Sony 2003 Annual Report Download - page 172

Consolidated Financial Information 2003
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unless Sony receives an identifiable benefit (goods or services) in exchange for the consideration, can
reasonably estimate the fair value of this benefit and receives documentation from the reseller to support
the amounts spent. Any payments meeting these criteria are treated as selling, general and administrative
expense. For the years ended March 31, 2002 and 2003, reseller payments, primarily for cooperative
advertising programs, included in selling, general and administrative expense totaled ¥ 28,683 million and
¥ 29,135 million ($ 243 million), respectively.
Cost of sales -
Costs classified as cost of sales relate to the producing and manufacturing of products and include such
items as material cost, subcontractor cost, depreciation of fixed assets, personnel expenses, research and
development costs, and amortization of film cost related to theatrical and television products.
Research and development costs -
Research and development costs are expensed as incurred.
Selling, general and administrative -
Costs classified as selling expense relate to the promoting and selling of products and include such items
as advertising, promotion, shipping, and warranty expenses.
General and administrative expenses include operating items such as officer's salaries, personnel
expenses, depreciation of fixed assets, office rental for sales, marketing and administrative divisions, a
provision for doubtful accounts and amortization of intangible assets.
Financial service expenses -
Financial service expenses include provision for policy reserves and amortization of deferred insurance
acquisition cost, and all other operating costs such as personnel expenses, depreciation of fixed assets,
office rental of subsidiaries in the Financial Services segment.
Advertising costs -
Advertising costs are expensed when the advertisement or commercial appears in the selected media,
except for advertising costs for acquiring new insurance policies which are deferred and amortized as part
of insurance acquisition costs.