Sharp 2008 Annual Report Download - page 49

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(a) Basis of presenting consolidated financial statements
The accompanying consolidated financial statements of
Sharp Corporation (“the Company”) and its consolidated sub-
sidiaries have been prepared in accordance with the provi-
sions set forth in the Japanese Financial Instruments and
Exchange Law and its related accounting regulations and in
conformity with accounting principles generally accepted in
Japan (“Japanese GAAP”), which are different in certain
respects as to application and disclosure requirements from
International Financial Reporting Standards.
The accounts of the Company’s overseas subsidiaries are
based on their accounting records maintained in conformity
with generally accepted accounting principles prevailing in
their respective countries of domicile. The accompanying
consolidated financial statements have been restructured and
translated into English (with certain expanded disclosures)
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 Japanese Financial Instruments
and Exchange Law. Certain supplementary information
included in the Japanese language statutory 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.
dollar amounts is included solely for the convenience of read-
ers outside Japan, using the prevailing exchange rate at
March 31, 2008, which was ¥99 to U.S. $1.00. The transla-
tions should not be construed as a representation 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 vot-
ing 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 are
accounted for using the equity method.
In the elimination of investments in consolidated sub-
sidiaries, the assets and liabilities of the subsidiaries, including
the portion attributable to minority shareholders, are evalu-
ated using the fair value at the time the Company acquired
control of the respective subsidiary.
Material intercompany balances, transactions and profits
have been eliminated in consolidation.
(c) Translation of foreign currencies
Monetary assets and liabilities denominated in foreign curren-
cies are translated into Japanese yen at current rates at each
balance sheet date, and the resulting translation gains or
losses are charged to income.
Assets and liabilities are translated at current rates at each
balance sheet date, net assets accounts are translated at his-
torical 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 in net assets.
(d) Cash and cash equivalents
Cash and cash equivalents include cash on hand, deposits
on demand placed with banks and highly liquid investments
with insignificant risk of changes in value which have maturi-
ties 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 securities
and held-to-maturity securities.
Other securities with available fair market values are
stated at fair market value, which is calculated as the average
of market prices during the last month of the fiscal year.
Unrealized holding gains and losses on these securities are
reported, net of applicable income taxes, as a separate com-
ponent of net assets. Realized gains and losses on the sale of
such securities are principally computed using average cost.
Other securities with no available fair market values are
stated at average cost, except for interest-bearing securities.
Interest-bearing securities are stated at amortized cost, net of
the amount considered uncollectible.
If the fair market value of other securities declines
significantly, such securities are stated at fair market value
1. Summary of Significant Accounting and Reporting Policies
Notes to Consolidated Financial Statements
Sharp Corporation and Consolidated Subsidiaries