Yamaha 2011 Annual Report Download - page 66

64 Yamaha Corporation
Notes to Consolidated Financial Statements
(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.
However, in accordance with “Practical Solution on Unification of
Accounting Policies Applied to Foreign Subsidiaries for Consolidated
Financial Statements” (Practical Issues Task Force (PITF) No.18), the
accompanying consolidated financial statements have been prepared
by using, the accounts of overseas consolidated subsidiaries prepared
in accordance with either International Financial Reporting Standards
(IFRS) or accounting principles generally accepted in the United States
as adjusted for certain items. The Company and all consolidated sub-
sidiaries are referred to herein as the “Yamaha Group.”
The 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 consolidated 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 consoli-
dated financial statements include the accounts of the Company and
78 consolidated subsidiaries for the year ended March 31, 2011 and 84
consolidated subsidiaries for the year ended March 31, 2010. All signifi-
cant intercompany balances and transactions have been eliminated in
consolidation.
Effective the year ended March 31, 2010, “Guidance on
Determining a Subsidiary and an Affiliate” (Accounting Standards
Board of Japan (ASBJ) Guidance No.22, issued by the ASBJ on May 13,
2008) has been applied. This change had no effect on profit or loss for
the year ended March 31, 2010.
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 one affiliate was
accounted for by the equity method for the year ended March 31, 2011
and 2010. Investments in unconsolidated subsidiaries and affiliates not
accounted for by the equity method are carried at cost.
Certain overseas subsidiaries have a financial closing date as
of December 31, which differs from the financial closing date of the
Company; however, a financial closing as of March 31 has been made
and reported by these overseas subsidiaries for consolidation pur-
poses. 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 good-
will and amortized over a period of five years on a straight-line basis.
(c) 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 clas-
sified as available-for-sale securities are carried at fair value with any
changes in unrealized holding gain or loss, net of the applicable
income taxes, included directly in net assets. Nonmarketable 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 respec-
tive fair value, thus establishing a new cost basis. The amount of each
write-down is charged to income as a loss on valuation of investment
securities unless the fair value is deemed recoverable. The Company
has established a policy for the recognition of loss on valuation of
investment securities 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.
(d) 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 periodic average method. Inventories
of the Company’s overseas consolidated subsidiaries are stated prin-
cipally at the lower of cost or market, cost being determined by the
moving average method. See Note 2(a)(l).
(e) Depreciation
Depreciation of property, plant and equipment (excluding leased
assets) is calculated principally by the declining-balance method,
except for certain consolidated subsidiaries applying the straight-line
method, at rates based on the estimated useful lives of the respective
assets.
1. Summary of Significant Accounting Policies