(a) Basis of Presentation
Nissan Motor Co., Ltd. (the “Company”) and its domestic subsidiaries
maintain their books of account in conformity with the financial
accounting standards of Japan, and its foreign subsidiaries maintain
their books of account in conformity with those of their countries of
domicile.
The accompanying consolidated financial statements have been
prepared 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, and have been compiled from the consolidated
financial statements prepared by the Company as required by the
Securities and Exchange Law of Japan.
Certain amounts in the prior years’ financial statements have been
reclassified to conform to the current year’s presentation.
(b) Principles of consolidation and accounting for investments
in unconsolidated subsidiaries and affiliates
The accompanying consolidated financial statements include the
accounts of the Company and any significant companies controlled
directly or indirectly by the Company. Companies over which the
Company exercises significant influence in terms of their operating
and financial policies have been included in the consolidated financial
statements on an equity basis. All significant intercompany balances
and transactions have been eliminated in consolidation.
The financial statements of the Company’s subsidiaries in certain
foreign countries including Mexico have been prepared based on
general price-level accounting. The related revaluation adjustments
made to reflect the effect of inflation in those countries in the
accompanying consolidated financial statements have been charged
or credited to operations and are directly reflected in retained
earnings.
Investments in subsidiaries and affiliates which are not
consolidated or accounted for by the equity method are carried at
cost or less. Where there has been a permanent decline in the value
of such investments, the Company has written down the investments.
Differences between the cost and the underlying net equity at fair
value of investments in consolidated subsidiaries and in companies
which are accounted for by the equity method have been amortized
by the straight-line method over periods not exceeding 20 years.
(c) Foreign currency translation
The balance sheet accounts of the foreign consolidated subsidiaries
are translated into yen at the rates of exchange in effect at the
balance sheet date, except for the components of shareholders’
equity which are translated at their historical exchange rates.
Revenue and expense accounts are translated at the average rate of
exchange in effect during the year. Translation adjustments are
presented as a component of shareholders’ equity and minority
interests in its consolidated financial statements.
(d) Cash equivalents
All highly liquid investments with maturity of three months or less
when purchased are considered cash equivalents.
(e) Inventories
Inventories are stated principally at the lower of cost or market, cost
being determined principally by the first-in, first-out method. See Note
2 (a).
(f) Short-term investments and investment securities
Securities other than equity securities issued by subsidiaries and
affiliates are classified into three categories: trading, held-to-maturity
or other securities. Trading securities are carried at fair value and
held-to-maturity securities are carried at amortized cost. Marketable
securities classified as other securities are carried at fair value with
changes in unrealized holding gain or loss, net of the applicable
income taxes, included directly in shareholders’ equity. Non-
marketable securities classified as other securities are carried at cost.
Cost of securities sold is determined by the moving average method.
(g) Property, plant and equipment and depreciation
Depreciation of property, plant and equipment of the Company and its