Annual Report 2012


>> P.54

DEPRECIATIONOFPROPERTYANDEQUIPMENTISCOMPUTEDPRINCIPALLYBYTHEDECLINING-BALANCEMETHODOVERTHEESTIMATEDUSEFULLIVESOFTHERESPECTIVEASSETS.MAINTENANCE,REPAIRSANDMINORIMPROVEMENTSARECHARGEDTOIN-COMEASINCURRED.MAJORIMPROVEMENTSARECAPITALIZED.(K)CAPITALIZATIONOFINTERESTEXPENSEINTERESTEXPENSEISGENERALLYCHARGEDTOINCOMEASINCURRED.HOW-EVER,INTERESTEXPENSEINCURREDINTHECONSTRUCTIONOFCERTAINVESSELSISCAPITALIZEDANDINCLUDEDINTHECOSTSOFTHEASSETSIFTHECONSTRUC-TIONPERIODISSUBSTANTIALLYLONGANDTHEAMOUNTOFINTERESTINCURREDDURINGTHEPERIODISSIGNIfiCANTLYLARGE.(L)LEASESLEASEDASSETSUNDERfiNANCELEASETRANSACTIONSTHATTRANSFEROWNER-SHIPTOTHELESSEEAREDEPRECIATEDBYTHESAMEMETHODSUSEDFOROWNEDfiXEDASSETS.LEASEDASSETSUNDERfiNANCELEASETRANSACTIONSTHATDONOTTRANS-FEROWNERSHIPTOTHELESSEEAREDEPRECIATEDTOARESIDUALVALUEOFZEROBYSTRAIGHT-LINEMETHODOVERTHELEASETERM.FINANCELEASETRANSACTIONSTHATDONOTTRANSFEROWNERSHIPTOTHELESSEE,STARTINGONORBEFOREMARCH31,2008AREACCOUNTEDFORASOPERATINGLEASETRANSACTIONS.(M)RESEARCHANDDEVELOPMENTCOSTSANDCOMPUTERSOFTWARERESEARCHANDDEVELOPMENTCOSTSARECHARGEDTOINCOMEASINCURRED.EXPENDITURESRELATINGTOTHEDEVELOPMENTOFCOMPUTERSOFTWAREINTENDEDFORINTERNALUSEARECHARGEDTOINCOMEWHENINCURRED,UN-LESSTHESEAREDEEMEDTOCONTRIBUTETOTHEGENERATIONOFFUTUREIN-COMEORCOSTSAVINGS.SUCHEXPENDITURESARECAPITALIZEDASASSETSANDAMORTIZEDBYTHESTRAIGHT-LINEMETHODOVERTHEIRESTIMATEDUSEFULLIFEOF5YEARS.(N)RETIREMENTBENEfiTSTHECOMPANYANDITSDOMESTICCONSOLIDATEDSUBSIDIARIESHAVETAX-QUALIfiEDDEfiNEDBENEfiTPENSIONPLANSANDRETIREMENTBENEfiTPLANS.HOWEVER,DURINGTHEYEARENDEDMARCH31,2011,THECOMPANYHADTRANSFERREDATAX-QUALIfiEDDEfiNEDBENEfiTPLANTOADEfiNEDBENEfiTPENSIONPLAN.CERTAINOVERSEASCONSOLIDATEDSUBSIDIARIESALSOHAVEEMPLOYEES’DEfiNEDBENEfiTPENSIONPLANS.THEEMPLOYEES’RETIREMENTBENEfiTPLANSPROVIDEFORALUMP-SUMPAYMENTDETERMINEDBYREFERENCETOTHECURRENTRATEOFPAY,LENGTHOFSERVICEANDCONDITIONSUNDERWHICHTHETERMINATIONOCCURS.ANALLOWANCEFOREMPLOYEES’RETIREMENTBENEfiTSHASBEENPRO-VIDEDBASEDONTHEAMOUNTOFTHEPROJECTEDBENEfiTOBLIGATIONREDUCEDBYTHEPENSIONPLANASSETSATFAIRVALUEATTHEENDOFTHEYEAR.ACTUARIALDIFFERENCESAREAMORTIZEDINTHEYEARFOLLOWINGTHEYEARINWHICHTHEDIFFERENCESARERECOGNIZEDBYTHESTRAIGHT-LINEMETHODPRIN-CIPALLYOVERAPERIODOFNINEYEARS,WHICHFALLSWITHINTHEESTIMATEDAVERAGEREMAININGYEARSOFSERVICEOFTHEELIGIBLEEMPLOYEES.PASTSERVICECOSTISAMORTIZEDBYTHESTRAIGHT-LINEMETHODPRINCI-PALLYOVERAPERIODOFNINEYEARS,WHICHFALLSWITHINTHEESTIMATEDAVER-AGEREMAININGYEARSOFSERVICEOFTHEELIGIBLEEMPLOYEES.CERTAINCONSOLIDATEDSUBSIDIARIESALSOPROVIDEFORRETIREMENTBEN-EfiTSTODIRECTORSANDCORPORATEAUDITORSBASEDONTHEIRINTERNALRULESATTHEAMOUNTWHICHWOULDBEREQUIREDTOBEPAIDIFALLDIRECTORSANDCORPORATEAUDITORSRETIREDATTHEBALANCESHEETDATE.(O)ACCRUEDEXPENSESFOROVERHAULOFVESSELSVESSELSOFTHECOMPANYANDITSCONSOLIDATEDSUBSIDIARIESARESUBJECTTOPERIODICOVERHAUL.ANACCRUALISPROVIDEDONTHEBASISOFTHEESTI-MATEDAMOUNTOFTOTALEXPENSESEXPECTEDTOBEINCURREDFOROVERHAUL-INGTHEVESSELS.(P)DERIVATIVESANDHEDGINGACTIVITIESTHECOMPANYANDITSCONSOLIDATEDSUBSIDIARIESUTILIZEDERIVATIVESTOHEDGETHERISKARISINGFROMflUCTUATIONINFOREIGNCURRENCYEXCHANGERATES,INTERESTRATESANDMARKETPRICES.UNDERTHEIRDERIVATIVESPOLICIES,TRADINGINDERIVATIVESISNOTENTEREDINTOFORSPECULATIVEPURPOSES.DERIVATIVESPOSITIONSARECARRIEDATFAIRVALUEWITHANYCHANGESINUNREALIZEDGAINORLOSSCREDITEDORCHARGEDTOINCOME,EXCEPTFORTHOSEWHICHMEETTHECRITERIAFORDEFERRALHEDGEACCOUNTINGUNDERWHICHUN-REALIZEDGAINORLOSS,NETOFTHEAPPLICABLEINCOMETAXES,ISREPORTEDASACOMPONENTOFNETASSETS.IFINTERESTRATESWAPCONTRACTSAREUSEDASHEDGESANDMEETCER-TAINHEDGINGCRITERIA,THENETAMOUNTTOBEPAIDORRECEIVEDUNDERTHEINTERESTRATESWAPCONTRACTISADDEDTOORDEDUCTEDFROMTHEINTERESTONTHEASSETSORLIABILITIESFORWHICHTHESWAPCONTRACTISEXECUTED.FORWARDFOREIGNEXCHANGECONTRACTSWHICHMEETCERTAINCRITERIAAREACCOUNTEDFORBYTHEALLOCATIONMETHODWHICHREQUIRESTHATRECOG-NIZEDFOREIGNCURRENCYRECEIVABLESORPAYABLESBETRANSLATEDATTHECORRESPONDINGCONTRACTRATES.(Q)INCOMETAXESDEFERREDINCOMETAXESHAVEBEENRECOGNIZEDWITHRESPECTTOTHEDIF-FERENCESBETWEENfiNANCIALREPORTINGANDTHETAXBASESOFTHEASSETSANDLIABILITIES.DEFERREDINCOMETAXESAREMEASUREDATTHERATESWHICHAREEXPECTEDTOAPPLYTOTHEPERIODWHENEACHASSETORLIABILITYISREAL-IZED,BASEDONTHETAXRATESWHICHHAVEBEENENACTEDASOFTHEBAL-ANCESHEETDATEORARESUBSEQUENTLYENACTED.(R)DISTRIBUTIONOFRETAINEDEARNINGSUNDERTHELAWANDTHECOMPANY’SARTICLESOFINCORPORATION,THEDIS-TRIBUTIONOFRETAINEDEARNINGSWITHRESPECTTOAGIVENfiSCALYEARENDISMADEBYRESOLUTIONOFTHESHAREHOLDERSATAGENERALMEETINGHELDSUB-SEQUENTTOTHECLOSEOFTHEfiNANCIALYEAR.THEDISTRIBUTIONOFRETAINEDEARNINGSWITHRESPECTTOTHEINTERIMfiNANCIALPERIODISMADEBYRESOLU-TIONOFTHEBOARDOFDIRECTORS.(S)REVENUESANDRELATEDCOSTSREVENUESOFTHECOMPANYANDITSCONSOLIDATEDSUBSIDIARIESFROMCARGOFREIGHTANDTHERELATEDCOSTSANDEXPENSES,EXCEPTFORTHOSEFROMCONTAINERVESSELS,ARERECOGNIZEDINFULLASOFTHEDATESONWHICHTHEVESSELSCOMPLETETHEIRRESPECTIVEVOYAGES(THEVOYAGECOMPLETIONMETHOD).REVENUESFROMCONTAINERVESSELSARERECOGNIZED,BASEDONTHEPASSAGEOFTHETRANSPORTATIONPERIOD(THECOMPLEXTRANSPORTATION54ANNUALREPORT2012


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