Sharp 2004 Annual Report Download - page 37

(a) Basis of presenting consolidated financial statements
Sharp Corporation (the "Company") and its domestic
consolidated subsidiaries maintain their official accounting
records in Japanese yen and in accordance with the
provisions set forth in the Japanese Commercial Code
and the Securities and Exchange Law and accounting
principles and practices generally accepted in Japan
("Japanese GAAP"). The accounts of overseas consolidated
subsidiaries are based on their accounting records
maintained in conformity with generally accepted accounting
principles and practices prevailing in the respective countries of
domicile. Certain accounting principles and practices
generally accepted in Japan are different from International
Financial Reporting Standards and standards in other
countries in certain respects as to application and
disclosure requirements.
The accompanying consolidated financial statements
have been restructured and translated into English (with
some expanded descriptions and the inclusion of
consolidated statements of shareholders’ equity) from the
consolidated financial statements of the Company prepared in
accordance with Japanese GAAP and filed with the
appropriate Local Finance Bureau of the Ministry of Finance as
required by the Securities and Exchange Law. Some
supplementary information included in the statutory
Japanese language consolidated financial statements, but
not required for fair presentation is not presented in the
accompanying consolidated financial statements.
The translation of the Japanese yen amounts into U.S.
dollars is included solely for the convenience of readers,
using the prevailing exchange rate at March 31, 2004,
which was ¥105 to U.S. $1.00. The convenience translations
should not be construed as representations that the
Japanese yen amounts have been, could have been, or
could in the future be, converted into U.S. dollars at this or any
other rate of exchange.
(b) Principles of consolidation
The accompanying consolidated financial statements
include the accounts of the Company and significant
companies over which the Company has power of control
through majority voting right or existence of certain
conditions evidencing control by the Company. Investments in
nonconsolidated subsidiaries and affiliates over which the
Company has the ability to exercise significant influence
over operating and financial policies of the investees, are
accounted for on the equity method.
In the elimination of investments in consolidated
subsidiaries, the assets and liabilities of the subsidiaries,
including the portion attributable to minority shareholders,
are evaluated using the fair value at the time the Company
acquired control of the respective subsidiaries.
Material intercompany balances, transactions and profits
have been eliminated in consolidation.
(c) Translation of foreign currencies
Monetary assets and liabilities denominated in foreign
currency are translated into Japanese yen at current rates at
each balance sheet date and the resulting translation gains or
losses are charged to income currently.
As to translation of financial statements of overseas
subsidiaries and affiliates, assets and liabilities are
translated at current rates at each balance sheet date,
shareholders’ equity accounts are translated at historical
rates, and revenues and expenses are translated at
average rates prevailing during the year. The resulting
foreign currency translation adjustments are shown as a
separate component of shareholders’ equity.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand,
deposits placed with banks on demand and highly liquid
investments with insignificant risk of changes in value which
have maturities of three months or less when purchased.
(e) Short-term investments and investments in securities
Short-term investments consist of certificates of
deposits and interest-bearing securities.
Investments in securities consist principally of
marketable and nonmarketable equity securities and
interest-bearing securities.
The Company and its domestic consolidated
subsidiaries categorize those securities as “other securities”,
which, in principle, include all securities other than trading
1. Summary of Significant Accounting and Reporting Policies
Notes to Consolidated Financial Statements
Sharp Corporation and Consolidated Subsidiaries
Sharp Annual Report 2004 35