Integrated Report 2020

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1. Summary of Significant Accounting Policies(a) Basis of presenting financial statementsLINTEC Corporation (the “Company”) maintains its accounting records and prepares its consolidated financial statements in accordance with accounting principles generally accepted in Japan, which are different in certain respects as to the application and disclosure requirements of International Financial Reporting Standards. The accompanying consolidated financial statements have been compiled from the consolidated financial statements prepared by the Company as required by the Financial Instruments and Exchange Act of Japan.In addition, the notes to the consolidated financial statements include information which is not required under accounting principles generally accepted in Japan but is presented herein as additional information.For the convenience of the readers, the accompanying consolidated financial statements have been presented in U.S. dollars by translating all Japanese yen amounts at the rate of ¥108.83=U.S.$1, the prevailing exchange rate as of March 31, 2020. This translation should not be construed as a representation that the Japanese yen amounts could be converted into U.S. dollars at this or any other rate of exchange.As permitted under the Financial Instruments and Exchange Act of Japan, amounts of less than one million yen have been omitted. As a result, the totals shown in the accompanying consolidated financial statements do not necessarily agree with the sum of the individual amounts.Certain reclassifications of previously reported amounts have been made to conform to the consolidated financial statements for the year ended March 31, 2020 presentation.(b) ConsolidationThe accompanying consolidated financial statements include the accounts of the Company and its 41 significant subsidiaries as of March 31, 2020, but exclude subsidiaries whose total assets, net sales, profit and retained earnings are not material in relation to the compa-rable amounts in these statements. All significant intercompany accounts and transactions have been eliminated in consolidation.Goodwill is amortized over periods of the estimated useful lives (mainly 10 years) on a straight-line basis.Investments in subsidiaries and affiliates, which are not consoli-dated or accounted for by the equity method, are carried at cost. Where there has been a permanent decline in the value of such investments, the Company has written down the investments.Certain subsidiaries are consolidated on the basis of fiscal period ending December 31, which differ from that of the Company. The necessary adjustments are made to the financial statements of such subsidiaries to reflect any significant transactions from their respective fiscal year ends to March 31.(c) Foreign currency translationReceivables, payables and securities denominated in foreign curren-cies are converted into Japanese yen at the exchange rates at fiscal year-end. Transactions in foreign currencies are recorded based on the prevailing exchange rates on the transaction dates and the resulting translation gains or losses are included in statement of income.In respect of the financial statement items of overseas subsidiaries, all assets and liabilities accounts are translated into Japanese yen by applying the exchange rates in effect at the fiscal year-end. All income and expense accounts are translated into Japanese yen by applying the average exchange rates during the fiscal year.Translation differences after allocating to non-controlling interest for portions attributable to non-controlling interest are reported as foreign currency translation adjustments in a separate component of net assets in the accompanying consolidated balance sheet.(d) Investment securitiesSecurities with market value are stated at fair value, and changes in fair value are recorded as a separate component of net assets at an amount, net of tax, and the moving-average method is used to calcu-late the original cost. Securities without market value are stated at cost determined by the moving-average method.(e) Derivatives Derivatives are stated at fair value.(f) InventoriesInventories mainly apply the cost method based on the weighted-average method, which determines the amount of the inventories shown on the consolidated balance sheet by writing them down based on the decrease in their profitability.Machinery applies the cost method based on the specific identifica-tion method, which determines the amount of the inventories shown on the consolidated balance sheet by writing them down based on the decrease in their profitability.(g) Property, plant and equipment (Excluding leased assets)Depreciation is computed by the straight-line method over the estimated useful lives of the respective assets.The significant estimated useful lives are summarized as follows: Buildings and structures 3–50 years Machinery, equipment and vehicles 3–17 years(h) Intangible assets (Excluding leased assets)Capitalized costs of software for internal use are amortized using the straight-line method over estimated useful lives (5 years).(i) Leased assetsLeased assets arising from finance lease transactions which transfer ownership to the lessees are depreciated as the same way as the owned property, plant and equipment.Leased assets arising from finance lease transactions which do not transfer ownership to the lessees are depreciated to a residual value of zero by the straight-line method over the estimated useful lives deter-mined based on the contract terms.Right-of-use assets are depreciated to a residual value of zero by the straight-line method over the estimated useful lives determined based on the contract terms.Regarding overseas consolidated subsidiaries other than those that adopt US accounting standards (US-GAAP), financial statements have been prepared based on International Financial Reporting Standard (hereinafter IFRS), but as stated in “Changes in accounting principle”, IFRS 16 “Leases” was applied from the beginning of the year ended March 31, 2020. Under IFRS 16 “Leases”, lessees, in principle, record all leases as assets and liabilities on the consolidated balance sheet. (j) Allowance for doubtful accountsThe allowance for doubtful accounts is provided at the amount of estimated uncollectible accounts, based on individual collectibility with respect to identified doubtful receivables and past experience of doubtful receivables.(k) Provision for directors’ bonusesBonus to directors is accrued at the year-end and to be paid in the following year when such bonuses are attributable.LINTEC Corporation and its consolidated subsidiaries March 31, 2020Notes to Consolidated Financial StatementsLINTEC Integrated Report 2020FoundationStrategyOverviewFinancial Information77