Toshiba 2009 Annual Report Download - page 78

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Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
M arch 31, 2009
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
impairment loss to the extent of such decline.
INVENTORIES
Raw materials, finished products and work in process for products are stated at the lower of cost or market, cost being deter-
mined principally by the average method. Finished products and work in process for contract items are stated at the lower of
cost or estimated realizable value, cost being determined by accumulated production costs.
In accordance with general industry practice, items with long manufacturing periods are included among inventories even
when not realizable within one year.
PROPERTY, PLANT AND EQUIPM ENT
Property, plant and equipment, including significant renewals and additions, are carried at cost. Depreciation for property,
plant and equipment associated with domestic operations is computed generally by the 250% declining-balance method with
estimated residual value reduced to a nominal value. Depreciation for property, plant and equipment for foreign subsidiaries
is generally computed using the straight line method.
Effective April 1, 2007, Toshiba Corporation and its domestic subsidiaries changed the method of calculating depreciation
of machinery, equipment and other fixed assets to the 250% declining-balance method with estimated residual value of a
nominal value. Also effective April 1, 2008, the estimated useful lives of specific machinery, equipment and other fixed assets
associated with the Semiconductor business have been shortened due to the escalated international competition over our
products. This change is a change in accounting estimate in accordance with SFAS No.154, Accounting Changes and Error
Corrections - a replacement of APB Opinion No.20 and FASB Statement No.3. Therefore, this change impacts on financial results
on and after April 1, 2008. Loss from continuing operations before income taxes and minority interest and net loss increased
by ¥6,024 million ($61,469 thousand) and by ¥3,953 million ($40,337 thousand), respectively compared with the figures
under the previous estimated useful lives. Basic net loss per share also increased by ¥1.22 ($0.01).
The estimated useful lives of the buildings are 3 to 50 years, and those of the machinery and equipment are 2 to 20 years.
Maintenance and repairs, including minor renewals and betterments, are expensed as incurred.
IM PAIRM ENT OF LONG-LIVED ASSETS
Long-lived assets, other than goodwill and intangible assets with indefinite useful lives, are evaluated for impairment using an
estimate of undiscounted cash flows whenever events or changes in circumstances indicate that the carrying amount of such
asset may not be recoverable. If the estimate of undiscounted cash flow is less than the carrying amount of the asset, an impair-
ment loss is recorded based on the fair value of the asset. Fair value is determined primarily by using the anticipated cash flows
discounted at a rate commensurate with the risk involved. For assets held for sale, an impairment loss is further increased by
costs to sell. Long-lived assets to be disposed of other than by sale are considered held and used until disposed of.
GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and intangible assets with indefinite useful lives are not amortized, but instead are tested for impairment at least
annually. Intangible assets with finite useful lives, consisting primarily of core and current technology and software, are amor-
tized using the straight-line method over their respective contractual periods or estimated useful lives.
ENVIRONM ENTAL LIABILITIES
Liabilities for environmental remediation and other environmental costs are accrued when environmental assessments or remedial
efforts are probable and the costs can be reasonably estimated, based on current law and existing technologies. Such liabilities are adjust-
ed as further information develops or circumstances change. Costs of future obligations are not discounted to their present values.
INCOM E TAXES
The provision for income taxes is computed based on the pre-tax income (losses) included in the consolidated statements of income.
Deferred income taxes are recorded to reflect the expected future tax consequences of temporary differences between the tax basis of
assets and liabilities and their reported amounts in the financial statements, and are measured by applying currently enacted tax laws.
The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that the change is enacted.
Valuation allowances are recorded to reduce deferred tax assets when it is more likely than not that a tax benefit will not be realized.
The company recognizes the financial statement effects of tax positions when they are more likely than not, based on the technical
merits, that the tax positions will be sustained upon examination by the tax authorities. Benefits from tax positions that meet the
more-likely-than-not recognition threshold are measured at the largest amount of benefit that is greater than 50 percent likely of being
realized upon settlement.
ACCRUED PENSION AND SEVERANCE COSTS
The Company has various retirement benefit plans covering substantially all employees. The unrecognized net obligation
existing at initial application of Statement of Financial Accounting Standards (“SFAS”) No. 87
, Employers’ Accounting for