Ricoh 1999 Annual Report Download - page 39

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which revised SFAS No. 87 for disclosures about pension and retirement
allowance plans. For comparative purposes, the related 1998 disclosures have
been restated to conform with the 1999 presentation. The disclosures
required by SFAS No. 132 are presented in Note 10.
(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 foreign
subsidiaries and affiliates, except for those deemed to be permanent
investments.
(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 eventual 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 comparison, 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
Ricoh conforms with SFAS No. 128, “Earnings Per Share,” which establishes
standards for computing and presenting earnings per share (EPS) and requires
a dual presentation of basic and diluted EPS.
(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 11).
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 maturity
of three months or less at date of purchase.
Millions of yen
Conversion of
convertible bonds
Capital lease obligations
incurred
Assets and liabilities of Ricoh
Elemex Corporation
Fair value of assets acquired
Liabilities assumed
Thousands of
U.S. dollars
1999
$480
11,950
459,777
271,289
1999
¥58
1,446
55,633
32,826
¥ 41,348
1,760
—
—
¥ 4,578
364
—
—
19981997
The following noncash transactions have been excluded from the consol-
idated statements of cash flows:
(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) Comprehensive Income
In the year ended March 31, 1999, Ricoh adopted SFAS No. 130, “Reporting
Comprehensive Income,” which establishes standards for reporting and
displaying comprehensive income and its components. The disclosures
required by SFAS No. 130 are presented in the consolidated statements
of shareholders’ investment and in Note 12. The consolidated financial
statements previously presented have been reclassified to conform with the
provisions of SFAS No. 130.
(q) New Accounting Standards
In June 1998, the Financial Accounting Standards Board issued SFAS No.
133, “Accounting for Derivative Instruments and Hedging Activities,” which
establishes accounting and reporting standards for derivative instruments. It
requires an entity to recognize all derivatives as either assets or liabilities in
the Consolidated Balance Sheets and measure those instruments at fair value.
Adjustments in the fair value will impact shareholders’ investment through
either net income or other comprehensive income, depending on whether
the derivative instruments qualify as hedges and, if so, the nature of the
hedging activity. SFAS No. 133 is effective for fiscal years beginning after
June 15, 1999, however, the Proposed Statement of Financial Accounting
Standards, “Accounting for Derivative Instruments and Hedging Activities—
Deferral of the Effective Date of FASB Statement No. 133,” was issued on
May 20, 1999, to defer the effective date of SFAS No. 133 to fiscal years
beginning after June 15, 2000. Ricoh has not determined the effect on the
consolidated financial statements.
In March 1998, the American Institute of Certified Public Accountants
issued Statement of Position 98-1 (“SOP 98-1”), “Accounting for the Costs
of Computer Software Developed or Obtained for Internal Use.” Effective
April 1, 1999, it requires Ricoh to capitalize the costs of computer software
for internal use if certain criteria are met. Previously, Ricoh expensed all such
costs.