Sony -- Chapter 2 Financial

Sony -- Chapter 2

Financial Reporting History -- Material Impacts

This chapter explores all restated financials for Sony Corporation for fiscal years 2007 through 2009. A review of all Form 20Fs for these years reveals that Sony appears to have an excellent degree of financial control. All restatements are due to adoption of new accounting standards.

In April, 2006, Sony adopted FAS No. 123 and began using its requirement for fair value-based method of accounting for employee stock-based compensation. Sony had previously accounted for its employee stock-based compensation in accordance with the provisions of APB No. 25. As a result of the adoption of FAS No. 123, the company's operating income decreased by 3,670 million yen for the fiscal year ended March 31, 2007. (Form 20F Year Ended Mar. 31, 2007)

In February 2006, Sony adopted FAS No. 155, electung to measure hybrid financial instruments at fair value. As a result of the adoption of FAS No. 155, Sony's operating income increased by 3,828 million yen for the fiscal year ended March 31, 2007. (Form 20F Year Ended Mar. 31, 2007) Also, on April 1, 2006, Sony recognized a net charge of 3,785 million yen (net of income taxes of 2,148 million yen) as a cumulative-effect adjustment to beginning retained earnings. (Form 20 F. Year Ended Mar. 31. 2008).

2.1.2.3 on April 1, 2004 Sony adopted SOP 03-1 which required the company to record additional reserves for long-duration life insurance contracts with minimum guarantee or annuity receivable options. As a result, Sony's operating income decreased by 5,156 million yen for the fiscal year ended March 31, 2005. Also, on April 1, 2004, Sony recognized a charge of 4,713 million yen (net of income taxes of 2,675 million yen) as a cumulative effect of an accounting change. (Form 20F Year Ended Mar. 31, 2008)

2.1.2.4 During the quarter ended December 31, 2004 Sony adopted EITF Issue No. 04-8 which requires that the maximum number of common stock that could be issued upon the conversion of contingently convertible debt instruments be included in diluted EPS computations from the date of issuance regardless of whether the conditions to exercise the stock acquisition rights have been met. As a result of the adoption of EITF Issue No. 04-8, Sony's diluted, Sony's diluted EPS of income before cumulative effect of an accounting change and net income for the fiscal year ended March 31, 2005 decreased by 7.26 yen and 7.06 yen, respectively, as a result of adopting EITF Issue No. 04-8. (Form 20F Year Ended Mar. 31, 2008)