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45
18. INCOME TAXES
The Group is subject to a number of different income taxes which, in the aggregate, result in an effective statutory tax rate
in Japan of approximately 40.7 percent for the years ended March 31, 2011 and 2010.
A reconciliation table between the reported income tax expense and the amount computed by multiplying the income
from continuing operations, before income taxes and noncontrolling interests by the applicable statutory tax rate is as
follows:
Millions of yen
Thousands of
U.S. dollars
Year ended March 31 2011 2010 2011
Expected income tax expense ¥ 79,588 ¥ 14,006 $ 958,891
Increase (decrease) in taxes resulting from:
Tax credits (1,765) (2,106) (21,265)
Non-deductible expenses for tax purposes 3,271 3,565 39,410
Net changes in valuation allowance (6,984) 25,255 (84,145)
Tax rate difference relating to foreign subsidiaries (11,624) (11,613) (140,048)
Deferred tax liabilities on undistributed earnings of foreign
subsidiaries and affi liates (20,267) 4,044 (244,181)
Other (1,499) 383 (18,060)
Income tax expense ¥ 40,720 ¥ 33,534 $ 490,602
The significant components of deferred tax assets and deferred tax liabilities as of March 31, 2011 and 2010 are as follows:
Millions of yen
Thousands of
U.S. dollars
March 31 2011 2010 2011
Gross deferred tax assets:
Inventories ¥ 20,297 ¥ 20,418 $ 244,542
Accrued pension and severance costs 119,503 116,687 1,439,795
Tax loss carryforwards 262,127 288,567 3,158,157
Pension liability adjustment 215,914 213,856 2,601,373
Accrued expenses 105,932 108,128 1,276,289
Depreciation and amortization 46,023 49,329 554,494
Other 128,940 139,965 1,553,494
898,736 936,950 10,828,144
Valuation allowance for deferred tax assets (269,639) (284,227) (3,248,662)
Deferred tax assets ¥ 629,097 ¥ 652,723 $ 7,579,482
Gross deferred tax liabilities:
Inventories ¥ (4,236) ¥ (6,119) $ (51,036)
Property, plant and equipment (10,125) (19,755) (121,988)
Unrealized gains on securities (37,698) (39,550) (454,193)
Gain on securities contributed to employee retirement benefi t trusts (17,381) (17,381) (209,410)
Undistributed earnings of foreign subsidiaries and affi liates (38,043) (56,122) (458,349)
Goodwill and other intangible assets (60,767) (68,596) (732,133)
Other (18,573) (12,365) (223,771)
Deferred tax liabilities (186,823) (219,888) (2,250,880)
Net deferred tax assets ¥ 442,274 ¥ 432,835 $ 5,328,602
Deferred tax liabilities included in other current liabilities and other liabilities at March 31, 2011 and 2010 were ¥75,515
million ($909,819 thousand) and ¥57,802 million, respectively.
The net changes in the total valuation allowance for the years ended March 31, 2011 and 2010 were a decrease of
¥14,588 million ($175,759 thousand) and an increase of ¥8,800 million, respectively.