Mitsubishi 2009 Annual Report Download - page 41

Notes to Consolidated Financial Statements
Mitsubishi Motors Corporation and Consolidated Subsidiaries
1. Significant Accounting Policies
(a) Basis of preparation
MMC and its domestic consolidated subsidiaries maintain their books of account in conformity with the financial accounting standards
of Japan. The financial statements of foreign subsidiaries are prepared for consolidation purposes in conformity with generally
accepted accounting principles in the United States or International Financial Reporting Standards, subject to the adjustments required
by generally accepted accounting principles in Japan.
The accompanying consolidated financial statements have been prepared in accordance with generally accepted accounting prin-
ciples in Japan which are different in certain respects as to the application and disclosure requirements of International Financial
Reporting Standards. These financial statements have been compiled from the consolidated financial statements filed with the Finan-
cial Services Agency as required by the Financial Instruments Law of Japan.
In addition, the notes to the consolidated financial statements include information, which is not required under generally accepted
accounting principles in Japan but is presented herein as additional information.
Certain reclassifications have been made to the prior year’s financial statements to conform to the current year’s presentation.
As permitted, amounts of less than ¥1 million have been omitted. Consequently, the totals shown in the accompanying financial
statements (both in Yen and U.S. dollars) do not necessarily agree with the sum of the individual amounts.
(b) Principles of consolidation
All significant companies over which MMC has effective control are consolidated. Significant companies over which MMC has the
ability to exercise significant influence have been accounted for by the equity method.
All significant inter-company transactions have been eliminated in consolidation.
Any differences at the date of acquisition between acquisition cost and the fair value of the net assets acquired are expensed when
incurred or are amortized over periods between 3 to 7 years on the period over which it is estimated to be effective, which is assessed
by each investment.
(c) Cash and cash equivalents
All highly liquid and low risk investments with maturities of three months or less when purchased are considered to be cash equivalents.
(d) Inventories
Inventories of MMC and its domestic consolidated subsidiaries are principally stated at cost determined by the first in first out (the
book value in the balance sheet may be devaluated if the deterioration in the profitability is recognized) or specific identification
method (the book value in the balance sheet may be devaluated if the deterioration in the profitability is recognized). Inventories of
the overseas consolidated subsidiaries are principally stated at the lower of cost or market value. Cost is determined by the specific
identification method.
(e) Investments
Investments in securities are classified either as held-to-maturity, investments in unconsolidated subsidiaries and affiliated companies,
or other securities. Held-to-maturity securities are stated at their amortized cost. No investments classified as held-to-maturity were
held during the years ended March 31, 2009 and 2008. Other securities with a readily determinable market value are stated at fair value
and the cost of such securities sold is computed based on the moving average method. The difference between the acquisition cost
and the carrying value of other securities, including unrealized gains and losses, is recognized in “Valuation difference on available-for-
sale securities” in the accompanying consolidated balance sheets. Other securities without a readily determinable market value are
stated at cost determined by the moving average method.
39
Annual Report 2009 MITSUBISHI MOTORS CORPORATION