Yamaha 2003 Annual Report Download - page 35

(l) Income taxes
Deferred income taxes are recognized by the liability method. Under the liability method, deferred tax assets and liabilities
are determined based on the differences between financial reporting and the tax basis of the assets and liabilities and
are measured using the enacted tax rates and laws which will be in effect when the differences are expected to
reverse.
(m) Derivative financial instruments
Derivative financial instruments are carried at fair value with any changes in unrealized gain or loss charged or credited
to operations, except for those which meet the criteria for deferral hedge accounting under which the 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 Group does not make an assessment of the effectiveness of its hedging activities because the relationship
between the anticipated cash flows fixed by hedging activities and the avoidance of market risk is so clear that there
is no need to evaluate the effectiveness of each hedge against the respective underlying hedged item.
(n) Accounting standard for treasury stock and reduction of legal reserve
Effective the year ended March 31, 2003, the Company and consolidated subsidiaries adopted a new accounting
standard for treasury stock and the reduction of legal reserve (Accounting Standard No. 1 issued by the Accounting
Standards Board of Japan; “ASBJ”) which took effect on April 1, 2002. The effect of the adoption of this new stan-
dard was immaterial.
(o) 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.
(p) Land revaluation
Pursuant to the “Law Concerning the Revaluation of Land,” land used for the business operations of the Company,
two consolidated subsidiaries and an affiliate was revalued. The excess of the revalued carrying amount over the book
value before revaluation which has been included in shareholders’ equity amounted to ¥16,152 million ($134,376
thousand) and ¥16,482 million as a reserve for land revaluation, net of the related tax effect, at March 31, 2003 and
2002, respectively.
The land revaluation was determined based on the official standard notice prices in accordance with the relevant
regulations of the Corporate Tax Law of Japan with certain necessary adjustments.
2. U.S. DOLLAR AMOUNTS
For the convenience of the reader, the accompanying financial statements with respect to the year ended March 31,
2003 have been presented in U.S. dollars by translating all yen amounts at ¥120.20=U.S.$1.00, the exchange rate
prevailing on March 31, 2003. 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. INVESTMENT SECURITIES
Investment securities at March 31, 2003 and 2002 were as follows:
Thousands of
Millions of Yen U.S. Dollars
2003 2002 2003
Investments in and advances to unconsolidated subsidiaries and affiliates........................... ¥55,563 ¥51,026 $462,255
Others ................................................................................................................................... 22,059 25,281 183,519
Investment securities ............................................................................................................ ¥77,622 ¥76,307 $645,774
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