Sony 2005 Annual Report Download - page 121

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118 Sony Corporation
During the year ended March 31, 2005, a corporation size-
based enterprise tax was introduced in Japan and the portion
of enterprise tax subject to income was reduced. As a result,
the statutory tax rate for the year ended March 31, 2005 was
Reconciliation of the differences between the statutory tax rate and the effective income tax rate is as follows:
Years ended March 31 2003 2004 2005
Statutory tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
42.0% 43.9% 41.0%
Increase (reduction) in taxes resulting from:
Income tax credits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(1.9) (2.4) (0.1)
Change in valuation allowances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.5 6.5 (22.7)
Decrease in deferred tax liabilities on undistributed earnings of foreign subsidiaries . . . . . . . . . . . . .
(14.8) (9.2) (4.0)
Lower tax rate applied to life and non-life insurance business in Japan. . . . . . . . . . . . . . . . . . . . . . .
(0.6) (2.6) (1.9)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.4 0.4 (2.1)
Effective income tax rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
32.6% 36.6% 10.2%
The significant components of deferred tax assets and liabilities are as follows:
Dollars in
Yen in millions millions
March 31 2004 2005 2005
Deferred tax assets:
Operating loss carryforwards for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(196,308 ¥(193,212 $(1,806
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
150,073 159,610 1,492
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
54,194 56,746 530
Warranty reserve and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
45,664 56,551 529
Future insurance policy benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
35,855 36,654 343
Accrued bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
36,285 34,536 323
Inventory—intercompany profits and write-down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
30,241 30,270 283
Depreciations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,108 15,320 143
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
13,740 8,552 80
Reserve for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
14,005 6,574 61
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141,731 153,525 1,434
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
732,204 751,550 7,024
Less: Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(127,577) (89,110) (833)
Total deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
604,627 662,440 6,191
Deferred tax liabilities:
Insurance acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(125,768) (135,083) (1,262)
Unbilled accounts receivable in the Pictures business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(71,586) (57,314) (536)
Unrealized gains on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(45,239) (41,564) (388)
Intangible assets acquired through exchange offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(36,490) (35,418) (331)
Undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(44,778) (30,865) (288)
Gain on securities contribution to employee retirement benefit trust . . . . . . . . . . . . . . . . . . . . . . . . .
(16,899) (6,184) (58)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(39,435) (58,714) (550)
Gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(380,195) (365,142) (3,413)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥(224,432 ¥(297,298 $(2,778
approximately 41% effective April 1, 2004. The effect of the
change in the tax rate on the balance of deferred tax assets
and liabilities was insignificant.
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