Ricoh 2001 Annual Report Download - page 36

3 4
( i) Income Taxes
Ricoh conform s 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 that are deem ed to be permanent
investm ents.
( j) Advertising
The costs of advertising are expensed as incurred.
( k) Impairment Loss on Long-Lived Assets
Ricoh conform s with SFAS No. 121, “Accounting for the Im pairm ent of Long-
Lived Assets and for Long-Lived Assets to Be Disposed Of,” in accounting for
impairm ent 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 impairm ent loss is recognized if the
sum of the expected future cash flows ( undiscounted and without interest
charges) is less than the carrying am ount 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. Measurem ent of an impair-
ment loss for long-lived assets and identifiable intangibles is based on the fair val-
ue of the asset.
( l) Ear nings Per Share
Ricoh conform s 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 m ade at various times have been accounted for
by transferring an am ount equivalent to the par value of such stocks from addi-
tional paid-in capital to comm on stock in the case of capitalization by resolution
of the Board of Directors. However, no accounting recognition is made for stock
splits when com m on 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 com parable circum stances are
required to be accounted for by transferring from retained earnings am ounts
equal to the fair market value of the shares issued, and by increasing additional
paid-in capital by the excess of the m arket 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
Elem ex Corporation in 1999 and
Lanier Woldwide, Inc., in 2001:
Fair value of assets acquired
Liabilities assum ed
Thousands of
U.S. dollars
2 0 0 1
$8,635
2,294
—
1 ,0 6 8 ,1 4 3
8 3 0 ,3 4 1
2 0 0 1
¥ 1,08 8
289
—
1 3 4 ,5 8 6
1 0 4 ,6 2 3
¥4,676
1,426
20,760
—
—
¥58
1,446
—
55,633
32,826
20001999
( o) Use of Estimates
Management of the Company has made a num ber of estimates and assum ptions
that affect the reported am ounts of assets, liabilities, revenues and expenses, and
the disclosure of contingent assets and liabilities, to prepare these financial state-
ments in conform ity with generally accepted accounting principles. Actual results
could differ from those estimates.
( p) Segment Information
In the year ended March 31, 2000, Ricoh adopted SFAS No. 131, “Disclosure about
Segments of an Enterprise and Related Inform ation,” which establishes standards
for the reporting of information about operating segm ents in the financial state-
ments. Prior years’ inform ation was restated as required in SFAS No. 131. Operat-
ing segments are defined as components of an enterprise for which separate
financial inform ation is available that is evaluated regularly by Ricoh’s m anage-
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 inform ation,
as presented in Note 18.
( q) Revenue Recognition
Ricoh recognizes revenue when it is realized or realizable and earned. Ricoh con-
siders revenue realized or realizable and earned when it has persuasive evidence of
an arrangem ent, the product has been shipped to and received by the customer or
the services have been provided to the customer, the sales price is fixed or deter-
minable and collectibility is reasonably assured.
In December 1999, the Securities and Exchange Commission issued Staff Ac-
counting Bulletin No. 101 ( “SAB 101”) , “Revenue Recognition in Financial
Statements.” SAB 101, as am ended, sum marizes certain of the SEC’s views in ap-
plying generally accepted accounting principles to revenue recognition in finan-
cial statements and provides guidance on revenue recognition issues in the
absence of authoritative literature addressing a specific arrangem ent or a specific
industry. Ricoh adopted SAB 101 in the year ended March 31, 2001. Adoption of
this guidance did not have a m aterial effect on Ricoh’s consolidated financial po-
sition or results of operations.
( r) New Accounting Standards
In June 1998, the Financial Accounting Standards Board ( FASB) issued Statem ent
of Financial Accounting Standards No. 133, “Accounting for Derivative Instru-
ments and Hedging Activities.” In June 2000, the FASB issued Statem ent 138, “Ac-