Ricoh 1998 Annual Report Download - page 38

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(g) Goodwill
Ricoh has classified as goodwill the cost in excess of fair value of the net
assets of major companies acquired in purchase transactions. Goodwill is
being amortized on a straight-line method over the estimated periods
benefited, not to exceed 20 years.
(h) Pension and Retirement Allowances Plans
Ricoh conforms with SFAS No. 87, “Employers’ Accounting for
Pensions,” in accounting for pension and retirement allowances plans.
(i) Income Taxes
Ricoh conforms with SFAS No. 109, “Accounting for Income Taxes,”
which requires an asset and liability approach for financial accounting and
reporting for income taxes.
Income taxes are currently provided for undistributed earnings of for-
eign subsidiaries and affiliates.
(j) Advertising
The costs of advertising are expensed as incurred.
(k) Impairment Loss on Long-Lived Assets
Ricoh conforms with SFAS No. 121, “Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of” in
accounting for impairment loss on long-lived assets and certain
identifiable intangibles. In performing the review for recoverability of
long-lived assets and certain identifiable intangibles, Ricoh estimates the
future cash flows expected to result from the use of the asset and its even-
tual disposition. An impairment loss is recognized if the sum of the
expected future cash flows (undiscounted and without interest charges) is
less than the carrying amount of the asset. For purposes of such compari-
son, portions of unallocated excess of cost over net assets acquired were
attributed to related long-lived assets and identifiable intangible assets,
based upon the relative fair values of such assets at acquisition.
Measurement of an impairment loss for long-lived assets and identifiable
intangibles is based on the fair value of the asset.
(l) Earnings Per Share
In the year ended March 31, 1998, Ricoh adopted SFAS No. 128, “Earn-
ings Per Share,” which establishes standards for computing and present-
ing earnings per share (EPS) and requires a dual presentation of basic and
diluted EPS. All EPS’s previously presented have been restated to con-
form to the provisions of SFAS No. 128.
(m) Accounting for Stock Splits
The stock splits of common stock made at various times have been
accounted for by transferring an amount equivalent to the par value of
such stocks from additional paid-in capital to common stock in the case of
capitalization by resolution of the Board of Directors. However, no
accounting recognition is made for stock splits when common stock
already includes a portion of the proceeds from shares issued at a price in
excess of par value (see Note 12).
In the United States, distributions of shares in comparable
circumstances are required to be accounted for by transferring from
retained earnings amounts equal to the fair market value of the shares
issued, and by increasing additional paid-in capital by the excess of the
market value over par value of the shares issued.
(n) Consolidated Statements of Cash Flows
Cash and cash equivalents include highly liquid investments with a matu-
rity of three months or less at date of purchase.
The following noncash transactions have been excluded from the
consolidated statements of cash flows:
Millions of yen
Conversion of
convertible bonds
Capital lease obligations
incurred
Assets and liabilities of Gestetner
Holdings PLC (see Notes 4 and 7):
Fair value of assets acquired
Liabilities assumed
Thousands of
U.S. dollars
1998
$313,243
13,333
—
—
(o) Use of Estimates
Management of the Company has made a number of estimates and
assumptions that affect the reported amounts of assets, liabilities, revenues
and expenses, and the disclosure of contingent assets and liabilities, to
prepare these financial statements in conformity with generally accepted
accounting principles. Actual results could differ from those estimates.
(p) Reclassifications
Minority interests which were previously included in the consolidated
statements of income under the caption “Other Expenses” have been
reclassified to “Minority Interests” for all periods presented. As a result of
this reclassification, both “Income before Income Taxes, Minority Interests
and Equity in Earnings of Affiliates” and “Income before Minority Interests
and Equity in Earnings of Affiliates” have been increased by ¥1,484 million
in 1996 and ¥2,186 million in 1997 from the amounts previously reported,
while net income and earnings per share have not been affected.
(q) New Accounting Standards
The Financial Accounting Standards Board issued SFAS No. 130,
“Reporting Comprehensive Income,” and SFAS No. 131, “Disclosure
About Segments of an Enterprise and Related Information,” in June 1997,
and SFAS No. 132, “Employers’ Disclosures about Pensions and Other
Post Retirement Benefits,” in February 1998. These standards will not af-
fect Ricoh’s financial position or results of operations as they only require
changes in or additions to current disclosures.
1998
¥41,348
1,760
—
—
¥4,578
364
—
—
¥ 731
223
122,254
100,211
19971996