Pioneer 2012 Annual Report Download - page 31

Notes to Consolidated Financial Statements
Pioneer Corporation and Subsidiaries
a. Basis of Consolidated Financial Statements
The accompanying consolidated financial statements
have been prepared in accordance with the provisions
set forth in the Japanese Financial Instruments and
Exchange Act 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 the application and
disclosure requirements of International Financial
Reporting Standards.
In preparing these consolidated financial
statements, certain reclassifications and
rearrangements have been made to the consolidated
financial statements issued in Japan in order to
present them in a form which is more familiar
to readers outside Japan. In addition, certain
reclassifications have been made in the 2011
consolidated financial statements to conform to the
classifications used in 2012.
The consolidated financial statements are stated
in Japanese yen, the currency of the country in which
Pioneer Corporation (Pioneer Kabushiki Kaisha;
the “Company”) is incorporated and operates. The
translations of Japanese yen amounts into U.S. dollar
amounts are included solely for the convenience
a. Consolidation
The consolidated financial statements as of March
31, 2012, include the accounts of the Company and
its 93 (97 in 2011) subsidiaries.
Under the control or influence concept, those
companies in which the Company, directly or
indirectly, is able to exercise control over operations
are fully consolidated, and those companies over
which the Group has the ability to exercise significant
influence are accounted for by the equity method.
Investments in six (five in 2011) associated
companies are accounted for by the equity method.
The excess of cost of an acquisition over the fair
value of the net assets of an acquired subsidiary at the
date of acquisition is being amortized over 20 years.
All significant intercompany balances and
transactions have been eliminated in consolidation. All
material unrealized profit included in assets resulting
from transactions within the Group is also eliminated.
1. Basis of Presentation
2. Summary of Significant Accounting Policies
of readers outside Japan and have been made at
the rate of ¥82 to $1.00, the approximate rate of
exchange at March 31, 2012. Such translations
should not be construed as representations that the
Japanese yen amounts could be converted into U.S.
dollars at that or any other rate.
b. Nature of Operations
The Company and its subsidiaries (together,
the “Group”) are engaged in the development,
manufacture and sale of electronic products. The
Group is a leading global manufacturer of consumer-
and business-use electronic products such as car
electronics and audio/video. The principal production
activities of the Group are carried out in Asia including
Japan, and the United States. The Group’s products
are generally sold under its own brand names,
principally “Pioneer.” The Group sells its products
to customers in consumer and commercial markets
through its sales offices in Japan, and its sales
subsidiaries and independent distributors overseas.
On an OEM (original equipment manufacturing) basis,
the Group markets certain products, such as car
electronics products, to other companies.
b. Unification of Accounting Policies Applied
to Foreign Subsidiaries for the Consolidated
Financial Statements
In May 2006, the Accounting Standards Board of
Japan (the “ASBJ”) issued ASBJ Practical Issues
Task Force (PITF) No. 18, “Practical Solution on
Unification of Accounting Policies Applied to Foreign
Subsidiaries for Consolidated Financial Statements.”
PITF No. 18 prescribes: (1) the accounting policies
and procedures applied to a parent company and
its subsidiaries for similar transactions and events
under similar circumstances should in principle
be unified for the preparation of the consolidated
financial statements, (2) financial statements
prepared by foreign subsidiaries in accordance with
either International Financial Reporting Standards or
the generally accepted accounting principles in the
United States of America tentatively may be used for
the consolidation process, (3) however, the following
items should be adjusted in the consolidation
process so that net income (loss) is accounted for in
accordance with Japanese GAAP unless they are not
material: 1) amortization of goodwill; 2) scheduled
amortization of actuarial gain or loss of pensions that
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Pioneer Corporation Annual Report 2012