Ricoh 2009 Annual Report Download - page 44

43 ANNUAL REPORT 2009
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 in 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 group of assets 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
common stock outstanding during the period. The calculation of
diluted net income per share of common stock is similar to the
calculation of basic net income per share, except that the weighted-
average number of shares outstanding includes the additional dilution
from potential common stock equivalents such as convertible bonds.
(s) Non-cash Transactions
There were no significant non-cash transactions for the years ended
March 31, 2007 or 2008.
The following non-cash transactions have been excluded from the
consolidated statements of cash flows:
(t) Use of Estimates
Management of Ricoh has made a number of estimates and
assumptions that affect the reported amounts of assets, liabilities,
revenues and expenses, including impairment losses of long-lived
assets and the disclosures of fair value of financial instruments and
contingent assets and liabilities, to prepare these financial
statements in conformity with U.S. generally accepted accounting
principles. Actual results could differ from those estimates.
Ricoh has identified seven areas where it believes assumptions and
estimates are particularly critical to the consolidated financial
statements. These are determination of the allowance for doubtful
receivables, impairment of securities, impairment of long-lived
assets including goodwill, uncertain tax positions, realizability of
deferred tax assets, the valuation of assets and liabilities in
purchase business combinations and pension accounting.
(u) Discontinued Operations
On May 31, 2006, the Company’s subsidiary San-Ai Co., Ltd. sold
its digital content distribution business to Giga Networks Co., Ltd.
(former Mobile Alliance Co., Ltd.). Because Ricoh has no
significant continuing involvement in the operation sold, the
operating result of the business units sold were reclassified to a
discontinued operation pursuant to the requirement of SFAS 144.
(v) Adoption of SAB 108
The Securities and Exchange Commission of the U.S. issued Staff
Accounting Bulletin (“SAB”) No.108, “Considering the Effects of Prior
Year Misstatements when Quantifying Misstatements in Current Year
Financial Statements” in September 2006. SAB 108 requires
companies to quantify misstatements using both the balance sheet
approach and the income statement approach (“dual” method), and
to evaluate the importance of misstatements taking into account
relevant quantitative and qualitative factors. Historically, Ricoh used
the income statement (“rollover”) approach to quantify
misstatements. Upon adoption, Ricoh recorded adjustment for the
cumulative effect of misstatements that were previously considered
immaterial under the rollover method that were considered material
under the dual method. Ricoh adopted SAB 108 in the fourth quarter
of the fiscal year ended March 31, 2007.
The Company and some of its domestic consolidated subsidiaries
previously set the residual value of tangible fixed assets at 5% of
acquisition cost in principle using the standards provided in the
Corporate Tax Law. However, based on an evaluation of residual
values realized from disposition of property, plant and equipment,
Ricoh concluded that the residual value of substantially all long lived
assets is negligible at the end of useful life. This misstatement had
been considered immaterial to Ricoh’s historical consolidated
financial statements using the income statement approach prior to
the adoption of SAB 108.
Accordingly, upon adoption of SAB 108, Ricoh recorded an increase
in accumulated depreciation of ¥11,464 million and an increase in
deferred tax assets (included in “Lease deposits and other”) of
¥4,675 million as of April 1, 2006 with a net reduction of the
beginning balance of retained earnings of ¥6,464 million.
(w)
Recently Adopted New Accounting Standards
In September 2006, the FASB issued SFAS No.157, “Fair Value
Measurements,” which defines fair value, establishes a framework
for measuring fair value, and expands disclosures about fair value
measurements. SFAS 157 applies under other accounting
pronouncements that require or permit fair value measurements,
where fair value is the relevant measurement attribute. SFAS 157
does not require any new fair value measurements. In February
2008, the FASB issued Staff Positions (“FSP”) No. FAS 157-2,
“Effective Date of FASB Statement No. 157,” which delays the
effective date of SFAS 157 for all nonfinancial assets and
nonfinancial liabilities, except those that are recognized or disclosed
at fair value in the financial statements on a recurring basis (at least
annually) and remove certain leasing transactions from its scope.
SFAS 157 is effective for fiscal years beginning after November 15,
Thousands of
Millions of Yen U.S. Dollars
2007 2008
2009 2009
Debt assumed in connection
with business acquisition - -
¥81,737 $825,626
Issuance of treasury stock in
exchange for subsidiary’s stock - -
¥9,138 $92,303