Wacom 2005 Annual Report Download - page 26

(6) Property, plant and equipment and depreciation
Property, plant and equipment are stated at cost. D epreciation,
except for buildings, is computed by the declining-balance
method at rates based on the estimated useful lives of the
assets. D epreciation of buildings at overseas subsidiaries and
those acquired by the Company on or after April 1, 1998 is
computed primarily by the straight-line method.
Major useful lives are as follows:
Buildings and facilities 3 to 65 years
Machinery, equipment and vehicles 5 to 13 years
Tools and furniture 2 to 20 years
O rdinary maintenance and repair costs are charged to income
as incurred. Major replacements and improvements are
capitalized.
(7) Software
Software for internal use is amortized by the straight-line
method over an estimated useful life (5 years). Software to be
sold is amortized based on the estimated volume of sales with
the minimum amortization amount calculated based on the
useful life of 3 years.
(8) Accrued retirement benefits
Lump-sum severance indemnity regulations of the Company,
which cover substantially all employees, provide for benefit
payments determined by reference to the employee’s current
basic rate of pay, length of service, position in the Company
and termination circumstances. The accrued retirement benefits
represent the actuarially calculated present value of projected
benefit obligation except for, as permitted under the standard,
the unrecognized transition obligation and the unrecognized
actuarial differences. The unrecognized transition obligation is
amortized on a straight-line basis over 5 years, and the
unrecognized actuarial differences are being amortized on a
straight-line basis over 5 years from the year after the year in
which they arise.
W ith respect to directors and statutory corporate auditors,
provision is made for lump-sum severance indemnities based
on internal regulations.
(9) Income taxes
D eferred income taxes are recognized, using the asset and
liability method. This method is used to recognize deferred tax
assets and liabilities for the expected future tax consequences
of temporary differences between the carrying amounts of
assets and liabilities for financial reporting purposes and the
amounts used for income tax purposes.
(10) Leases
Leases that transfer substantially all the risks and rewards of
ownership of the assets are accounted for as capital leases;
Leases that do not transfer ownership of the assets at the end
of the lease term are accounted for as operating leases in
accordance with accounting principles and practices generally
accepted in Japan.
(11) Appropriations of retained earnings
Appropriations of retained earnings are reflected in the
financial statements in the year they are approved at the
general meeting of shareholders.
(12) Foreign currency translation
Foreign currency transactions are translated using foreign
exchange rates prevailing at the transaction dates.
All monetary assets and liabilities denominated in foreign
currencies, whether they are long-term or short-term, are
translated into Japanese yen at the exchange rates prevailing at
the balance sheet date. Resulting gains and losses are included
in the consolidated statement of income.
All assets and liabilities of foreign subsidiaries are translated at
current rates at the respective balance sheet date and all the
income and expense accounts are translated at average rates
for respective periods. Foreign currency translation
adjustments are presented as a component of “Shareholders’
equity” in the consolidated financial statements.
(13) Recently issued new accounting standards
O n August 9, 2002, the Business Accounting Council in Japan
issued “Accounting Standard for Impairment of Fixed Assets.”
The standard requires that fixed assets be reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount of an asset may not be
recoverable. An impairment loss shall be recognized in the
income statement by reducing the carrying amount of impaired
assets or a group of assets to the recoverable amount which is
measured at the higher of net selling price or value in use.
The standard shall be effective for fiscal years beginning April 1,
2005. However, earlier adoption is permitted for fiscal years
beginning April 1, 2004 and for fiscal years ending after March
31, 2004.
This standard has not been applied in the consolidated financial
statements. Although this standard has not been applied in the
consolidated financial statements, the adoption of this standard
would not have significant impact on the consolidated financial
statements.
(14) Reclassifications
Certain reclassifications of the financial statements and related
footnote amounts in the year ended March 31, 2004 have
been made to conform to the presentation in the year ended
March 31, 2005.
W acom Co., Ltd. Annual Report 2005
25