Ricoh 2010 Annual Report Download - page 45

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ANNUAL REPORT 2010
To Our Shareholders
and Customers
Corporate Social
Responsibility
Financial
Section
Fiscal 2010 Highlights
and Progress of MTP
RICOH NOW
impairment of securities is critical for its financial statements
because it holds significant amounts of securities, the recoverability
of which or lack thereof, could significantly affect its results of
operations.
Realizability of Deferred Tax Assets
Ricoh records deferred tax assets and liabilities using the effective
tax rate taking into consideration the effect of temporary differences
between the book and tax bases of assets and liabilities. If the
effective tax rate were to change, Ricoh would adjust its deferred
tax assets and liabilities, through the provision for income taxes in
the period of change, to reflect the effective tax rate expected to be
in effect when the deferred tax items reverse.
Ricoh records a valuation allowance to reduce its deferred tax
assets to an amount that is more likely than not to be recoverable.
Ricoh considers future market conditions, forecasted earnings,
future taxable income, the mix of earnings in the jurisdictions in
which Ricoh operates, and prudent and feasible tax planning
strategies in determining the need for a valuation allowance. In the
event Ricoh were to determine that Ricoh would not be able to
recover any portion of Ricoh’s net deferred tax assets in the future,
the unrecoverable portion of the deferred tax assets would be
charged to earnings during the period in which such determination
is made. Likewise, if Ricoh were to later determine that it is more
likely than not that the net deferred tax assets would be recoverable,
the previously recovered valuation allowance would be reversed. In
order to recover its deferred tax assets, Ricoh must be able to
generate sufficient taxable income in the tax jurisdictions in which
the deferred tax assets are located.