Pioneer 2016 Annual Report Download - page 33

replaced the accounting standard for retirement ben-
efits that had been issued by the Business Accounting
Council in 1998 with an effective date of April 1, 2000,
and the other related practical guidance, and were
followed by partial amendments from time to time
through 2009.
(a) Under the revised accounting standard, actuarial
gains and losses and past service costs that are yet
to be recognized in profit or loss are recognized within
equity (“Accumulated other comprehensive income”),
after adjusting for tax effects, and any resulting defi-
cit or surplus is recognized as a liability (“Accrued
pension and severance costs”) or asset (“Net defined
benefit asset”).
(b) The revised accounting standard does not change
how to recognize actuarial gains and losses and past
service costs in profit or loss. Those amounts are
recognized in profit or loss over a certain period no
longer than the expected average remaining service
period of the employees. However, actuarial gains
and losses and past service costs that arose in the
current period and have not yet been recognized in
profit or loss are included in other comprehensive
income, and actuarial gains and losses and past
service costs that were recognized in other compre-
hensive income in prior periods and then recognized
in profit or loss in the current period shall be treated
as reclassification adjustments.
(c) The revised accounting standard also made
certain amendments relating to the method of attrib-
uting expected benefit to periods and relating to the
discount rate and expected future salary increases.
This accounting standard and the guidance for (a) and
(b) above are effective for the end of annual periods
beginning on or after April 1, 2013, and for (c) above
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 beginning
of annual periods beginning on or after April 1, 2013.
However, no retrospective application of this account-
ing standard to consolidated financial statements 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, and for (c) above,
effective April 1, 2014.
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 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
obligation 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 the asset
retirement obligation can be made. Upon initial rec-
ognition of a liability for an asset 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 to expense through deprecia-
tion 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 soft-
ware for internal use 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
The 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.
The depreciation method for lease assets involv-
ing 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.
31
Pioneer Corporation Annual Report 2016