Suzuki 2004 Annual Report Download - page 31

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SUZUKI MOTOR CORPORATION
Assets and liabilities of the foreign subsidiaries and affiliates are translated into Japanese yen at
the exchange rates prevailing at the balance sheet date.
The shareholders' equity at the beginning of the year is translated into Japanese yen at the
historical rates. Profit and loss accounts for the year are translated into Japanese yen using the
average exchange rate during the year or, alternatively, using the exchange rates prevailing at the
balance sheet date. Differences in yen amounts arising from the use of different rates are
presented as "foreign currency translation adjustments" in the shareholders' equity.
(h)Inventories
Inventories are stated at the lower of cost or market value, cost being determined principally by
the periodic average method.
(i)Property, plant and equipment
Property, plant and equipment are stated at cost. Depreciation is principally computed by the
declining-balance method based on estimated useful lives of the assets
(mainly 3-75 years).
Provision for additional depreciation to certain assets is made to reflect use of machinery and
equipment in excess of normal production schedules, a substantial portion of which is, however,
not tax deductible.
Maintenance and repairs, including minor renewals and improvements, are charged to income
as incurred.
(Accounting change)
Effective from the fiscal year ending March 31, 2004, the Company and its subsidiaries adopted
"Accounting Standards for Impairment of Fixed Assets"(Opinion on Establishing Accounting
Standards for Impairment of Fixed Assets, issued by Accounting Standards Board of Japan on
August 9, 2002) and "Guidance on Application of Accounting Standards for Impairment of Fixed
Assets"(Business Accounting Standard Application Guideline No.6, issued on October 31, 2003).
The assets are divided into two groups, i.e. the assets for business and the assets for rent
respectively in business places. Since land prices have dropped due to burst of the bubble
economy, mainly book value of the assets group lent as marketing base was decreased to the
recoverable amount. As a result of this change, "Income before income taxes" decreased by
17,419 million yen. The amount is included in "Other income and expenses" of Consolidated
Statements of Income.
In the measurement of impairments, future cash flow and the discount rate are reasonably
estimated. If the future cash flow and the discount rate need to be revised due to drastic changes
in the economic environment in the area of operations where an assets group is situated, a large
amount of loss of impairment may be posted.
(j)Leases
Finance lease transactions, except for those which meet the conditions that the ownership of the
lease assets is substantially transferred to the lessee, are accounted for on a basis similar to
ordinary rental transactions.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
31