Yamaha 2001 Annual Report Download - page 31

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(m) Hedge accounting
Effective the year ended March 31, 2001, the Company adopted a new accounting standard for financial instruments (“Opinion
Concerning Establishment of Accounting Standard for Financial Instruments” issued by the Business Accounting Deliberation
Council (the “BADC”) on January 22, 1999). In accordance with a new accounting standard, derivative financial instruments are
carried at fair value with changes in unrealized gain or loss charged or credited to operations, except for those which meet the criteria
for deferral hedge accounting under which unrealized gain or loss is deferred as an asset or a liability. Forward foreign exchange
contracts that meet certain criteria are accounted for by the allocation method, which is utilized to hedge against risk arising from
fluctuations in foreign exchange rates.
The Company and consolidated subsidiaries do not make an assessment of the effectiveness for hedging activities because the
relationship between the anticipated cash flows fixed by hedging activities and the avoidance of market risk is existing clearly so that
there is no need to evaluate such effectiveness.
(n) Appropriation of retained earnings
Under the Commercial Code of Japan (the “Code”), the appropriation of retained earnings with respect to a given financial period
is made by resolution of the shareholders at a general meeting held subsequent to the close of such financial period. The accounts
for that period do not, therefore, reflect such appropriation.
(o) Land revaluation
Pursuant to the “Law Concerning the Revaluation of Land” (the “Law”), land used for the business operations of a consolidated
subsidiary and an affiliate was revalued on March 31, 2000. The excess of the revalued carrying amount over the book value before
revaluation that has been included in shareholders’ equity amounted to ¥8,269 million ($66,740 thousand) and ¥8,331 million as
reserve for land revaluation at an amount net of the related tax effect at March 31, 2001 and 2000, respectively.. The correspond-
ing income taxes of ¥1,632 million are included in long-term liabilities at March 31, 2001 and 2000 as deferred income taxes on land
revaluation.
The revaluation of the land was determined based on the official standard notice prices in accordance with the relevant regula-
tions of the Local Income Tax Law of Japan with certain necessary adjustments.
(p) Reclassifications
Certain prior-year amounts have been reclassified to conform to the fiscal 2001 presentation. These changes have had no impact
on previously reported results of operations or shareholders’ equity.
2. U.S. DOLLAR AMOUNTS
For the convenience of the reader, the accompanying financial statements with respect to the year ended March 31, 2001 have
been presented in U.S. dollars by translating all yen amounts at ¥123.90=U.S.$1.00, the exchange rate prevailing on March 31,
2001. This translation should not be construed as a representation that yen have been, could have been, or could in the future be
converted into U.S. dollars at the above or any other rate.
3. ACCOUNTING CHANGES
Effective April 1, 2000, the Company changed the exchange rates for the translation of revenue and expense accounts of the foreign
consolidated subsidiaries into yen from the rate of exchange in effect at the balance sheet date to the average exchange rate in effect
during the fiscal year. This is in order to avoid significant fluctuations between the exchange rates used in interim consolidated
financial statements, which became mandatory filing effective April 1, 2000, and the exchange rates used in the year-end consoli-
dated financial statements. The effect of this change was to decrease operating income, and income before income taxes and minority
interests by ¥967 million ($7,805 thousand) and ¥540 million ($4,358 thousand), respectively, from the amounts which would
have been recorded by the method applied in previous year.
In addition, due to the change effective the year ended March 31, 2001, in regulations relating to the presentation of translation
adjustments, the resulting foreign currency translation adjustments are included in minority interests and shareholders’ equity,
instead of as a component of assets and liabilities which was recorded in the previous year.
Further, effective the year ended March 31, 2001, the Company adopted a revised accounting standard for foreign currency
transactions, “Opinion Concerning Establishment of Accounting Standard for Foreign Currency Transactions” issued by the
BADC on October 22, 1999. The effect of this change on income before income taxes and minority interests was immaterial.