Sony 2006 Annual Report Download - page 130

128
The significant components of deferred tax assets and liabilities are as follows:
Dollars in
Yen in millions millions
March 31 2005 2006 2006
Deferred tax assets:
Operating loss carryforwards for tax purposes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
¥ 193,212 ¥ 146,206 $ 1,250
Accrued pension and severance costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 159,610 95,226 814
Film costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,746 51,937 444
Warranty reserve and accrued expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 56,551 52,008 445
Future insurance policy benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36,654 24,785 212
Accrued bonus . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34,536 27,353 234
Inventory—intercompany profits and write-down . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30,270 47,578 407
Depreciation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1 5,320 34,052 291
Tax credit carryforwards . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8,552 39,443 337
Reserve for doubtful accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6,574 7,479 64
Impairment of investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52,501 52,658 450
Deferred revenue in the Pictures segment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12,947 16,713 143
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 88,077 144,337 1,232
Gross deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 751,550 739,775 6,323
Less: Valuation allowance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (89,110) (150,899) (1,290)
Total deferred tax assets. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 662,440 588,876 5,033
Deferred tax liabilities:
Insurance acquisition costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(135,083) (136,919) (1,170)
Unbilled accounts receivable in the Pictures segment. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (57,314) (49,953) (427)
Unrealized gains on securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (41,564) (63,739) (545)
Intangible assets acquired through stock exchange offerings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (35,418) (34,627) (296)
Undistributed earnings of foreign subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (30,865) (66,719) (570)
Gain on securities contribution to employee retirement benefit trust . . . . . . . . . . . . . . . . . . . . . . . . . (6,184) (3,992) (34)
Other . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (58,714) (65,151) (557)
Gross deferred tax liabilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . (365,142) (421,100) (3,599)
Net deferred tax assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . ¥ 297,298 ¥ 167,776 $ 1,434
The valuation allowance mainly relates to deferred tax assets
of Sony Corporation and certain consolidated subsidiaries with
operating loss carryforwards and tax credit carryforwards for tax
purposes that are not expected to be realized. The net changes
in the total valuation allowance were an increase of ¥11,509
million for the fiscal year ended March 31, 2004, a decrease of
¥38,467 million for the fiscal year ended March 31, 2005 and
an increase of ¥61,789 million ($528 million) for the fiscal year
ended March 31, 2006. The increase during the fiscal year
ended March 31, 2006 resulted from a provision for additional
valuation allowances due to continued losses recorded by
Sony Corporation and certain subsidiaries mainly in the
electronics business.
As a result of operating losses in the past, certain consoli-
dated subsidiaries in the U.S. had recognized valuation allow-
ances against deferred tax assets for U.S. federal and certain
state taxes. However, because of improved operating results in
recent years and a sound outlook for the future operating perfor-
mance of certain consolidated subsidiaries in the U.S., Sony
reversed ¥67,892 million of valuation allowance, resulting in a
reduction of income tax expenses for the fiscal year ended
March 31, 2005.
Tax benefits which have been realized through utilization of
operating loss carryforwards for the fiscal years ended March 31,
2004, 2005 and 2006 were approximately ¥12,000 million,
¥30,000 million and ¥42,000 million ($359 million), respectively.