earnings also decreased by ¥18,132 million since the net retirement
benefit obligation at transition and actuarial loss was charged directly
to retained earnings for the year ended March 31, 2004. The effect
of this change on segment information is explained in Note 21.
(c) Until the year ended March 31, 2003, noncancelable lease
transactions of the Company and its domestic consolidated
subsidiaries were accounted for as operating leases (whether such
leases were classified as operating or finance leases) except that
lease agreements which stipulated the transfer of ownership of the
leased assets to the lessee were accounted for as finance leases.
Effective April 1, 2003, the Company and its domestic consolidated
subsidiaries changed their method of accounting for noncancelable
lease transactions which transfer substantially all risks and rewards
associated with the ownership of assets, from accounting for them as
operating leases, to finance leases. This change was made in order to
achieve a better matching of revenue and expenses by calculating
manufacturing costs more accurately and to establish a better
presentation of the Company’s and its domestic consolidated
subsidiaries’ financial position by reflecting lease transactions more
appropriately in its consolidated financial statements, considering the
increasing materiality of these lease transactions as well as from an
international point of view. The effect of this change in method of
accounting was to decrease sales, cost of sales and selling, general
and administrative expenses by ¥17,943 million, ¥38,910 million and
¥624 million, respectively, and to increase operating income and
income before income taxes and minority interests by ¥21,591
million and ¥17,659 million respectively, for the year ended March
31, 2004 as compared with the corresponding amounts which would
have been recorded if the previous method had been followed. In
addition, trade and sales finance receivables, tangible fixed assets
and lease obligation increased by ¥70,670 million, ¥66,514 million
and ¥120,061 million respectively, at March 31, 2004 over the
corresponding amounts which would have been recorded if the
previous method had been followed. The effect of this change on
segment information is explained in Note 21.
(d) Until the year ended March 31, 2004, freight and shipping costs
of the Company and certain consolidated subsidiaries were included
in selling, general and administrative expenses. Effective April 1,
2004, the Company and those consolidated subsidiaries began to
account for the freight and shipping costs as cost of sales. This
change was made in order to present gross profit more accurately by
including the freight and shipping costs in cost of sales and matching
them directly with sales as well as to unify the accounting policy
among the Nissan group considering the fact that shipping costs for
export parts to be used for manufacture in overseas countries have
increased due to the expansion of manufacturing activities outside
Japan.