Toyota 2012 Annual Report Download - page 86

TOYOTA ANNUAL REPORT 2012
Toyota Global Vision Changes for Making
Ever-Better Cars President
ʼ
s Message Medium- to Long-Term
Growth Initiatives Special Feature Management and Corporate Information Investor Information
Business and
Performance Review Financial Section
Notes to Consolidated Financial Statements
impairment loss would be recognized when the
carrying amount of an asset group exceeds the
estimated undiscounted cash flows expected to
result from the use of the asset and its eventual
disposition. The amount of the impairment loss
to be recorded is calculated by the excess of the
carrying value of the asset group over its fair
value. Fair value is determined mainly using a
discounted cash flow valuation method.
Goodwill is not material to Toyota
ʼ
s consolidated
balance sheets.
Intangible assets consist mainly of software.
Intangible assets with a definite life are amortized
on a straight-line basis with estimated useful
lives mainly of 5 years. Intangible assets with an
indefinite life are tested for impairment whenever
events or circumstances indicate that a carrying
amount of an asset
(
asset group
)
may not be
recoverable.
An impairment loss would be recognized
when the carrying amount of an asset exceeds
the estimated undiscounted cash flows used
in determining the fair value of the asset. The
amount of the impairment loss to be recorded is
generally determined by the difference between
the fair value of the asset using a discounted cash
flow valuation method and the current book value.
Toyota has both defined benefit and defined
contribution plans for employees
ʼ
retirement
statement of income. The asset and liability
approach is used to recognize deferred tax
assets and liabilities for the expected future tax
consequences of temporary differences between
the carrying amounts and the tax bases of assets
and liabilities. Valuation allowances are recorded
to reduce deferred tax assets when it is more likely
than not that a tax benefit will not be realized.
Toyota employs derivative financial instruments,
including forward foreign currency exchange
contracts, foreign currency options, interest rate
swaps, interest rate currency swap agreements
and interest rate options to manage its exposure to
fluctuations in interest rates and foreign currency
exchange rates. Toyota does not use derivatives
for speculation or trading purposes. Changes in
the fair value of derivatives are recorded each
period in current earnings or through other
comprehensive income, depending on whether
a derivative is designated as part of a hedge
transaction and the type of hedge transaction.
The ineffective portion of all hedges is recognized
currently in operations.
Basic net income attributable to Toyota Motor
Corporation per common share is calculated by
dividing net income attributable to Toyota Motor
Corporation by the weighted-average number of
shares outstanding during the reported period.
Property, plant and equipment are stated at
cost. Major renewals and improvements are
capitalized; minor replacements, maintenance
and repairs are charged to current operations.
Depreciation of property, plant and equipment
is mainly computed on the declining-balance
method for the parent company and Japanese
subsidiaries and on the straight-line method for
foreign subsidiary companies at rates based on
estimated useful lives of the respective assets
according to general class, type of construction
and use. The estimated useful lives range from
2 to 65 years for buildings and from 2 to 20 years
for machinery and equipment.
Vehicles and equipment on operating leases
to third parties are originated by dealers and
acquired by certain consolidated subsidiaries.
Such subsidiaries are also the lessors of certain
property that they acquire directly. Vehicles and
equipment on operating leases are depreciated
primarily on a straight-line method over the lease
term, generally from 2 to 5 years, to the estimated
residual value. Incremental direct costs incurred
in connection with the acquisition of operating
lease contracts are capitalized and amortized on
a straight-line method over the lease term.
Toyota reviews its long-lived assets for
impairment whenever events or changes in
circumstances indicate that the carrying amount
of an asset group may not be recoverable. An
benefits. Retirement benefit obligations are
measured by actuarial calculations in accordance
with U.S.GAAP. The funded status of the defined
benefit postretirement plans is recognized on the
consolidated balance sheets as prepaid pension
and severance costs or accrued pension and
severance costs, and the funded status change is
recognized in the year in which it occurs through
other comprehensive income.
Environmental expenditures relating to current
operations are expensed or capitalized as
appropriate. Expenditures relating to existing
conditions caused by past operations, which do
not contribute to current or future revenues, are
expensed. Liabilities for remediation costs are
recorded when they are probable and reasonably
estimable, generally no later than the completion
of feasibility studies or Toyota
ʼ
s commitment to
a plan of action. The cost of each environmental
liability is estimated by using current technology
available and various engineering, financial and
legal specialists within Toyota based on current
law. Such liabilities do not reflect any offset for
possible recoveries from insurance companies
and are not discounted. There were no material
changes in these liabilities for all periods
presented.
The provision for income taxes is computed based
on the pretax income included in the consolidated
■
Property, plant and equipment
■
Goodwill and intangible assets
■
Long-lived assets
■
Employee benefit obligations
■
Environmental matters
■
Income taxes
■
Derivative financial instruments
■
Net income attributable to Toyota Motor
Corporation per share
0820
Search NextPrev page 86
Contents