Sharp 2009 Annual Report Download - page 50

Realized gains and losses on the sale of such securities are prin-
cipally 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 signifi-
cantly, such securities are stated at fair market value and the
difference between the fair market value and the carrying
amount is recognized as loss in the period of decline. If the
net asset value of other securities (except for interest-bearing
securities) with no available fair market values declines signifi-
cantly, the securities are written down to the net asset value
and charged to income. In these cases, the fair market value
or the net asset value is carried forward to the next year.
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On and before March 31, 2008, finished products held by the
Company and its domestic consolidated subsidiaries were
principally stated at the lower of moving average cost or
market, and ones held by overseas consolidated subsidiaries
were principally valued at the lower of first-in, first-out cost or
market. Work in process and raw materials were principally
stated at current production and purchase costs, respectively,
but not in excess of the estimated realizable value.
Effective for the year ended March 31, 2009, inventories
held by the Company and its domestic consolidated subsidiar-
ies are primarily stated at moving average cost (for balance
sheet valuation, in the event that an impairment is determined
inventories impairment is computed using net realizable value).
For overseas consolidated subsidiaries, inventories are stated
at the lower of moving average cost or market.
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Depreciation of plant and equipment except for lease assets
is primarily computed using the declining-balance method,
except for machinery and equipment in the Mie and
Kameyama plants which are depreciated using the straight
line method over the estimated useful life of the asset. Build-
ings acquired by the Company and its domestic consolidated
subsidiaries on and after April 1, 1998 are depreciated using
the straight-line method. Properties at overseas consolidated
subsidiaries are depreciated using the straight-line method.
Maintenance and repairs, including minor renewals and
betterments, are charged to income as incurred.
Amortization of intangible assets except for lease assets
is computed using the straight-line method.
Depreciation of lease assets under finance leases that do not
transfer ownership is computed using the straight-line method,
using the lease period as the depreciable life and the residual
value as zero. Finance leases of the Company and its domestic
consolidated subsidiaries that do not transfer ownership, for
which the starting date of the lease transaction is on and before
March 31, 2008, lease payments are recognized as expenses.
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The Company and its domestic consolidated subsidiaries accrue
estimated amounts of employees’ bonuses based on the esti-
mated amounts to be paid in the subsequent period.
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The asset and liability approach is used to recognize
deferred tax assets and liabilities for the expected future tax
consequences of temporary differences between the carry-
ing amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes.
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The Company and its domestic consolidated subsidiaries
have primarily a trustee noncontributory defined benefit pen-
sion plan for their employees to supplement a governmental
welfare pension plan.
Certain overseas consolidated subsidiaries primarily have
defined contribution pension plans and lump-sum retirement
benefit plans.
The Company and its domestic consolidated subsidiaries
provide an allowance for severance and pension benefits based
on the estimated amounts of projected benefit obligation and
the fair value of plan assets at the balance sheet date. Projected
benefit obligation and expenses for severance and pension
benefits are determined based on the amounts actuarially calcu-
lated using certain assumptions.
The excess of the projected benefit obligation over the
total of the fair value of pension assets as of April 1, 2001 and
the allowance for severance and pension benefits recorded as
of April 1, 2001 (the “net transition obligation”) amounted to
¥69,090 million. The net transition obligation is being amortized
in equal amounts over 7 years commencing with the year
ended March 31, 2002. Prior service costs are amortized using
the straight-line method over the average of the estimated
remaining service years (16 years) commencing with the cur-
rent period. Actuarial gains and losses are primarily amortized
using the straight-line method over the average of the esti-
mated remaining service years (16 years) commencing with
the following period.
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