Yamaha 2009 Annual Report Download - page 58

value with any changes in unrealized holding gain or loss, net of the applicable income taxes, included directly in net assets. Non-marketable
securities classified as available-for-sale securities are carried at cost. If the market value of marketable securities classified as available-for-sale
securities declines significantly, such securities are written down to their respective fair value, thus establishing a new cost basis. The amount
of each write-down is charged to income as an impairment loss unless the fair value is deemed recoverable. The Company has established
a policy for the recognition of impairment loss if the market value at the year end has declined more than 30% and a recovery to fair value is
not anticipated. Cost of securities sold is determined by the weighted-average method.
(f) Inventories
Inventories of the Company and its domestic consolidated subsidiaries are stated principally at the cost method (method of reducing
book value when the contribution of inventories to profitability declines), cost being determined by the last-in, first-out method. Invento-
ries of the Company’s overseas consolidated subsidiaries are stated principally at the lower of cost or market, cost being determined by
the moving average method. See Note 2 (1).
(g) Depreciation
Depreciation of property, plant and equipment (excluding leased assets) is calculated principally by the declining-balance method
(except that certain consolidated subsidiaries employ the straight-line method) at rates based on the estimated useful lives of the
respective assets.
Estimated useful lives:
Buildings: 31 - 50 years (structures attached to buildings: 15 years)
Structures: 10 - 30 years
Machinery and equipment: 4 - 9 years
Tools, furniture and fixtures: 5 - 6 years (molds: 2 years)
Starting from April 1, 2008, pursuant to the revision of the Corporate Tax Law of Japan in fiscal year 2008, the Company and its
domestic consolidated subsidiaries have reviewed the useful lives of their property, plant and equipment. As a result, the useful lives of
machinery and equipment included among property, plant and equipment have been changed from the previous 4- to 11-year range to
the 4- to 9-year range.
The effect of this change on profit and loss for the year ended March 31, 2009 was not material.
Depreciation of leased assets under finance leases, other than those for which the ownership transfers to the lessee, is calculated
by the straight-line method over the lease period with the residual value zero.
(h) Allowance for doubtful accounts
The allowance for doubtful accounts is provided at an amount sufficient to cover possible losses on the collection of receivables. The
amount of the provision is based on the historical experience with write-offs plus an estimate of specific probable doubtful accounts
determined by a review of the collectibility of individual receivables.
(i) Provision for directors’ bonuses
To provide for the payment of bonuses to directors, the projected amount of such bonuses is set aside as a provision.
(j) Provision for product warranties
Provision for product warranties is provided to cover the cost of customers’ claims relating to after-sales service and repairs. The
amount of this provision is estimated based on a percentage of the amount or volume of sales after considering the historical experience
with repairs of products under warranty.
(k) Provision for business restructuring expenses
To provide for expenses arising from business reorganization and so forth, the projected amount of such expenses is set aside as a provision.
(l) Provision for retirement benefits
Provision for employees’ retirement benefits is provided based on the projected retirement benefit obligation and the pension fund assets.
Prior service cost is amortized as incurred by the straight-line method over a period (10 years) which is shorter than the average
remaining years of service of the employees participating in the plans.
Actuarial gain or loss is amortized in the year following the year in which the gain or loss is recognized, primarily by the straight-line
method, over a period (10 years) which is shorter than the average remaining years of service of the employees participating in the plans.
(m) Criteria for presentation of finance leases (as Lessor)
In the case of finance leases where the Company or a consolidated subsidiary is the lessor in the transaction, other than those for which
the ownership transfers to the lessee, the leased assets are entered under lease investment assets which is included in the item “Other”
under “Current assets.” Sales and cost of sales related to finance lease transactions are recognized at the time the lease fees are received.
56 Yamaha Corporation