Sharp 2010 Annual Report Download - page 49

Notes to Consolidated Financial Statements
Sharp Corporation and Consolidated Subsidiaries
(a) Basis of presenting consolidated financial
statements
The accompanying consolidated financial statements of Sharp
Corporation (“the Company”) and its consolidated subsidiar-
ies have been prepared in accordance with the provisions 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 (“IFRS”).
The financial statements of the Company’s overseas
consolidated subsidiaries for consolidation purposes have
been prepared in conformity with IFRS or generally accepted
accounting principles in the United States of America (“US
GAAP”), and partially reflect the adjustments which are
necessary to conform with Japanese GAAP.
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 supplemen-
tary information included in the Japanese language statutory
consolidated financial statements, but not required for fair
presentation, is not presented in the accompanying consoli-
dated 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, 2010, which was ¥92 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
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 are accounted for using the equity method.
In the elimination of investments in consolidated subsid-
iaries, 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.
1. Summary of Significant Accounting and Reporting Policies
Material intercompany balances, transactions and unreal-
ized profits have been eliminated in consolidation.
Sharp Office Equipments (Changshu) Co., Ltd. and 7 other
consolidated subsidiaries have fiscal year end of December
31. Previously, the Company’s consolidated financial state-
ments included the accounts of these subsidiaries as of
December 31, with appropriate adjustments for significant
transactions which have occurred from December 31 through
to the consolidated fiscal year end of March 31. Effective for
the year ended March 31, 2010, the Company’s consolidated
financial statements include the accounts of these subsidiar-
ies as of March 31, to provide more appropriate and timely
disclosure. The gains and losses of these subsidiaries,
incurred from January 1, 2009 to March 31, 2009, have been
included as a change in retained earnings.
(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 historical rates, and revenues and expenses are translated
at average rates prevailing during the year. The resulting for-
eign currency translation adjustments are shown as a sepa-
rate 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 maturities of
three months or less when purchased.
(e) Investments in securities
Investments in securities consist principally of marketable
and nonmarketable equity 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.
Financial Section
Annual Report 2010 47