| 7. Consolidated Statements of Cash Flows | ||
 Supplemental information 
Significant Matters Pertaining to the Preparation of Consolidated Financial Statements The consolidated financial statements of NTT have been prepared in conformity with accounting principles generally accepted in the United States of America (Accounting Principles Board Opinions, Statements of Financial Accounting Standards, etc.) 1. Application of New Accounting Standard Accounting for Conditional Asset Retirement Obligations Effective April 1, 2005, NTT Group adopted the Financial Accounting Standards Board ("FASB") Interpretation No. 47 ("FIN 47") "Accounting for Conditional Asset Retirement Obligations - an interpretation of FASB Statement No. 143." FIN 47 provides guidance relating to the identification of and financial reporting for legal obligations to perform an asset retirement activity. The Interpretation requires recognition of a liability for the fair value of a conditional asset retirement obligation when incurred if the liability's fair value can be reasonably estimated. The adoption of FIN 47 did not have an impact on the results of operations or the financial position of NTT Group. 2. Principal Accounting Policies (1) Marketable Securities SFAS 115, "Accounting for Certain Investments in Debt and Equity Securities" applies. (2) Inventories Inventories are stated at cost, not in excess of market value. The cost of telecommunications equipment to be sold is determined by the first-in first-out method. (3) Property, Plant, and Equipment and Depreciation Property, plant, and equipment are stated at cost. Depreciation is computed principally using the declining-balance method with the exception of buildings for which the straight-line method. (4) Goodwill and Other Intangible Assets SFAS 142, "Goodwill and Other Intangible Assets" applies. (5) Liabilities for Employees' Severance Payments SFAS 87, "Employers' Accounting for Pensions" and SFAS 88, "Employers' Accounting for Settlements and Curtailments of Defined Benefit Pension Plans and for Termination of Benefits" apply. (6) Derivative Financial Instruments SFAS 133, "Accounting for Derivatives Instruments and Hedging Activities," SFAS 138 "Accounting for Certain Derivatives Instruments and Certain Hedging Activities, an amendment of SFAS No. 133" and SFAS 149, "Amendment of Statement 133 on Derivative Instruments and Hedging Activities" apply. (7) Income Taxes Income taxes are computed on income (loss) before income taxes in the consolidated statements of income. According to the asset and liability approach, the expected future consequences of temporary differences between the carrying amounts and the tax basis of assets and liabilities and of operating loss carryforward are recognized as deferred tax assets or liabilities. | ||
|
