONEER CORPORATION Annual Report 2010