Pioneer 2012 Annual Report Download - page 34

and the capitalized amount of the related asset
retirement cost.
n. 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 1–3 years, while
software used by the Group 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.
o. Leases
Depreciation method for lease assets involving
finance lease transactions of which the ownership
is transferred to lessees is the same as that which
applies to property, plant and equipment owned by
the Company.
Depreciation method for lease assets involving
finance lease transactions of which the ownership is
not transferred to lessees is the straight-line method
with their residual values being zero over their leased
periods used as the number of years for useful life.
In March 2007, the ASBJ issued ASBJ Statement
No. 13, “Accounting Standard for Lease Transactions,”
which revised the former accounting standard for
lease transactions issued in June 1993, and ASBJ
Guidance No. 16, “Guidance on Accounting Standard
for Lease Transactions,” which revised the former
Guidance issued in January 1994. The adoption of the
revised accounting standard was permitted for fiscal
years beginning on or after April 1, 2008.
All other leases are accounted for as operating
leases.
p. Income Taxes
The provision for income taxes is computed based
on the pretax income included in the consolidated
statements of income. The asset and liability
approach is used to recognize deferred tax
assets and liabilities for the expected future tax
consequences of temporary differences between
the carrying amounts and the tax bases of assets
and liabilities. Deferred taxes are measured by
applying currently enacted tax laws to the temporary
differences. A valuation allowance is established to
reduce deferred tax assets if they are not considered
to be recoverable.
q. Foreign Currency Translations
All short-term and long-term monetary receivables
and payables denominated in foreign currencies are
translated into Japanese yen at the exchange rates at
the balance sheet date. The foreign exchange gains
and losses from translation are recognized in the
consolidated statement of income to the extent that
they are not hedged by forward exchange contracts.
r. Foreign Currency Financial Statements
The balance sheet accounts of the foreign
consolidated subsidiaries are translated into
Japanese yen at the current exchange rate as of
the balance sheet date except for equity, which is
translated at the historical rate. Differences arising
from such translations were shown as “Foreign
currency translation adjustments” in a separate
component of equity. Revenue and expense
accounts of consolidated foreign subsidiaries are
translated into yen at the average exchange rate.
s. Derivatives and Hedging Activities
The Group uses derivative financial instruments
to manage its exposures to fluctuations in foreign
exchange and interest rates. Foreign exchange
forward contracts and currency swaps are utilized
by the Group to reduce foreign currency exchange
and interest rate risks associated with assets and
liabilities denominated in foreign currencies and
debt obligations. The Group does not enter into
derivatives for trading or speculative purposes.
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 consolidated statement of income
and b) for derivatives used for hedging purposes,
if such derivatives 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.
t. Per Share Information
Basic net income per share is computed by dividing
net income available to common shareholders by
the weighted-average number of shares of common
stock outstanding for the period, after deduction of
treasury stock, retroactively adjusted for stock splits.
Diluted net income per share for the year ended
March 31, 2012, is not disclosed as there were
no potentially dilutive securities for the year ended
March 31, 2012.
32 Pioneer Corporation Annual Report 2012