Pioneer 2014 Annual Report Download - page 34

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 undiscounted 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.
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 ap-
plies 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 an operat-
ing lease.
p. Income Taxes
The provision for income taxes is computed based
on the pretax income included in the consolidated
statement of operations. The asset and liability ap-
proach 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 allow-
ance is established to reduce deferred tax assets if
they are not considered to be recoverable.
are effective for the beginning of annual periods begin-
ning on or after April 1, 2014, or for the beginning
of annual periods beginning on or after April 1, 2015,
subject to certain disclosure in March 2015, both with
earlier application being permitted from the begin-
ning of annual periods beginning on or after April 1,
2013. However, no retrospective application of this
accounting standard to consolidated financial state-
ments in prior periods is required.
The Company applied the revised accounting stan-
dard and guidance for retirement benefits for (a) and
(b) above, effective March 31, 2014. As a result, “Pen-
sion adjustments recognized by foreign consolidated
subsidiaries” among “Accumulated other compre-
hensive income (loss)” of ¥(3,332) million ($(32,350)
thousand) was included in “Defined retirement benefit
plans” as of March 31, 2014. In addition, “Accrued
pension and severance costs” of ¥34,585 million
($335,777 thousand) was recorded as of March 31,
2014, and “Accumulated other comprehensive income
(loss)” for the year ended March 31, 2014, decreased
by ¥20,235 million ($196,456 thousand).
The Company expects to apply the revised accounting
standard for (c) above from April 1, 2014, and is in
the process of measuring the effects of applying the
revised accounting standard for (c) above in future
applicable periods.
m. Asset Retirement Obligations
In March 2008, the ASBJ published ASBJ Statement
No. 18 “Accounting Standard for Asset Retirement
Obligations” and ASBJ Guidance No. 21 “Guidance
on Accounting Standard for Asset Retirement Obli-
gations.” Under this accounting standard, 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 as-
sociated 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 obligation is incurred if a reason-
able 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 reason-
able estimate of asset retirement obligation can be
made. Upon initial recognition of a liability for an as-
set retirement obligation, 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
32 Pioneer Corporation
Annual Report 2014