Sony 2003 Annual Report Download - page 165

Consolidated Financial Information 2003
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management to make estimates and assumptions that affect the reported amounts of assets and liabilities
and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those
estimates.
Translation of foreign currencies -
All asset and liability accounts of foreign subsidiaries and affiliates are translated into Japanese yen at
appropriate 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.
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
determinable, 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.
Equity securities in non-public companies -
Equity securities in non-public companies are carried at cost as fair value is not readily determinable. If the
value of a non-public equity investment is estimated to have declined and such decline is judged to be other
than temporary, Sony recognizes the impairment of the investment and the carrying value is reduced to its
fair value. Determination of impairment is based on the consideration of such factors as operating results,
business plans and estimated future cash flows. Fair value is determined through the use of such
methodologies as discounted cash flows, valuation of recent financings and comparable valuations of
similar companies.