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Leases | 12 Months Ended
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Mar. 31, 2023
Leases [Abstract] |
Leases | 6. Leases (1) Lessor Some of the contracts include options to extend or to terminate the lease. The Company and its subsidiaries determine the lease term while taking such periods covered by options into account when determined the lease term when it is reasonably certain that it will exercise these options. The majority of the lease contracts do not contain bargain purchase options for customers. The estimated unguaranteed residual value represents estimated proceeds from the disposition of equipment at the time the lease is terminated. The estimated unguaranteed residual value is determined based on market value of used equipment, estimates of when and how much equipment will become obsolete, and actual recovery being experienced for similar used equipment. The Company and its subsidiaries may incur losses if the estimated residual amounts are unable to collect or need to recognize valuation losses when the estimates differ from actual trends in equipment valuation and the secondhand market. The risk of loss on leased assets relating to the estimated unguaranteed residual value of the leased assets is monitored through projections of the estimated unguaranteed residual value at lease origination and periodic review of estimated unguaranteed residual value. When auto leases are bundled with maintenance contracts, considerations on contracts are allocated based upon the estimated standalone selling prices of the lease and non-lease components. Lease components generally include product and financing cost, and non-lease components generally consist of maintenance contracts. A certain subsidiary is providing automobile related services, and applying practical expedients, to not separate non-lease components from the associated lease components. In this service, ASC 606 is applied to the entire contract because the consideration related to non-lease components accounts for the majority of contract consideration. Revenues from these operations are recognized over the customers’ usage period of the services, since customers simultaneously receive and consume the benefits when the performance obligations are satisfied. The value transferred to customers is directly measured based on the usage period. Lease income for fiscal 2021, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | Fiscal Year ended March 31, 2021 |  |  | Fiscal Year ended March 31, 2022 |  |  | Fiscal Year ended March 31, 2023 |
Lease income – net investment in leases |  |  |  |  |  |  |  |  |  |  |  |
Interest income |  | ¥ | 69,718 |  |  | ¥ | 73,379 |  |  | ¥ | 80,810 |
Other |  |  | 2,113 |  |  |  | 2,598 |  |  |  | 2,568 |
Lease income – operating leases* |  |  | 397,065 |  |  |  | 450,454 |  |  |  | 499,541 |
Total lease income |  | ¥ | 468,896 |  |  | ¥ | 526,431 |  |  | ¥ | 582,919 |
* | Gains from the disposition of real estate under operating leases included in operating lease revenues were ¥15,459 million, ¥17,912 million and ¥25,699 million, and gains from the disposition of operating lease assets other than real estate included in operating lease revenues were ¥10,899 million, ¥22,236 million and ¥31,233 million for fiscal 2021, 2022 and 2023, respectively.
Lease income from net investment in leases is included in finance revenues in the consolidated statements of income. Gains and losses from the disposition of net investment in leases were not material for fiscal 2021, 2022 and 2023. Net investment in leases at March 31, 2022 and 2023 consists of the following:
|  | Millions of yen |
|  | March 31, 2022 |  |  | March 31, 2023 |
Lease receivables* |  | ¥ | 1,029,157 |  |  | ¥ | 1,057,990 |
Unguaranteed residual value |  |  | 27,361 |  |  |  | 28,145 |
Initial direct costs |  |  | 1,455 |  |  |  | 1,428 |
Total |  | ¥ | 1,057,973 |  |  | ¥ | 1,087,563 |
* | Some lease contracts are subject to government assistance for the customers’ acquisition of leased assets, mainly for the purpose of environmental measures. This government assistance is accounted for as a reduction of lease receivables of lease contracts when the Company and its subsidiaries confirm receipt of cash. The amount of a reduction of lease receivables is ¥ 28,532 million as of March 31, 2023. Benefits of the government assistance are attributed to the customers by the reduced lease payments. Furthermore, remaining term of government assistance contracts ranges up to 11 years. And when receiving the government assistance, restrictions mainly on disposal of property and duty of keeping documents occur for a certain period of time.
Investment in operating leases at March 31, 2022 and 2023 consists of the following:
|  | Millions of yen |
|  | March 31, 2022 |  |  | March 31, 2023 |
Transportation equipment |  | ¥ | 1,438,621 |  |  | ¥ | 1,521,865 |
Measuring and information-related equipment |  |  | 326,680 |  |  |  | 342,591 |
Real estate |  |  | 307,338 |  |  |  | 319,074 |
Other |  |  | 71,935 |  |  |  | 79,633 |
|  |  | 2,144,574 |  |  |  | 2,263,163 |
Accumulated depreciation |  |  | (819,839 | ) |  |  | (865,942 | )
Net |  |  | 1,324,735 |  |  |  | 1,397,221 |
Right-of-use assets |  |  | 107,742 |  |  |  | 98,417 |
Accrued rental receivables |  |  | 31,639 |  |  |  | 45,123 |
Allowance for doubtful receivables on operating leases |  |  | (914 | ) |  |  | (3,583 | )
Total |  | ¥ | 1,463,202 |  |  | ¥ | 1,537,178 |
Costs of operating leases include depreciation and various expenses (insurance, property tax and other). Depreciation and various expenses for fiscal 2021, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | 2021 |  |  | 2022 |  |  | 2023 |
Depreciation expenses |  | ¥ | 217,212 |  |  | ¥ | 231,643 |  |  | ¥ | 245,180 |
Various expenses |  |  | 78,416 |  |  |  | 90,427 |  |  |  | 91,807 |
Total |  | ¥ | 295,628 |  |  | ¥ | 322,070 |  |  | ¥ | 336,987 |
Remaining lease receivables of net investment in leases (including residual value guarantees) range up to 26 years at March 31, 2023. Remaining lease receivables of the operating lease contracts range up to 58 years at March 31, 2023. At March 31, 2023, the amounts due in each of the next five years and thereafter are as follows:
|  | Millions of yen |
Years ending March 31, |  | Net investment in leases |  |  | Operating leases |
2024 |  | ¥ | 447,559 |  |  | ¥ | 343,108 |
2025 |  |  | 302,161 |  |  |  | 215,400 |
2026 |  |  | 199,127 |  |  |  | 141,773 |
2027 |  |  | 116,071 |  |  |  | 84,474 |
2028 |  |  | 63,524 |  |  |  | 45,595 |
Thereafter |  |  | 60,252 |  |  |  | 129,854 |
Total lease payments |  |  | 1,188,694 |  |  | ¥ | 960,204 |
Less imputed interest |  |  | (130,704 | ) |  |  |  |
Total lease receivables |  | ¥ | 1,057,990 |  |  |  |  |
(2) Lessee The Company and its subsidiaries determine if an arrangement is a lease at inception of each contract. The Company and its subsidiaries have operating and finance leases for various assets including lands, office buildings, employees’ accommodations, and vehicles. Some of the lease arrangements include options to extend or terminate lease term. The Company and its subsidiaries determine the lease term while taking such options into account when determining the lease term when it is reasonably certain that it will exercise these options. The Company and its subsidiaries’ lease arrangements do not contain material residual value guarantees or material restrictive covenants. As a rate implicit in most of the leases cannot be readily determinable, the Company and its subsidiaries use incremental borrowing rate based on the information available at commencement to determine the present values of lease payments. The component of lease expense for fiscal 2021, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | Year ended March 31, 2021 |  |  | Year ended March 31, 2022 |  |  | Year ended March 31, 2023 |
Finance lease cost |  |  |  |  |  |  |  |  |  |  |  |
Depreciation expenses of right-of-use assets |  | ¥ | 359 |  |  | ¥ | 534 |  |  | ¥ | 536 |
Interest expenses of lease liabilities |  |  | 131 |  |  |  | 106 |  |  |  | 150 |
|  |  | 490 |  |  |  | 640 |  |  |  | 686 |
Operating lease cost |  |  | 42,964 |  |  |  | 49,725 |  |  |  | 52,279 |
Short-term lease cost |  |  | 3,347 |  |  |  | 3,034 |  |  |  | 2,742 |
Variable lease cost |  |  | 230 |  |  |  | 65 |  |  |  | 1,297 |
Sublease income |  |  | (4,142 | ) |  |  | (3,192 | ) |  |  | (8,819 | )
Total |  | ¥ | 42,889 |  |  | ¥ | 50,272 |  |  | ¥ | 48,185 |
Supplemental cash flow information related to leases for fiscal 2021, 2022 and 2023 are as follows:
|  | Millions of yen |
|  | Year Ended March 31, 2021 |
|  | Finance leases |  |  | Operating leases |
Cash paid for amounts included in the measurements of lease liabilities: |  |  |  |  |  |  |  |
Cash flows from operating activities |  | ¥ | 131 |  |  | ¥ | 41,680 |
Cash flows from financing activities |  |  | 674 |  |  |  | 0 |
Right-of-use assets obtained in exchange for lease liabilities: |  | ¥ | 228 |  |  | ¥ | 55,344 |
|  | Millions of yen |
|  | Year Ended March 31, 2022 |
|  | Finance leases |  |  | Operating leases |
Cash paid for amounts included in the measurements of lease liabilities: |  |  |  |  |  |  |  |
Cash flows from operating activities |  | ¥ | 106 |  |  | ¥ | 47,321 |
Cash flows from financing activities |  |  | 878 |  |  |  | 0 |
Right-of-use assets obtained in exchange for lease liabilities: |  | ¥ | 278 |  |  | ¥ | 37,816 |
|  | Millions of yen |
|  | Year Ended March 31, 2023 |
|  | Finance leases |  |  | Operating leases |
Cash paid for amounts included in the measurements of lease liabilities: |  |  |  |  |  |  |  |
Cash flows from operating activities |  | ¥ | 150 |  |  | ¥ | 50,369 |
Cash flows from financing activities |  |  | 781 |  |  |  | 0 |
Right-of-use assets obtained in exchange for lease liabilities: |  | ¥ | 93 |  |  | ¥ | 39,823 |
Supplemental balance sheet information related to lessee leases at March 31, 2022 and 2023 are as follows:
|  | Millions of yen, except lease term and discount rate |
|  | March 31, 2022 |
|  | Finance leases |  |  | Operating leases |
Investment in Operating Leases |  | ¥ | 4,955 |  |  | ¥ | 102,787 |
Property under Facility Operations |  |  | 1,763 |  |  |  | 68,149 |
Office Facilities |  |  | 375 |  |  |  | 104,157 |
Total right-of-use assets |  |  | 7,093 |  |  |  | 275,093 |
Other Liabilities |  |  | 7,698 |  |  |  | 275,199 |
Total lease liabilities |  | ¥ | 7,698 |  |  | ¥ | 275,199 |
Weighted average remaining lease term |  |  | 25years |  |  |  | 11years |
Weighted average discount rate |  |  | 2.5 | % |  |  | 1.1 | %
|  | Millions of yen, except lease term and discount rate |
|  | March 31, 2023 |
|  | Finance leases |  |  | Operating leases |
Investment in Operating Leases |  | ¥ | 4,782 |  |  | ¥ | 93,635 |
Property under Facility Operations |  |  | 1,394 |  |  |  | 85,036 |
Office Facilities |  |  | 368 |  |  |  | 100,744 |
Total right-of-use assets |  |  | 6,544 |  |  |  | 279,415 |
Other Liabilities |  |  | 7,129 |  |  |  | 280,829 |
Total lease liabilities |  | ¥ | 7,129 |  |  | ¥ | 280,829 |
Weighted average remaining lease term |  |  | 37years |  |  |  | 11years |
Weighted average discount rate |  |  | 2.4 | % |  |  | 1.3 | %
At March 31, 2023, the amounts of lease liabilities related to lessee leases due in each of the next five years and thereafter are as follows:
|  | Millions of yen |
Years ending March 31, |  | Finance leases |  |  | Operating leases |
2024 |  | ¥ | 851 |  |  | ¥ | 53,153 |
2025 |  |  | 777 |  |  |  | 40,853 |
2026 |  |  | 447 |  |  |  | 35,134 |
2027 |  |  | 300 |  |  |  | 28,606 |
2028 |  |  | 280 |  |  |  | 24,029 |
Thereafter |  |  | 7,381 |  |  |  | 115,534 |
Total lease payments |  |  | 10,036 |  |  |  | 297,309 |
Less imputed interest |  |  | (2,907 | ) |  |  | (16,480 | )
Total lease liabilities |  | ¥ | 7,129 |  |  | ¥ | 280,829 |

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