Toshiba 2014 Annual Report Download - page 113

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TOSHIBA Annual Report 2014
Toshiba Corporation and Subsidiaries
March 31, 2014
Notes to Consolidated Financial Statements
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)Energy &
Infrastructure, (2)Community Solutions, (3)Healthcare Systems & Services, (4)Electronic Devices & Components, (5)
Lifestyle Products & Services, and (6)Others. For the year ended March 31, 2014, sales of Energy & Infrastructure
represented the most significant portion of the Group's total sales or approximately 26 percent. Electronic Devices &
Components, second to Energy & Infrastructure, represented approximately 24 percent, Community Solutions
approximately 19 percent, Lifestyle Products & Services approximately 18 percent, and Healthcare Systems & Services
approximately 6 percent of the Group's total sales. For the year ended March 31, 2013, sales of Energy & Infrastructure
represented the most significant portion of the Group's total sales or approximately 26 percent. Electronic Devices &
Components represented approximately 21 percent, Lifestyle Products & Services approximately 20 percent, Community
Solutions approximately 19 percent and Healthcare Systems & Services approximately 6 percent of the Group's total sales.
The Group's products are manufactured and marketed throughout the world with approximately 42 percent and 46
percent of its sales in Japan for the years ended March 31, 2014 and 2013, 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.
BASIS OF CONSOLIDATION AND INVESTMENTS IN AFFILIATES
The consolidated financial statements 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 the Accounting Standards
Codification (“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, goodwill and investments, 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.