Sony 2001 Annual Report Download - page 102

Sony Corporation Annual Report 2001
100
Translation of foreign currencies—
All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at appropri-
ate year-end current rates and all income and expense accounts are translated at rates that approximate those
rates prevailing at the time of the transactions. The resulting translation adjustments are accumulated as a
component of accumulated other comprehensive income.
Foreign currency receivables and payables are translated at appropriate year-end current rates and the
resulting translation gains or losses are taken into income currently.
Revenue recognition—
As a result of the adoption of SAB No. 101, revenues from electronics, game and music sales are recognized
upon delivery which is considered to have occurred when the customer has taken title to the product and the
risk and rewards of ownership have been substantively transferred. Previously, such revenues were recognized
when Sony’s obligations pursuant to the sales contract were substantially completed which was considered to
have occurred when product was shipped. If the sales contract contains a customer acceptance provision, then
sales are recognized after customer acceptance occurs or the acceptance provisions lapse.
Revenues from the theatrical exhibition of motion pictures are recognized as the customer exhibits the film.
Revenues from the licensing of feature films and television programming are recorded when the material is
available for telecast by the licensee and when any restrictions regarding the exhibition or exploitation of the
product lapse. Revenues from the sale of home videocassettes and DVDs are recognized upon availability of sale
to the public.
Insurance premiums are reported as revenue when due from policyholders. Benefits and expenses are
associated with earned insurance premiums so as to result in the recognition of profits over the life of the
contracts. This association is accomplished through a provision for liabilities for future benefits and amortiza-
tion of acquisition costs.
Cash and cash equivalents—
Cash and cash equivalents include all highly liquid investments, generally with original maturities of three
months or less, that are readily convertible to known amounts of cash and are so near maturity that they
present insignificant risk of changes in value because of changes in interest rates.
Marketable debt and equity securities—
Debt securities and equity securities designated as available-for-sale, whose fair values are readily determin-
able, are carried at fair value with unrealized gains or losses included as a component of accumulated other
comprehensive income, net of applicable taxes. Debt and equity securities classified as trading securities are
carried at fair value with unrealized gains or losses included in income. Debt securities that are expected to be
held-to-maturity are carried at amortized cost. Individual securities classified as either available-for-sale or
held-to-maturity are reduced to net realizable value by a charge to income for other than temporary declines in
fair value. Realized gains and losses are determined on the average cost method and are reflected in income.
Inventories—
Inventories in electronics, game and music are valued at cost, not in excess of market, cost being determined
on the “average cost” basis except for the cost of finished products carried by certain subsidiary companies
which is determined on the “first-in, first-out” basis.