Yamaha 2009 Annual Report Download - page 57

Notes to Consolidated Financial Statements
Yamaha Corporation and Consolidated Subsidiaries
Years ended March 31, 2009 and 2008
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) Basis of presentation
Yamaha Corporation (the “Company”) and its domestic subsidiaries maintain their accounting records and prepare their financial state-
ments in accordance with accounting principles generally accepted in Japan, and its overseas subsidiaries maintain their books of
account in conformity with those of their respective countries of domicile. The Company and all consolidated subsidiaries are referred to
herein as the “Yamaha Group.” Effective April 1, 2008, the Company has applied the new accounting standard “Practical Solution on
Unification of Accounting Policies Applied to Foreign Subsidiaries for Consolidated Financial Statements” (Practical Issues Task Force,
No. 18, issued by the ASBJ on May 17, 2006). Under the new accounting standard, the accompanying consolidated financial state-
ments for the year ended March 31, 2009 have been prepared by using the accounts of overseas consolidated subsidiaries prepared in
accordance with either International Financial Reporting Standards or generally accepted accounting principles in the United States as
adjusted for certain items. Until March 31, 2008, the accompanying consolidated financial statements had been prepared by using the
accounts of overseas consolidated subsidiaries prepared in accordance with accounting principals generally accepted in their countries
of domicile. See Note 2 (3). The accompanying consolidated financial statements are prepared on the basis of accounting principles
generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International
Financial Reporting Standards, and are compiled from the consolidated financial statements prepared by the Company as required by
the Financial Instruments and Exchange Law of Japan. Certain reclassifications have been made to present the accompanying consoli-
dated financial statements in a format which is familiar to readers outside Japan. As permitted, amounts of less than one million yen
have been omitted. As a result, the totals shown in the accompanying consolidated financial statements (both in yen and U.S. dollars)
do not necessarily agree with the sums of the individual amounts.
(b) Basis of consolidation and accounting for investments in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include the accounts of the parent company and all subsidiaries over which it
exerts substantial control either through majority ownership of voting stock and/or by other means. As a result, the accompanying con-
solidated financial statements include the accounts of the Company and 88 consolidated subsidiaries for the year ended March 31,
2009 and 87 consolidated subsidiaries for the year ended March 31, 2008. All significant intercompany balances and transactions have
been eliminated in consolidation. Investments in affiliates (other than subsidiaries as defined above) whose decision-making and control
over their own operations are significantly affected in various ways by the Yamaha Group are accounted for by the equity method.
Investments in two affiliates were accounted for by the equity method for the year ended March 31, 2009, and one affiliate was
accounted for by the equity method for the year ended March 31, 2008. Investments in unconsolidated subsidiaries and affiliates not
accounted for by the equity method are carried at cost. Certain overseas subsidiaries are consolidated on the basis of fiscal periods
ending December 31, which differs from the balance sheet date of the Company; however, all necessary adjustments between the fiscal
year end of these overseas subsidiaries and that of the Company have been made, thus enabling them to report financial results equiva-
lent to those as of and for the Company’s fiscal year end. All assets and liabilities of subsidiaries are revalued at fair value on acquisition
and, if applicable, the excess of cost over the underlying net assets at the respective dates of acquisition is presented as goodwill and
amortized over a period of five years on a straight-line basis.
(c) Foreign currency translation
Monetary assets and liabilities of the Company and its domestic consolidated subsidiaries denominated in foreign currencies are trans-
lated at the exchange rates in effect at each balance sheet date if not hedged by forward foreign exchange contracts, or at the con-
tracted rates of exchange when hedged by forward foreign exchange contracts. The resulting exchange gain or loss is recognized as
other income or expense. Assets and liabilities of the overseas consolidated subsidiaries are translated at the exchange rates in effect at
each balance sheet date. The components of net assets excluding minority interests are translated at their historical exchange rates.
Revenue and expense accounts are translated at the average rates of exchange in effect during the year. Differences arising from trans-
lation are presented as translation adjustments and minority interests in the accompanying consolidated balance sheets.
(d) Cash and cash equivalents
Cash on hand and in banks, and all highly liquid investments, generally with a maturity of three months or less when purchased, which
are readily convertible into known amounts of cash and are so near maturity that they represent only an insignificant risk of any change
in value attributable to changes in interest rates, are considered cash and cash equivalents.
(e) Securities
Securities owned by the Yamaha Group have been classified into two categories, held-to-maturity and available-for-sale, in accordance
with the accounting standard for financial instruments. Under this standard, held-to-maturity debt securities are either amortized or
accumulated to face value by the straight-line method. Marketable securities classified as available-for-sale securities are carried at fair
Annual Report 2009 55