CENTRAL JAPAN RAILWAY COMPANY Annual Report 2007

Lease Accounting
On March 30, 2007, the ASBJ issued ASBJ Statement No.13, “Accounting Standard for Lease Transactions”, which revised the existing accounting standard for lease
transactions issued on June 17, 1993.
Under the existing accounting standard, finance leases that deem to transfer ownership of the leased property to the lessee are to be capitalized, however, other finance leases
are permitted to be accounted for as operating lease transactions if certain “as if capitalized” information is disclosed in the note to the lessee’s financial statements.
The revised accounting standard requires that all finance lease transactions should be capitalized. The revised accounting standard for lease transactions is effective for fiscal
years beginning on or after April 1, 2008 with early adoption permitted for fiscal years beginning on or after April 1, 2007.
4. ACCOUNTING CHANGES
Effective April 1, 2004, the Company adopted the declining-balance method of depreciation for the buildings and structures of the Shinkansen railway ground facilities, which
had been previously depreciated by the straight-line method which had been different from method adopted for conventional railway network since assuming the Shinkansen
railway ground facilities. This change was made to reinforce the financial position and unify the method of Shinkansen railway ground facilities to that of conventional
railway network in connection with both commencement of Shinagawa station and drastic timetable revisions focusing on completion of improving the Shinkansen trains to
operate at 270 km/hr.
The effects of this change were to increase depreciation by ¥39,455 million and to decrease operating income and income before income taxes and minority interests,
respectively, by approximately ¥39,455 million for the year ended March 31, 2005.
5. INVESTMENT SECURITIES
Information regarding investment securities with readily determinable fair values classified as available-for-sale as of March 31, 2007 and 2006 is as follows:
2007
2006
¥ 40,660
70
276
¥ 45,645
90
¥ 53 ¥ 86,252
71
366
¥ 18,660
70
276
¥ 41,963
155
¥ 13 ¥ 60,610
70
431
$ 344,576
601
2,338
$ 386,840
2007
763
$ 449 $ 730,967
601
3,101
Proceeds from sales of available-for-sale securities for the years ended March 31, 2007, 2006 and 2005 were ¥11 million ($93 thousand), ¥111 million and ¥22,797 million,
respectively. Gross realized gains and losses on these sales, computed on the moving average cost basis, were nil for the year ended March 31, 2007, ¥6 million and ¥2
million, respectively, for the year ended March 31, 2006, and ¥21,782 million and nil, respectively, for the year ended March 31, 2005.
Available-for-sale securities whose fair value is not readily determinable as of March 31, 2007 and 2006 were as follows:
Total
2007 2006 2007
¥ 16,085
5,000
¥ 21,085
¥ 16,157
5,000
¥ 21,157
The carrying values of debt securities by contractual maturities for securities classified as available-for-sale securities as of March 31, 2007 are as follows:
Total
$ 136,314
42,372
$ 178,686
Certain securities, which amounted to ¥62 million ($525 thousand) and ¥63 million as of March 31, 2007 and 2006, respectively, were included in the prepaid expenses and
other on the accompanying consolidated balance sheets.
6. LONG-LIVED ASSETS
The Companies recognize all properties of the railway business as one asset group, which includes both the Shinkansen railway ground facilities and conventional railway
network. The business properties other than railway business properties are also principally divided into each asset groups in which the Companies continuously receive cash
flows in consideration of complementary cash flows.
The Companies reviewed their long-lived assets for impairment as of the year ended March 31, 2005 and, as a result, recognized an impairment loss of ¥1,095 million as
other expense for commercial facilities in Tokyo, which are included in buildings and structures, due to decrease of profitability and lands in Aichi or other areas, which are
included in construction in progress, due to having been idle by freezing plans of increasing lines. These carrying amounts were written down to the recoverable amounts,
which were measured at memorandum value, due to the fact that there were little opportunities to sell or divert those assets.
The Companies reviewed their long-lived assets for impairment as of the year ended March 31, 2006 and, as a result, recognized an impairment loss of ¥2,450 million for
land mostly used as a company house for its employees. Since the Companies committed to a plan to sell the land, these carrying amounts were written down to the
recoverable amounts, which were measured at its net selling value determined by quotation from real estate appraisers.
The Companies reviewed their long-lived assets for impairment as of the year ended March 31, 2007 and, as a result, recognized an impairment loss of ¥1,276 million
($10,813 thousand) for commercial buildings and structures. Since the Companies committed to a plan to retire assets with renewal construction, these carrying amounts
were written down to the recoverable amounts, which were measured at its utility value based on the future cash flows discounted in the rate of 1.185%.
¥ 20
35
15
¥ 70
$ 169
296
128
$ 593
43