Toshiba 2008 Annual Report Download - page 88

Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2008
1. DESCRIPTION OF BUSINESS
Toshiba Corporation and its subsidiaries (collectively, the “Company ” ) are engaged in research and development, manufactur-
ing and sales of high-technology electronic and energy products, which span (1)Digital Products, (2)Electronic Devices,
(3)Social Infrastructure, (4)Home Appliances, and (5)Others. For the year ended March 31, 2008, sales of Digital Products
represented the most significant portion of the Company’s total sales or approximately 36 percent. Social Infrastructure repre-
sented approximately 29 percent, Electronic Devices approximately 21 percent, and Home Appliances approximately 9 per-
cent of the Company’s total sales. The Company’s products were manufactured and marketed throughout the world with
approximately 48 percent of its sales in Japan and the remainder in Asia, North America, Europe and other parts of the world.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPARATION OF FINANCIAL STATEMENTS
Toshiba Corporation and its domestic subsidiaries maintain their records and prepare their financial statements in accor-
dance with accounting principles generally accepted in Japan, and its foreign subsidiaries in conformity with those of the
countries of their domicile.
Certain adjustments and reclassifications have been incorporated in the accompanying consolidated financial statements to
conform with accounting principles generally accepted in the United States. These adjustments were not recorded in the
statutory books of account.
BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES
The consolidated financial statements of the Company include the accounts of Toshiba Corporation, its majority-owned sub-
sidiaries and variable interest entities (“VIEs”) for which the Company is the primary beneficiary under Financial Accounting
Standards Board (“FASB”) Interpretation No.46 as revised in December 2003, Consolidation of Variable Interest Entities, an
Interpretation of ARB No.51 (“FIN 46R”). All significant intercompany transactions and accounts are eliminated in consolidation.
Investments in affiliates in which the ability to exercise significant influence exists are accounted for under the equity method of
accounting. The Company eliminates unrealized intercompany profits in determining its equity in the current net earnings (losses)
of such companies.
USE OF ESTIMATES
The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the
United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabili-
ties, disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported
amounts of revenues and expenses during the reporting periods. The Company has identified significant areas where it
believes assumptions and estimates are particularly critical to the consolidated financial statements. These are determination
of impairment on long-lived tangible and intangible assets and goodwill, realization of deferred tax assets, uncertain tax posi-
tions, pension accounting assumptions, revenue recognition and other valuation allowances and reserves. Actual results could
differ from those estimates.
CASH EQUIVALENTS
All highly liquid investments with original maturities of 3 months or less at the date of purchase are considered to be cash equivalents.
FOREIGN CURRENCY TRANSLATION
The assets and liabilities of foreign consolidated subsidiaries and affiliates that operate in a local currency environment are
translated into Japanese yen at applicable current exchange rates at year end. Income and expense items are translated at aver-
age exchange rates prevailing during the year. The effects of these translation adjustments are included in accumulated other
comprehensive income (loss) and reported as a component of shareholders’ equity. Exchange gains and losses resulting from
foreign currency transactions and translation of assets and liabilities denominated in foreign currencies are included in other
income or other expense in the consolidated statements of income.
ALLOWANCE FOR UNCOLLECTIBLE RECEIVABLES
An allowance for uncollectible trade receivables is recorded based on a combination of the write-off history, aging analysis, and
an evaluation of any specific known troubled accounts. When all collection options are exhausted including legal recourse, the
accounts or portions thereof are deemed to be uncollectible and charged against the allowance.
MARKETABLE SECURITIES AND OTHER INVESTMENTS
The Company classifies all of its marketable securities as available-for-sale which are reported at fair value, with unrealized gains and loss-
es included in accumulated other comprehensive income (loss), net of taxes. Other investments without quoted market prices are stated
at cost. Realized gains or losses on the sale of securities are based on the average cost of a particular security held at the time of sale.
Marketable securities and other investment securities are regularly reviewed for other-than-temporary declines in carrying amount
based on criteria that include the length of time and the extent to which the market value has been less than cost, the financial condition
and near-term prospects of the issuer and the Company’s intent and ability to retain marketable securities and investment securities for a
period of time sufficient to allow for any anticipated recovery in market value. When such a decline exists, the Company recognizes an