XML 26 R13.htm IDEA: XBRL DOCUMENT

Leases

12 Months Ended

Mar. 31, 2023

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