May file Schedule M-1, Reconciliation of Income (Loss) and Analysis of Unappropriated Retained Earnings
per Books, in place of Parts II and III of Schedule M-3;
10 per share cash dividend and 30% stock dividend out its unappropriated retained earnings
as of Dec.
Years ended March 31, 2007 and 2006 ([yen] thousand) 2007 2006 Net sales 5,357,360 5,083,934 Cost of sales 4,245,697 4,354,997 Gross profit 1,111,662 728,936 Selling, general and administrative expenses 599,845 498,502 Operating income 511,817 230,434 Non-operating income 30,378 54,023 Non-operating expenses 18,088 11,656 Ordinary income 524,108 272,800 Extraordinary income -- 35,326 Extraordinary loss 43,558 120,363 Income before income taxes 480,549 187,764 Income taxes -- current 246,373 145,423 Income taxes -- deferred (27,686) (13,957) Net income 261,863 56,298 Unappropriated retained earnings
brought -- 267,925 forward Unappropriated retained earnings
for the term -- 324,224
These instructions also discuss Schedule M-2, "Analysis of Unappropriated Retained Earnings
per Books," as follows:
Moreover, if Schedule L is eliminated, there would be no need for Schedule M-2 -- Analysis of Unappropriated Retained Earnings
per Books to be included with the return.
Legal requirements for dividends vary from state to state, but most states require a positive balance in unappropriated retained earnings
before a dividend may be declared.
In addition, Schedule M-1, Reconciliation of Income (Loss) per Books with Income per Return (used by corporations with assets under $10 million), and Schedule M-2, Analysis of Unappropriated Retained Earnings
per Books per Return, previously included in Form 1120-F, are now separate forms.
GAAP requires the analysis of all retained earnings, not just unappropriated retained earnings
Before a corporation can declare a dividend, it must have not only the cash on hand, but sufficient unappropriated retained earnings
45 259 investments in subsidiaries, etc' 1,201 1,118 Unappropriated retained earnings
1,377 1,246 1,432 1,563 1,563 1,432
Schedules G (Analysis of Unappropriated Retained Earnings
per Books) and H (Current Earnings and Profits) require taxpayers to submit certain information concerning their earnings.
8,461 9,638 21 Unappropriated retained earnings
9,737 8,515 11,914 13,136 TOTAL STOCKHOLDERS' EQUITY 13,136 11,914