Annual Report 2012


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NOTESTOCONSOLIDATEDFINANCIALSTATEMENTS1.SUMMARYOFSIGNIfiCANTACCOUNTINGPOLICIES(A)BASISOFPREPARATIONTHEACCOMPANYINGCONSOLIDATEDfiNANCIALSTATEMENTSOFKAWASAKIKIS-ENKAISHA,LTD.(THE“COMPANY”)ANDITSCONSOLIDATEDSUBSIDIARIESHAVEBEENPREPAREDONTHEBASISOFACCOUNTINGPRINCIPLESGENERALLYACCEPTEDINJAPAN,WHICHAREDIFFERENTINCERTAINRESPECTSASTOTHEAPPLICATIONANDDISCLOSUREREQUIREMENTSOFINTERNATIONALFINANCIALREPORTINGSTANDARDS,ANDARECOMPILEDFROMTHECONSOLIDATEDfiNANCIALSTATEMENTSPREPAREDBYTHECOMPANYASREQUIREDBYTHEFINANCIALINSTRUMENTSANDEXCHANGEACTOFJAPAN.INPREPARINGTHEACCOMPANYINGCONSOLIDATEDfiNANCIALSTATEMENTS,CERTAINRECLASSIfiCATIONSANDREARRANGEMENTSHAVEBEENMADETOPRESENTTHEMINAFORMWHICHISFAMILIARTOREADERSOUTSIDEJA-PAN.HOWEVER,NOADJUSTMENTSHAVEBEENMADEWHICHWOULDCHANGETHEfiNANCIALPOSITIONORTHERESULTSOFOPERATIONSPRESENTEDINTHEORIGINALCONSOLIDATEDfiNANCIALSTATEMENTS.CERTAINRECLASSIfiCATIONSOFPREVIOUSLYREPORTEDAMOUNTSHAVEBEENMADETOCONFORMTHECONSOLIDATEDfiNANCIALSTATEMENTSFORTHEYEARENDEDMARCH31,2011TOTHE2012PRESENTATION.SUCHRECLASSIfi-CATIONSHADNOEFFECTONCONSOLIDATEDNETINCOMEORNETASSETS.THETRANSLATIONOFYENAMOUNTSINTOU.S.DOLLARAMOUNTSISINCLUD-EDSOLELYFORCONVENIENCEANDHASBEENMADE,ASAMATTEROFARITHME-TICCOMPUTATIONONLY,AT¥82.19=U.S.$1.00,THEAPPROXIMATERATEOFEXCHANGEPREVAILINGONMARCH31,2012.FURTHERMORE,THETRANSLATIONSHOULDNOTBECONSTRUEDASAREPRESENTATIONTHATYENHAVEBEEN,COULDHAVEBEEN,ORCOULDINTHEFUTUREBE,CONVERTEDINTOU.S.DOLLARSATTHATORANYOTHERRATE.(B)PRINCIPLESOFCONSOLIDATIONTHEACCOMPANYINGCONSOLIDATEDfiNANCIALSTATEMENTSINCLUDETHEAC-COUNTSOFTHECOMPANYAND288AND316SUBSIDIARIESFORTHEYEARSENDEDMARCH31,2012AND2011,RESPECTIVELY.THEPRINCIPLESOFCON-SOLIDATIONARETOINCLUDESIGNIfiCANTSUBSIDIARIES,WHOSEVOTINGINTERESTSAREOWNED40%ORMOREBYTHECONSOLIDATEDGROUPANDWHOSEDECI-SION-MAKINGCONTROLOVERTHEIROPERATIONSISSIGNIfiCANTLYAFFECTEDBYTHECONSOLIDATEDGROUPTHROUGHfiNANCIALORTECHNICALSUPPORT,PERSON-NEL,TRANSACTIONS,ANDSOFORTH.INADDITION,SIGNIfiCANTAFfiLIATESWHOSEDECISION-MAKINGCONTROLOVERTHEIROPERATIONSISSIGNIfiCANTLYAFFECTEDBYTHECONSOLIDATEDGROUPINVARIOUSWAYSAREACCOUNTEDFORBYTHEEQUITYMETHOD.FORTHEPURPOSESOFCONSOLIDATION,ALLSIGNIfiCANTINTERCOMPANYTRANSACTIONS,ACCOUNTBALANCESANDUNREALIZEDPROfiTAMONGTHECON-SOLIDATEDGROUPCOMPANIESHAVEBEENELIMINATED.GOODWILLANDNEGATIVEGOODWILLARE,ASARULE,AMORTIZEDBYTHESTRAIGHT-LINEMETHODOVERAPERIODOFfiVEYEARS.(C)ACCOUNTINGPERIODMOSTOFTHECONSOLIDATEDSUBSIDIARIESHAVEADECEMBER31YEARENDWHICHDOESNOTACCORDWITHTHATOFTHECOMPANY.ASARESULT,ADJUST-MENTSHAVEBEENMADEFORANYSIGNIfiCANTTRANSACTIONSWHICHTOOKPLACEDURINGTHEPERIODBETWEENTHEYEARENDOFTHESESUBSIDIARIESANDTHEYEARENDOFTHECOMPANY.(D)TRANSLATIONOFFOREIGNCURRENCIESALLMONETARYASSETSANDLIABILITIESDENOMINATEDINFOREIGNCURRENCIESOTHERTHANTHOSEHEDGEDBYFORWARDFOREIGNEXCHANGECONTRACTSARETRANSLATEDINTOYENATTHERATESOFEXCHANGEINEFFECTATTHEBALANCESHEETDATE.GAINORLOSSRESULTINGFROMTHESETTLEMENTOFTHESEITEMSISCREDITEDORCHARGEDTOINCOME.(E)TRANSLATIONOFACCOUNTSOFOVERSEASCONSOLIDATEDSUBSIDIARIESTHEACCOUNTSOFTHEOVERSEASCONSOLIDATEDSUBSIDIARIES,EXCEPTFORTHECOMPONENTSOFNETASSETSEXCLUDINGMINORITYINTERESTSOFCONSOLI-DATEDSUBSIDIARIES,ARETRANSLATEDINTOYENATTHERATESOFEXCHANGEINEFFECTATTHEBALANCESHEETDATE.THECOMPONENTSOFNETASSETSEX-CLUDINGMINORITYINTERESTSOFCONSOLIDATEDSUBSIDIARIESARETRANSLATEDATTHEIRHISTORICALEXCHANGERATES.DIFFERENCESARISINGFROMTRANSLATIONAREPRESENTEDASTRANSLATIONADJUSTMENTSANDMINORITYINTERESTSINTHEAC-COMPANYINGCONSOLIDATEDfiNANCIALSTATEMENTS.(F)CASHANDCASHEQUIVALENTSCASHANDCASHEQUIVALENTSINCLUDECASHONHANDANDINBANKSANDOTHERHIGHLYLIQUIDINVESTMENTSWITHMATURITIESOFTHREEMONTHSORLESSWHENPURCHASED.(G)ALLOWANCEFORDOUBTFULRECEIVABLESANALLOWANCEFORDOUBTFULRECEIVABLESISPROVIDEDATANAMOUNTCALCU-LATEDBASEDONTHEHISTORICALEXPERIENCEOFBADDEBTSONORDINARYRE-CEIVABLESPLUSANADDITIONALESTIMATEOFPROBABLESPECIfiCBADDEBTSFROMCUSTOMERSEXPERIENCINGfiNANCIALDIFfiCULTIES.(H)INVENTORIESINVENTORIESARESTATEDATTHELOWEROFCOSTORNETSELLINGVALUE,COSTBEINGDETERMINEDBYTHEMOVINGAVERAGEMETHOD.(I)INVESTMENTSINSECURITIESSECURITIESARECLASSIfiEDINTOTHREECATEGORIES:TRADINGSECURITIES,HELD-TO-MATURITYDEBTSECURITIESOROTHERSECURITIES.TRADINGSECURI-TIES,CONSISTINGOFDEBTANDMARKETABLEEQUITYSECURITIES,ARESTATEDATFAIRVALUE.GAINORLOSS,BOTHREALIZEDANDUNREALIZED,ARECREDITEDORCHARGEDTOINCOME.HELD-TO-MATURITYDEBTSECURITIESARESTATEDATTHEIRAMORTIZEDCOST.MARKETABLESECURITIESCLASSIfiEDASOTHERSECURI-TIESARECARRIEDATFAIRVALUEWITHANYCHANGESINUNREALIZEDHOLDINGGAINORLOSS,NETOFTHEAPPLICABLEINCOMETAXES,REPORTEDASASEPA-RATECOMPONENTOFNETASSETS.NON-MARKETABLESECURITIESCLASSIfiEDASOTHERSECURITIESARECARRIEDATCOSTDETERMINEDBYTHEMOVINGAV-ERAGEMETHOD.UNDERTHECORPORATIONLAWOFJAPAN(THE“LAW”),UNREALIZEDHOLD-INGGAINONOTHERSECURITIES,NETOFTHERELATEDTAXES,ISNOTAVAILABLEFORDISTRIBUTIONASDIVIDENDS.(J)VESSELS,PROPERTYANDEQUIPMENTANDDEPRECIATIONDEPRECIATIONOFVESSELSISCOMPUTEDBYTHESTRAIGHT-LINEORTHEDECLINING-BALANCEMETHODOVERTHEESTIMATEDUSEFULLIVESOFTHERE-SPECTIVEVESSELS.KAWASAKIKISENKAISHA,LTD.ANDCONSOLIDATEDSUBSIDIARIESMARCH31,201253ANNUALREPORT2012


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