Ricoh 2000 Annual Report Download - page 36

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(i) Income Taxes
Ricoh conforms with SFAS No. 109, “Accounting for Income Taxes,” which re-
quires 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 per-
forming 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 com-
parison, portions of unallocated excess of cost over net assets acquired were at-
tributed to related long-lived assets and identifiable intangible assets, based upon
the relative fair values of such assets at acquisition. Measurement of an impair-
ment loss for long-lived assets and identifiable intangibles is based on the fair val-
ue of the asset.
(l) Earnings Per Share
Ricoh conforms with SFAS No. 128, “Earnings Per Share,” which establishes stan-
dards 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 addi-
tional 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 is-
sued.
(n) Consolidated Statements of Cash Flows
Cash and cash equivalents include highly liquid investments with a maturity of
three months or less at the date of purchase.
The following noncash transactions have been excluded from the consolidat-
ed statements of cash flows:
Millions of yen
Conversion of
convertible bonds
Capital lease obligations
incurred
Transfer of securities
to pension fund
Assets and liabilities of Ricoh
Elemex Corporation
Fair value of assets acquired
Liabilities assumed
Thousands of
U.S. dollars
2000
$ 45,398
13,845
201,553
—
—
2000
¥ 4,676
1,426
20,760
—
—
¥58
1,446
—
55,633
32,826
¥ 41,348
1,760
—
—
—
19991998
(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 state-
ments 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 Com-
prehensive 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.
(q) Segment Information
In the year ended March 31, 2000, Ricoh adopted SFAS No. 131, “Disclosure about
Segments of an Enterprise and Related Information,” which establishes standards
for the reporting of information about operating segments in the financial state-
ments. Prior years’ information was restated as required in SFAS No. 131. Operat-
ing segments are defined as components of an enterprise for which separate
financial information is available that is evaluated regularly by Ricoh’s manage-
ment in deciding how to allocate resources and in assessing performance. SFAS
No. 131 also requires disclosures about products and services, geographic areas
and major customers. The adoption of SFAS No. 131 did not affect results of oper-
ations or financial position but did affect the disclosure of segment information,
as presented in Note 17.
(r) 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 enti-
ty to recognize all derivatives as either assets or liabilities in the Consolidated Bal-
ance 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, as amended,
is effective for fiscal years beginning after June 15, 2000. Ricoh has not deter-
mined the effect on the consolidated financial statements.