Toshiba 2011 Annual Report Download - page 90

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Notes to Consolidated Financial Statements
Toshiba Corporation and Subsidiaries
March 31, 2011
ALLOWANCE FOR DOUBTFUL RECEIVABLES
An allowance for doubtful 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 efforts 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 Group classifies all of its marketable securities as available-for-sale which are reported at fair value, with unrealized gains
and losses included in accumulated other comprehensive income (loss), net of tax. 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 impairments 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 Group’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 Group 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
determined 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 EQUIPMENT
Property, plant and equipment, including significant renewals and additions, are carried at cost. Depreciation for property,
plant and equipment associated with the Company and domestic subsidiaries is computed generally by the 250%
declining-balance method with estimated residual value recorded at a nominal value. Depreciation for property, plant and
equipment for foreign subsidiaries is generally computed using the straight line method.
The estimated useful lives of buildings are 3 to 50 years, and those of machinery and equipment are 2 to 20 years.
Maintenance and repairs, including minor renewals and betterments, are expensed as incurred.
IMPAIRMENT 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
impairment 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. Goodwill is allocated among and tested for impairment at the reporting unit level. Intangible assets with finite
useful lives, consisting primarily of core and current technology and software, are amortized using the straight-line
method over their respective contractual periods or estimated useful lives.
ENVIRONMENTAL 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
adjusted as further information develops or circumstances change. Costs of future obligations are not discounted to their present
values.
INCOME TAXES
The provision for income taxes is computed based on the income (loss) from continuing operations, before income taxes and
noncontrolling interests 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