Sony 2015 Annual Report Download - page 154

SONY CORPORATION AND CONSOLIDATED SUBSIDIARIES
Deferred insurance acquisition costs -
Costs that vary with and are directly related to acquiring new insurance policies are deferred as long as they
are recoverable. The deferred insurance acquisition costs include such items as commissions, medical
examination costs and inspection report fees, and are subject to recoverability testing at least annually to ensure
that the capitalized amounts do not exceed the present value of anticipated gross profits or premiums less benefits
and maintenance expenses, as applicable. The deferred insurance acquisition costs for traditional life insurance
contracts are amortized over the premium-paying period of the related insurance policies using assumptions
consistent with those used in computing policy reserves. The deferred insurance acquisition costs for non-
traditional life insurance contracts are amortized over the expected life in proportion to the estimated gross
profits.
Product warranty -
Sony provides for the estimated cost of product warranties at the time revenue is recognized. The product
warranty is calculated based upon product sales, estimated probability of failure and estimated cost per
claim. The variables used in the calculation of the provision are reviewed on a periodic basis.
Certain subsidiaries in the MC, G&NS, IP&S and HE&S segments offer extended warranty programs. The
consideration received for extended warranty service is deferred and recognized as revenue on a straight-line
basis over the term of the extended warranty.
Future insurance policy benefits -
Liabilities for future insurance policy benefits are primarily comprised of the present value of estimated
future payments to policyholders. These liabilities are computed by the net level premium method based upon the
assumptions as to future investment yield, morbidity, mortality, withdrawals and other factors. These
assumptions are reviewed on a periodic basis. Liabilities for future insurance policy benefits also include
liabilities for guaranteed benefits related to certain non-traditional life and annuity contracts.
Policyholders’ account in the life insurance business -
Liabilities for policyholders’ account in the life insurance business represent the contract value that has
accrued to the benefit of the policyholders as of the balance sheet date. This liability is generally equal to the
accumulated account deposits, plus interest credited, less policyholder withdrawals and other charges assessed
against the account balances.
Impairment of long-lived assets -
Sony reviews the recoverability of the carrying value of its long-lived assets held and used, other than
goodwill and intangible assets with indefinite lives, and assets to be disposed of, whenever events or changes in
circumstances indicate that the individual carrying amount of an asset or asset group may not be
recoverable. Long-lived assets to be held and used are reviewed for impairment by comparing the carrying value
of the asset or asset group with their estimated undiscounted future cash flows. If the cash flows are determined
to be less than the carrying value of the asset or asset group, an impairment loss would be recognized during the
period for the amount by which the carrying value of the asset or asset group exceeds estimated fair value. Long-
lived assets that are to be disposed of other than by sale are considered held and used until they are disposed of.
Long-lived assets that are to be disposed of by sale are reported at the lower of their carrying value or fair value
less cost to sell and are not depreciated. Fair value is determined using the present value of estimated net cash
flows or comparable market values. This approach uses significant estimates and assumptions including
projected future cash flows, the timing of such cash flows, discount rates reflecting the risk inherent in future
cash flows, perpetual growth rates applied to determine terminal values, determination of appropriate market
comparables and the determination of whether a premium or discount should be applied to comparables.
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