Yamaha 2011 Annual Report Download - page 68

66 Yamaha Corporation
(o) Cash and cash equivalents
Cash on hand and in banks, and all highly liquid investments, gener-
ally 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.
(p) Income taxes
Deferred income taxes are recognized by the asset and liability
method. Under this method, deferred tax assets and liabilities are
determined based on the differences between financial reporting and
the tax bases 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.
The Company and certain of its subsidiaries have been approved
by the Commissioner of the National Tax Agency regarding the appli-
cation of the consolidated taxation system from the year ending March
31, 2012. Therefore, effective the year ended March 31, 2011, related
accounting procedures have been based on the “Practical Solution
on Tentative Treatment of Tax Effect Accounting under Consolidated
Taxation System (Part 1)” (PITF No.5) and the “Practical Solution on
Tentative Treatment of Tax Effect Accounting under Consolidated
Taxation System (Part 2)” (PITF No.7).
(q) Consumption tax
Income and expenses are recorded net of consumption tax.
(a) Changes in methods of accounting
(1) Accounting standards for inventories
Effective the year ended March 31, 2011, accompanying the applica-
tion of “Accounting Standards for Measurement of Inventories” (ASBJ
Statement No.9, revised by the ASBJ on September 26, 2008), the
Company and certain of its consolidated subsidiaries in Japan have
changed the method of measurement of inventories from the cost
method using the last-in, first-out method to the periodic average
method. As a result, operating income and income before income taxes
and minority interests for the year ended March 31, 2011 increased by
each ¥956 million ($11,497 thousand) respectively, compared with the
corresponding amounts that would have recorded under the previous
method.
(2) Accounting standards for asset retirement obligations
Effective the year ended March 31, 2011, “Accounting Standard for
Asset Retirement Obligations” (ASBJ Statement No.18, issued by the
ASBJ on March 31, 2008) and “Guidance on Accounting Standard for
Asset Retirement Obligations” (ASBJ Guidance No.21, issued by the
ASBJ on March 31, 2008) have been applied. The effect of this change
on profit and loss for the year ended March 31, 2011 was not material.
(3) Accounting standards for business combinations and related matters
Effective the year ended March 31, 2011, the Company and its consoli-
dated subsidiaries have applied the following accounting standards.
All of these accounting standards, partial amendments to existing
accounting standards, and guidance were issued by the ASBJ on
December 26, 2008.
• “Accounting Standard for Business Combinations” (ASBJ Statement
No.21)
• “Accounting Standard for Consolidated Financial Statements” (ASBJ
Statement No.22)
• “Partial amendments to Accounting Standard for Research and
Development Costs” (ASBJ Statement No.23)
• “Revised Accounting Standard for Business Divestitures” (ASBJ
Statement No.7)
• “Revised Accounting Standard for Equity Method of Accounting for
Investments” (ASBJ Statement No.16)
• “Revised Guidance on Accounting Standard for Business Combinations
and Accounting Standard for Business Divestitures” (ASBJ Guidance
No.10)
These changes had no effect on profit and loss for the year
ended March 31, 2011.
(4) Accounting standards for construction contracts
The Company and its consolidated subsidiaries have previously
applied the completed-contract method for recognizing the revenues
for construction contracts. However, effective the year ended March
31, 2010, accompanying the application of “Accounting Standard for
Construction Contracts” (ASBJ Statement No.15, issued by the ASBJ
on December 27, 2007) and “Guidance on Accounting Standard for
Construction Contracts” (ASBJ Guidance No.18, issued by the ASBJ on
December 27, 2007), the percentage-of-completion method has been
applied for the construction work under contract that commenced
during the year ended March 31, 2010, provided the outcome of the
construction activity is deemed certain during the course of the activ-
ity (based on the ratio of costs incurred to the estimated total cost to
estimate the percentage of completion of construction activity).
For construction where uncertainty exists, the completed-
contract method has been applied.
The effect of this change on profit and loss for the year ended
March 31, 2010 was not material.
2. Changes in Methods of Accounting and Presentation