Sony 2003 Annual Report Download - page 171

Consolidated Financial Information 2003
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by a transfer from additional paid-in capital to the common stock account or with no entry if free shares are
distributed from the portion of previously issued shares in the common stock account.
Under the Japanese Commercial Code, a stock dividend can be effected by an appropriation of retained
earnings to the common stock account by resolution of the general meeting of shareholders, followed by a
free share distribution with respect to the amount appropriated by resolution of the Board of Directors’
meeting.
Free distribution of common stock is recorded in the consolidated financial statements only when it
becomes effective, except for the calculation and presentation of per share amounts.
Stock issue costs -
Stock issue costs are directly charged to retained earnings, net of tax, in the accompanying consolidated
financial statements as the Japanese Commercial Code prohibits charging such stock issue costs to capital
accounts which is the prevailing practice in the United States of America.
Revenue recognition -
In accordance with 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. 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.
Life insurance policies that the life insurance subsidiary writes, most of which are categorized as
long-duration contracts, mainly consist of whole life, term life and accident and health insurance contracts.
Premiums from these policies are reported as revenue when due from policyholders.
Property and casualty insurance policies that the non-life insurance subsidiary writes are primarily
automotive insurance contracts which are categorized as short-duration contracts. Premiums from these
policies are reported as revenue over the period of the contract in proportion to the amount of insurance
protection provided.
Accounting for consideration paid to a reseller -
In accordance with EITF Issue No. 01-09, cash consideration paid to a reseller including payments for
buydowns, slotting fees and cooperative advertising programs, is accounted for as a reduction of revenue