Ricoh 2008 Annual Report Download - page 39

Certain leased buildings, machinery and equipment are accounted
for as capital leases in conformity with SFAS No.13, “Accounting
for Leases.” The aggregate cost included in property, plant and
equipment and related accumulated depreciation as of March 31,
2007 and 2008 are as follows:
Thousands of
Millions of Yen U.S. Dollars
2007 2008 2008
Aggregate cost ¥ 7,341 ¥ 7,269 $ 72,690
Accumulated depreciation 5,761 6,072 $ 60,720
The related future minimum lease payments and the present value
of the net minimum lease payments as of March 31, 2008 were
¥1,259 million ($12,590 thousand) and ¥1,177 million ($11,770
thousand), respectively.
Ordinary maintenance and repairs are charged to expense as
incurred. Major replacements and improvements are capitalized.
When properties are retired or otherwise disposed of, the property
and related accumulated depreciation accounts are relieved of the
applicable amounts, and any differences are included in earnings.
(k) Capitalized Software Costs
In accordance with Statement of Position (“SOP”) 98-1, “Accounting
for the Costs of Computer Software Developed or Obtained for
Internal Use,” Ricoh capitalizes qualifying cost of computer
software. Costs incurred during the application development stage
as well as upgrades and enhancements that results in additional
functionality are capitalized. The capitalized software is amortized
on a straight line basis over their estimated useful lives.
(l) Goodwill and Other Intangible Assets
SFAS No.141, “Business Combinations” requires the use of only the
purchase method of accounting for business combinations and
refines the definition of intangible assets acquired in a purchase
business combination. SFAS No.142, “Goodwill and Other
Intangible Assets” eliminates the amortization of goodwill and
instead requires annual impairment testing thereof. SFAS 142 also
requires acquired intangible assets with a definite useful life to be
amortized over their respective estimated useful lives and reviewed
for impairment when an indication of impairment is identified in
accordance with SFAS No.144, “Accounting for the Impairment or
Disposal of Long-Lived Assets.” Other intangible assets with
definite useful lives, consisting primarily of software, patents,
customer relationships and tradenames are amortized on a straight
line basis over 1 year to 20 years. Any acquired intangible asset
determined to have an indefinite useful life is not amortized, but
instead is tested annually for impairment based on its fair value
until its life would be determined to no longer be indefinite.
Ricoh completed its annual assessment of the carrying value of
indefinite-lived intangible assets, including goodwill for the years
ended March 31, 2006, 2007 and 2008 and determined that no
impairment charge was necessary.
(m) Pension and Retirement Allowances Plans
The measurement of pension costs and liabilities is determined in
accordance with SFAS No.87, “Employers’ Accounting for
Pensions” as amended by SFAS No.158, “Employers’ Accounting
for Defined Benefit Pension and Other Postretirement Plans” and
SFAS 158. Under SFAS 158 which was adopted effective March 31,
2007, Ricoh recognizes the funded status (i.e., the difference
between the fair value of plan assets and the projected benefit
obligations) of its pension fund plans as of the end of fiscal year,
with a corresponding adjustment to accumulated other
comprehensive income (loss), net of tax, and a charge to other
comprehensive income for periods subsequent to adoption.
The expected long-term rate of return on plan assets used for
pension accounting is determined based on the historical long-term
rate of return on plan assets. The discount rate is determined based
on the rates of return of high-quality fixed-income investments
currently available and expected to be available during the period to
maturity of the pension benefits.
(n) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured using
enacted tax rates expected to apply to taxable income in the years in
which those temporary differences and carryforwards are expected
to be realized or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
On April 1, 2007, Ricoh adopted FIN 48, “Accounting for Uncertainty
in Income Taxes – an Interpretation of FASB Statement No. 109”,
which requires a more-likely-than-not threshold for financial
statement recognition and measurement of tax positions taken or
expected to be taken in a tax return.
Ricoh recognizes interest and penalties accrued related to
unrecognized tax benefits in income taxes in the consolidated
statements of income
(o) Research and Development Expenses and
Advertising Costs
Research and development expenses and advertising costs are
expensed as incurred.
(p) Shipping and Handling Costs
Shipping and handling costs, which mainly include transportation
to customers, are included in selling, general and administrative
expenses on the consolidated statements of income.
(q)
Impairment or Disposal of Long-Lived Assets
Long-lived assets and acquired intangible assets with a definite life
are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset or
group of assets may not be recoverable. Recoverability of assets to
be held and used is assessed by comparing the carrying amount of
an asset or asset group to the expected future undiscounted net
cash flows of the asset or group of assets. If an asset or group of
assets is considered to be impaired, the impairment charge to be
recognized is measured as the amount by which the carrying
amount of the asset or group of assets exceeds fair value. Long-
lived assets meeting the criteria to be considered as held for sale
are reported at the lower of their carrying amount or fair value less
costs to sell.
(r) Earnings Per Share
Basic net income per share of common stock is calculated by
dividing net income by the weighted-average number of shares of
To Our Shareholders
and Customers
Fiscal 2008 Highlights
Fiscal 2008 Milestones 16th Mid-Term
Management Plan
Corporate Governance /
CSR
Financial Section
Sustainable Environmental
Management
38
ANNUAL REPORT 2008