Sony 2015 Annual Report Download - page 150

SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Gains or losses that result from a loss of a controlling financial interest in a subsidiary are recorded in
earnings along with fair value remeasurement gains or losses on any retained investment in the entity, while a
change in interest of a consolidated subsidiary that does not result in a change in control is accounted for as a
capital transaction and no gains or losses are recorded in earnings.
The excess of the cost over the underlying net equity of investments in consolidated subsidiaries and
affiliated companies accounted for on an equity basis is allocated to identifiable tangible and intangible assets
and liabilities based on fair values at the date of acquisition. The unassigned residual value of the excess of the
cost over Sony’s underlying net equity is recognized as goodwill as a component of the investment balance.
Use of estimates -
The preparation of the consolidated financial statements in conformity with U.S. GAAP requires
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. The most significant estimates include those used in
determining the valuation of investment securities, valuation of inventories, fair values of long-lived assets, fair
values of goodwill, intangible assets and assets and liabilities assumed in business combinations, product
warranty liability, pension and severance plans, valuation of deferred tax assets, uncertain tax positions, film
costs, and insurance related liabilities. Actual results could significantly 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 fiscal year end exchange rates and all income and expense accounts are translated at exchange 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. Upon remeasurement of a previously
held equity interest in accordance with the accounting guidance for business combinations achieved in stages,
accumulated translation adjustments, if any, are included in earnings.
Receivables and payables denominated in foreign currencies are translated at appropriate fiscal year end
exchange rates and the resulting translation gains or losses are recognized into income.
Cash and cash equivalents -
Cash and cash equivalents include all highly liquid investments, 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 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 fair value by a charge to income when an other-than-temporary impairment is recognized. Realized
gains and losses are determined on the average cost method and are reflected in income.
Sony regularly evaluates its investment portfolio to identify other-than-temporary impairments of individual
securities. Factors that are considered by Sony in determining whether an other-than-temporary decline in value
has occurred include: the length of time and extent to which the market value of the security has been less than
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