Toshiba 2011 Annual Report Download - page 89

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Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
1. DESCRIPTION OF BUSINESS
Toshiba Corporation (“the Company”) and its subsidiaries (hereinafter collectively, “the Group”) are engaged in research
and development, manufacturing and sales of high-technology electronic and energy products, which range (1)Digital
Products, (2)Electronic Devices, (3)Social Infrastructure, (4)Home Appliances, and (5)Others. For the year ended March
31, 2011, sales of Digital Products represented the most significant portion of the Group’s total sales or approximately 33
percent. Social Infrastructure, second to Digital Products, represented approximately 33 percent, Electronic Devices
approximately 20 percent and Home Appliances approximately 9 percent of the Group’s total sales. For the year ended
March 31, 2010, sales of Social Infrastructure represented the most significant portion of the Group’s total sales or
approximately 34 percent. Digital Products represented approximately 33 percent, Electronic Devices approximately 19
percent and Home Appliances approximately 9 percent of the Group’s total sales. The Group’s products are manufactured
and marketed throughout the world with approximately 45 percent and 44 percent of its sales in Japan for the years ended
March 31, 2011 and 2010, respectively and the remainder in Asia, North America, Europe and other parts of the world.
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
PREPARATION OF FINANCIAL STATEMENTS
The Company and its domestic subsidiaries maintain their records and prepare their financial statements in accordance
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.
In June 2009, the Financial Accounting Standards Board (“FASB”) issued the Accounting Standards Codification
(“ASC”). The ASC has become the source of authoritative U.S. generally accepted accounting principles (“GAAP”). The
codified standards are described as “ASC”.
BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES
The consolidated financial statements of the Group include the accounts of the Company, its majority-owned subsidiaries and
variable interest entities (“VIEs”) for which the Group is the primary beneficiary in accordance with ASC No.810 “Consolidation”
(“ASC No.810”). All significant intra-entity transactions and accounts are eliminated in consolidation.
Investments in affiliates over which the Group has the ability to exercise significant influence are accounted for under the
equity method of accounting. Net income (loss) attributable to shareholders of the Company includes its equity in the current
net earnings (loss) of such companies after elimination of unrealized intra-entity gains. The proportionate share of the income or
loss of some companies accounted for under the equity method is recognized from the most recent available financial statements.
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
liabilities, 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 Group 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, recoverability of receivables,
realization of deferred tax assets, uncertain tax positions, pension accounting assumptions, revenue recognition and other
valuation allowances and reserves including contingencies for litigations. 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
average 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 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.