伊藤忠商事（8001） – Items Disclosed on the Internet Concerning Notice of the 98th Ordinary General Meeting of Shareholders

This document is an unofficial translation of the Notice of the 98th Ordinary General Meeting of Shareholdersand is provided for your convenience only, without any warranty as to its accuracy or as to the completeness ofthe information. The Japanese original version of the document is the sole official version.Notes to Consolidated Financial Statements……………………1Notes to Non-Consolidated Financial Statements………………29(Reference) Consolidated Statement of Cash Flows……………41(Reference) Operating Segment Information……………………42Items Disclosed on the Internet ConcerningNotice of the 98thOrdinary General Meeting of ShareholdersThis document is provided on ITOCHU Corporation’s website(https://www.itochu.co.jp/en/ir/shareholder/general_meeting/), pursuant to the provisions of laws and regulationsand Article 16 of ITOCHU Corporation’s Articles of Incorporation.The Japanese original version of this document (excluding financial statements for reference) is in the scope of theaudit by the Corporate Auditors and Independent Auditor in preparing the Audit Reports.ITOCHU CorporationNameDomesticOverseasSubsidiariesDole International Holdings, Inc.ITOCHU Techno-Solutions CorporationITOCHU ENEX CO., LTD.FamilyMart Co., Ltd.C.I. TAKIRON CorporationPOCKET CARD CO., LTD.ITOCHU PROPERTY DEVELOPMENT, LTD.Prima Meat Packers, Ltd.YANASE & CO., LTDITOCHU LOGISTICS CORP.ITOCHU-SHOKUHIN Co., Ltd.CONEXIO CorporationNIPPON ACCESS, INC.ITOCHU International Inc.ITOCHU Europe PLCITOCHU Hong Kong Ltd.ITOCHU (CHINA) HOLDING CO., LTD.Orchid Alliance Holdings LimitedEuropean Tyre Enterprise LimitedITOCHU Minerals & Energy of Australia Pty LtdITOCHU FIBRE LIMITEDNameDomesticOverseasEquity-Method Associated CompaniesOrient CorporationTokyo Century CorporationMarubeni-Itochu Steel Inc.FUJI OIL HOLDINGS INC.DESCENTE LTD.C.P. Pokphand Co. Ltd.[Notes to Consolidated Financial Statements][Basis of Presenting Consolidated Financial Statements]1.Basis of Consolidated Financial StatementsThe Consolidated Financial Statements of ITOCHU Corporation (the “Company”) have been prepared in conformity with International Financial Reporting Standards (IFRS) pursuant to the provision of paragraph 1, Article 120 of the Ordinance on Company Accounting. Some of the descriptions and notes required under IFRS have been omitted based on the provision of the latter part of the said paragraph of the Ordinance.2.Scope of Consolidation and Application of Equity Method(1)Number of consolidated subsidiaries and names of principal consolidated subsidiariesNumber of Consolidated Subsidiaries: 192 (*)Names of Principal Consolidated Subsidiaries:(2)Number of equity-method associated companies and names of principal associated companiesNumber of Equity-Method Associated Companies: 82 (*)Names of Principal Associated Companies:(*)Investment companies which are considered as part of the parent company (154 companies) and companies other than those which are directly invested by the Company and its overseas trading subsidiaries (488 companies) are not included in the number of companies.- 1 -(3)Major changes in the scope of consolidation and application of equity methodExclusionSubsidiaries: ITOCHU Coal Americas Inc.Equity-Method Associated Companies: Japan Brazil Paper & Pulp Resources Development Co., Ltd.,(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)SPACE SHOWER NETWORKS INC.,(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)GL Connect Corporation, Paidy Inc.3.Significant Accounting PoliciesSignificant Accounting Policies are described in the “Significant Accounting Policies” notes.- 2 -Time deposits5Trade receivables and others11,193Inventories14,763Investments and non-current receivables203,304Property, plant and equipment38,685Total267,950Short-term borrowings11,007Trade payables and others15,202Long-term borrowings11,021Lease liabilities (short-term and long-term)116,318Total153,5482.Allowance for doubtful accounts directly deducted from assetsAllowance for doubtful receivables directlydeducted from current assets, including trade receivables¥21,518 millionAllowance for doubtful receivables directlydeducted from non-current assets, including non-current receivables¥36,303 million3.Accumulated depreciation and accumulated impairment lossesfor property, plant and equipment¥1,727,235 million4.Accumulated depreciation and accumulated impairment lossesfor investment property¥39,175 million5.Fair value of investment property¥47,833 million[Notes to Consolidated Statement of Financial Position]1.Pledged Assets as Collateral and Secured Obligations(1)Pledged assets as collateral(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247)(cid:247) (Millions of Yen)(2)Secured obligations- 3 -Financial guaranteesGuarantees forperformancetransactionsTotalGuarantees for associates and joint ventures:Maximum potential amount of future payments………¥ 84,943¥ 2,880¥ 87,823Amount of substantial risk……………………………67,7342,88070,614Guarantees for customers:Maximum potential amount of future payments………23,52738,84262,369Amount of substantial risk……………………………16,3708,27624,646Total:Maximum potential amount of future payments………¥ 108,470¥ 41,722¥ 150,192Amount of substantial risk……………………………84,10411,15695,2606.Guarantees of Contracts and OthersThe maximum potential amount of future payments and the amount of substantial risk of the guarantees for associates, joint ventures and customers of the Company and its subsidiaries at March 31, 2022 were as follows:The maximum potential amount of future payments represents the amounts that the Company and its subsidiaries could be obliged to pay if there were defaults. The amount of substantial risk represents the actual amount of liability incurred by the guaranteed parties within the maximum potential amount of future payments. The amounts that may be reassured from third parties have been excluded in determining the amount of substantial risk.(Millions of Yen)(cid:247)JAPÃO BRASIL MINÉRIO DE FERRO PARTICIPAÇÕES LTDA.(“JBMF”), a subsidiary of the Company, currently holds CSN Mineração S.A. (“CM”) which is recorded in Other investments accompanying the merger of Nacional Minérios S.A. (“NAMISA”), which was a joint venture of the Company, and the Casa de Pedra Mine and railway company shares and port facility usage rights owned by Companhia Siderúrgica Nacional, the major Brazilian steel producer which is the parent company of NAMISA, in November 2015. NAMISA received a tax assessment notice in December 2012 from the Brazilian tax authorities relating to corporation tax and social contributions attributable to income for the period from 2009 to 2011 related to the deductibility of the amortization of goodwill for tax purposes over the period from August 2009 to July 2014. CM, which took over this tax assessment, filed suit in Brazilian federal court in September 2017 upon exhausting the administrative appeal procedures. CM received a tax assessment notice in December 2018 from the Brazilian tax authorities relating to corporation tax and social contributions attributable to income for the period from 2013 to 2014, and proceeded with the administrative appeal procedures in January 2019. With regards to the tax assessment, the impact on JBMF will be ¥34,875 million in the event that the amortization of goodwill for tax purposes is not deductible. The Company’s proportionate interest related to the tax assessment is ¥24,290 million, including interest and penalties of ¥18,610 million. CM, which took over the tax litigation, recorded no liabilities related to this assessment.- 4 -ResolutionType of sharesTotal cashdividendsSourceDividendsper shareDividendsrecord dateDividendseffective dateOrdinary general meeting of shareholders held on June 18, 2021Commonstock¥65,447millionRetainedearnings¥44March 31,2021June 21,2021Board ofDirectors meeting held onNovember 5, 2021Commonstock¥69,909millionRetainedearnings¥47September30, 2021December 2,2021Resolution(Plan)Type of sharesTotal cashdividendsSourceDividendsper shareDividendsrecord dateDividendseffective dateOrdinary general meeting of shareholders to be held on June 24, 2022Commonstock¥92,715millionRetainedearnings¥63March 31,2022June 27,2022[Notes to Consolidated Statement of Changes in Equity]1.The total number of issued shares was 1,584,889,504 shares of common stock as of March 31, 2022.2.Cash dividends on common stockDividends paid were as follows:Dividend for which the record date is in this fiscal year but the effective date is in the following fiscal year is as follows:[Financial Instruments]1.Status of financial instrumentsThe Company and its subsidiaries hold financial instruments such as trade receivables and payables, loans and guarantees, corporate bonds and borrowings, investments, and derivatives.The Company and its subsidiaries conduct business transactions and operations in regions around the world, and consequently are exposed to foreign exchange rate risk, interest rate risk, commodity price risk, stock price risk, credit risk, and liquidity risk. The Company and its subsidiaries utilize periodic monitoring and other means to manage these risks.(1)Foreign exchange rate risk managementThe Company and its subsidiaries are exposed to foreign exchange rate risk related to transactions in foreign currencies due to their significant involvement in import/export trading. Therefore, the Company and its subsidiaries work to minimize foreign exchange rate risk through hedge transactions that utilize derivatives, such as foreign exchange forward contracts.(2)Interest rate risk managementThe Company and its subsidiaries are exposed to interest rate risk in both raising and using funds for investing, financing, and operating activities. Among interest insensitive assets, such as investment securities or fixed assets, the portion acquired using floating interest loans is considered to be the interest mismatch amount exposed to interest rate risk. The Company and its subsidiaries seek to quantify the interest rate risk to better control the fluctuation of gains and losses due to interest rate changes.- 5 -In addition, the Company and its subsidiaries periodically track interest rate trends and monitor the amount of influence on interest payments due to interest rate changes, using the Earnings at Risk (EaR).The Company and its subsidiaries may be impacted by the interest rate benchmark reform associated with the permanent discontinuation of U.S. dollar LIBOR, holding financial instruments in reference to U.S. dollar LIBOR. Towards a smooth transition to alternate interest rate benchmarks, the Company and its subsidiaries carefully monitor regulatory developments and market trends. Except for major U.S. dollar LIBOR tenors, which are to be permanently discontinued at the end of June 2023, the transition to alternate interest rate benchmarks was completed by the end of the fiscal year ended March 31, 2022.(3)Commodity price risk managementThe Company and its subsidiaries conduct actual demand transactions that are based on the hedge transactions of a variety of commodities. As a result, because it holds long or short positions in light of market prices, in some cases the Company and its subsidiaries are exposed to commodity price fluctuation risk. Therefore, the Company and its subsidiaries analyze inventories and purchase and sales contracts, and each Division Company has established middle and back offices for major commodities, which establish a balance limit and loss cut limit for each commodity, as well as conduct monitoring, management, and periodic reviews.To reduce commodity price risks, the Company and its subsidiaries use such hedges as futures and forward contracts.(4)Stock price risk managementThe Company and its subsidiaries hold a variety of marketable equity securities, mainly to strengthen relationships with customers, suppliers, and other parties, and to secure business income, and to increase corporate value through means such as making a wide range of proposals to investees, and consequently are exposed to stock price fluctuation risk. Therefore, the Company and its subsidiaries periodically track and monitor the amount of influence on consolidated shareholders’ equity, using the Value at Risk (VaR).(5)Credit risk managementThrough trade receivables, loans, guarantees, and other formats, the Company and its subsidiaries grant credit to their trading partners, both domestically and overseas. The Company and its subsidiaries, therefore, bear credit risk in relation to such receivables becoming uncollectible due to the deteriorating credit status or insolvency of the Company’s and its subsidiaries’ partners, and in relation to assuming responsibilities to fulfill contracts where an involved party is unable to continue its business and therefore cannot fulfill its obligations under the contracts. Therefore, when granting credit, the Company and its subsidiaries work to reduce risk by conducting risk management through the establishment of credit limits and the acquisition of collateral or guaranties as needed. At the same time, the Company and its subsidiaries establish an allowance for doubtful accounts by estimating expected credit losses based on the creditworthiness, the status of receivable collection, and the status of receivables in arrears of business partners. The Company and its subsidiaries, having transactions in a broad range of businesses across a wide range of regions, are not exposed to credit risk that is significantly concentrated on any individual counterparty.(6)Liquidity risk managementThe Company and its subsidiaries are exposed to liquidity risk in both raising and using funds for investing, financing, and operating activities, as well as repayments of borrowings. In addition to securing flexibility in fundraising in response to changes in financial conditions and reducing the cost of funds, the Company and its subsidiaries have taken steps to diversify their sources of funds and methods of fundraising.- 6 -Carrying amountFair valueFinancial assets:FVTPL financial assets……………………………………..¥ 100,926¥ 100,926FVTOCI financial assets……………………………………864,112864,112Derivative assets……………………………………………90,87790,877Non-current receivables and Non-current financial assets other than investments and receivables (excluding derivative assets)…………………………………………346,580344,714Financial liabilities:Derivative liabilities………………………………………..80,25080,250Long-term debentures and borrowings and Other non-current financial liabilities (excluding derivative liabilities)…………………………………………………2,432,6872,432,1402.Fair values of financial instrumentsThe carrying amounts and fair values of financial instruments as of March 31, 2022 are as follows:(Millions of Yen)Note:Of the “Non-current receivables” reflected on the Consolidated Statement of Financial Position, the shareholder loan to Chia Tai Bright Investment Company Limited (“CTB”) accompanying the acquisition of CITIC Limited shares is not included above, and the information concerning the said financial instrument is described in (4) below.(1)Valuation techniques for fair values of financial instrumentsIFRS 13 “Fair Value Measurement” defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. IFRS 13 also establishes a hierarchy for inputs used in measuring fair value and requires that each fair value be categorized into one of the following three levels based on its observability of inputs:Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities.Level 2: Inputs other than quoted prices included in Level 1 that are observable for the asset or liability,either directly or indirectly.Level 3: Unobservable inputs for identical assets or liabilities.The Company and its subsidiaries use the following valuation techniques for assets and liabilities that are measured at fair value on a recurring basis.The financial instruments classified as FVTPL and FVTOCI financial assets consist of securities and alternative investments. Securities that are listed on exchanges are measured using quoted market prices. When quoted prices in active markets in which transactions occur with sufficient frequency are available, they are classified as Level 1. In contrast, instruments that are measured at quoted prices in markets in which there are relatively few transactions are classified as Level 2.Securities that are not listed on exchanges are measured mainly using the discounted cash flow and modified net assets methods based on comprehensive consideration of various inputs that are available to the Company and its subsidiaries, including expectation of future income of the investee, the net asset value of the subject stock, and the actual value of significant assets held by the said investee. If the amount affected by unobservable inputs covers a significant proportion of the fair value, the security is classified as Level 3, and if the amount affected by unobservable inputs does not cover a significant proportion of fair value, the security is classified as Level 2.- 7 -On the Consolidated Statement of Financial Position, the financial instruments classified as FVTPL and FVTOCI financial assets are included in “Other current financial assets” and “Other investments”.Derivative assets and derivative liabilities consist of currency derivatives, interest rate derivatives, and commodity derivatives. The derivative instruments that are traded in the active market are valued at quoted market prices and classified as Level 1. The other derivative instruments that are measured using commonly used fair value pricing models, such as the Black-Scholes model, based upon observable inputs only, are classified as Level 2.On the Consolidated Statement of Financial Position, derivative assets are included in “Other current financial assets” and “Non-current financial assets other than investments and receivables”, and derivative liabilities are included in “Other current financial liabilities” and “Other non-current financial liabilities”.The fair values of “Non-current receivables” and “Non-current financial assets other than investments and receivables” (excluding derivative assets) are estimated based on the present value of future cash flows discounted using the current rates of loans or receivables with similar terms, conditions, and maturities being offered to borrowers or customers with similar credit ratings and are classified as Level 2.“Non-current receivables” and “Non-current financial assets other than investments and receivables”, for which the Company and its subsidiaries recognized an allowance for doubtful accounts, are classified as Level 3.The fair values of “Long-term debentures and borrowings” and “Other non-current financial liabilities” (excluding derivative liabilities) are based on the present value of future cash flows discounted using the current borrowing rates of similar debt instruments having comparable maturities and are classified as Level 2.Of the securities included in “Other current financial assets” and “Other investments”, financial assets measured at amortized cost are primarily public and corporate bonds for which the fair values are approximately the same as their carrying amounts.The carrying amounts of current financial assets and liabilities other than those mentioned above are approximately the same as their fair values mainly because of their short maturities.Based on the policies and procedures defined by the Company, the Company and its subsidiaries apply the best available valuation techniques and inputs to measure the fair value of assets and liabilities by considering their nature, features, and risk. The assets and liabilities that are classified as Level 3 are mainly measured by the discounted cash flow and modified net assets methods. In addition, the result of the measurement of the fair value has been approved by the appropriate authority in each division company.The fair value of assets and liabilities that are measured by discounted cash flow fluctuates depending on the discount rates that are applied. These discount rates are applied to each financial asset by calculating the risk-free rate, which includes country risk premium (Approximately 7–16%. Meanwhile, for the resource-related investments in Russia, higher discounted rate reflecting rise of the country risk was applied.)If the unobservable inputs have been changed to reflect reasonably possible alternative assumptions, the effect is expected to be insignificant.The Company and its subsidiaries recognize transfers of assets or liabilities between levels of the fair value hierarchy at the end of quarter when the transfer occurs.- 8 -Level 1Level 2Level 3TotalFinancial assets:FVTPL financial assets………FVTOCI financial assets ……Derivative assets ……………Financial liabilities:Derivative liabilities …………¥ 6,391521,16111,06217,876¥ 26,921-79,81562,374¥ 67,614342,951–¥ 100,926864,11290,87780,250FVTPLfinancial assetsFVTOCI financial assets Beginning balance …………………………………………………¥ 59,077¥ 279,548 Total gains or losses…………………………………………………15,17443,319 Included in gains on investments…………………………………15,174- Included in other comprehensive income (loss) (FVTOCI financial assets) ……………………………………-27,327 Included in other comprehensive income (loss) (Translation adjustments) ……………………………………-15,992 Purchases …………………………………………………………7,46719,199 Sales ………………………………………………………………(10,900)(60,172) Transfers out of Level 3……………………………………………(260)(498) Others………………………………………………………………(2,944)61,555 Ending balance ……………………………………………………67,614342,951 The amount of gains (losses) on investments for the fiscal year relating to assets still held as of March 31, 2022 ………………¥ 8,956¥ -(2)The information by level for financial instruments that were measured at fair value on a recurring basis as of March 31, 2022(Millions of Yen)(3)The changes in Level 3 items for the fiscal year ended March 31, 2022(Millions of Yen)*1 The “Transfers out of Level 3” recognized for the fiscal year ended March 31, 2022 were due to the fact that the fair value of equity securities becomes measurable using the quoted market price resulting from listing on exchanges.*2 The increase in “Others” of FVTOCI financial assets was mainly due to the conversion of Paidy Inc. into “Other investment” (FVTOCI financial asset) from “Investment accounted for by the equity method”. Also, the decrease in “Sales” of FVTOCI financial assets was mainly because Paidy Inc., which was converted into “Other investment” (FVTOCI financial asset) was sold.(4)Shareholder loan to CTB accompanying the acquisition of CITIC Limited sharesCTB, a company in which the Company and Charoen Pokphand Group Company Limited each invested 50%, owns 5,818 million CITIC Limited shares, which equates to 20% of that company’s ordinary shares, and CTB applied the equity method. In order for CTB to procure the necessary funds for the acquisition of CITIC Limited shares, the Company provided investment in and a shareholder loan to CTB.As of March 31, 2022, the balances of the investment and the shareholder loan to CTB accompanying the acquisition of CITIC Limited shares amounted to US$514 million (¥62,870 million) and US$4,446 million (¥544,182 million) respectively. The balance of the shareholder loan is presented under “Non-current receivables” on the Consolidated Statement of Financial Position.- 9 -The closing price of CITIC Limited shares on the Hong Kong Stock Exchange on March 31, 2022 was HK$8.71 per share, and the value obtained by multiplying the number of CITIC Limited shares that CTB owns by the said share price is HK$50,675 million (¥792,606 million). In addition, the amount obtained by multiplying this value by 50%, which is the Company’s ownership interest in CTB, is HK$25,338 million (¥396,303 million).Shareholders’ equity per share¥2,857.50Basic earnings per share attributable to ITOCHU¥552.86Diluted earnings per share attributable to ITOCHU¥552.86[Per Share Information]Note: The Company’s shares held in the trust account for the benefit share ESOP and the BIP trust account for officer remuneration are treated as treasury stock on the Consolidated Statement of Financial Position and included in the treasury stock that is subtracted in the calculation of the Per Share Information stated above.TextileMachineryMetals &MineralsEnergy &ChemicalsFoodRevenues from external customers¥ 444,750¥ 1,193,976¥ 1,043,071¥ 2,864,111¥ 4,293,543Intersegment revenues138438,62411,886Total revenues¥ 444,763¥ 1,194,060¥ 1,043,071¥ 2,902,735¥ 4,305,429GeneralProducts &RealtyICT &FinancialBusinessThe 8thOthers,Adjustments &EliminationsConsolidatedTotalRevenues from external customers¥ 1,036,990¥ 863,997¥ 457,920¥ 94,990¥ 12,293,348Intersegment revenues21,88313,0771,942(87,509)Total revenues¥ 1,058,873¥ 877,074¥ 459,862¥ 7,481¥ 12,293,348[Revenues]1.Disaggregation of RevenueThe Company has established a system of eight Division Companies organized in line with their respective industries, principal products, and service -Textile, Machinery, Metals & Minerals, Energy & Chemicals, Food, General Products & Realty, ICT & Financial Business, and The 8th. Under this system, each Division Company has responsibility for business execution in its business field. These Division Companies are the segment units for which the Company’s management determines management strategies and the allocation of management resources. Results are managed at the Division Company level in accordance with a number of indicators, such as Revenues and Net profit attributable to ITOCHU.In consideration of the above, the Company uses the eight Division Companies as its reportable segments.The disaggregated revenues for the fiscal year ended March 31, 2022 are as follows.(Millions of Yen)Note: Revenues from external customers include revenues resulting from contracts with customers and other sources of revenue. Revenues resulting from other sources of revenue mainly include revenues from energy trading transactions such as oil and gas and lease contracts, which are immaterial in terms of amount.- 10 -Beginning BalanceEnding BalanceReceivables from Contracts with Customers¥ 2,122,815¥ 2,458,991Contract Assets19,12427,665Contract Liabilities133,127151,0272. Contract Balances(Millions of Yen)A contract asset is recognized when the Company and its subsidiaries transfer goods or services to a customer on their ordinary activities, but a right to receive the payment is conditional in line with a series of performance related milestones other than the passage of time. Contract assets generally increase when the Company and its subsidiaries transfer goods or services to the customer before the customer pays the consideration or before the payment becomes due and decrease when the Company and its subsidiaries bill the customer. The balance of contract assets increased mainly due to the progress of satisfaction of the performance obligations for the fiscal year ended March 31, 2022.A contract liability is presented when a payment from a customer is already received or due, prior to the Company and its subsidiaries transferring goods or services to the customer on their operating activities. Contract liabilities generally increase when the Company and its subsidiaries receive consideration from a customer prior to the transfer of goods or services to the customer and decrease when the Company and its subsidiaries meet their performance obligations. The balance of contract liabilities increased mainly due to advances from customer for the fiscal year ended March 31, 2022.Revenues recognized for the fiscal year ended March 31, 2022 include ¥109,259 million, recognized from contract liabilities at the beginning of the fiscal year ended March 31, 2022.Revenues recognized for the fiscal year ended March 31, 2022 arising from performance obligations fulfilled in past periods are immaterial.3. Remaining Performance ObligationsAs of March 31, 2022, the Company and its subsidiaries have total transaction price of ¥885,538 million, mainly in energy, iron ore, system development, and ships transactions, allocated to remaining performance obligations. The Company and its subsidiaries expect most of these transactions to take place over the next 3 years, and to be recognized as revenues once the contracts are executed.The Company and its subsidiaries use the practical expedients, pursuant to IFRS 15, “Revenue from Contracts with Customers”, and only disclose individual transactions with anticipated contract lengths exceeding 1 year.4. Assets Recognized from Costs Incurred to Acquire or Execute Customer ContractsThe Company and its subsidiaries do not recognize any significant amount of assets or their depreciation arising from costs incurred to acquire or execute customer contracts.- 11 -[Significant Accounting Policies]1.Basis of Consolidation(1)Business combinationsThe Company and its subsidiaries apply the acquisition method in accordance with IFRS 3 “Business Combinations.” That is, one of the parties to the business combination, as the acquirer, recognizes the acquisition-date fair value of the identifiable assets acquired from the acquiree and the liabilities assumed from the acquiree. (However, assets and liabilities that need to be measured at other than fair value in accordance with IFRS 3, such as deferred tax assets, deferred tax liabilities, and assets / liabilities related to employee benefit arrangements, are recognized at the amount stipulated in IFRS 3.) Any previously held equity interest is remeasured at acquisition-date fair value and non-controlling interest is remeasured at acquisition-date fair value or at the non-controlling interest’s proportionate share of the acquiree’s identifiable net assets. Goodwill is then recognized as of the acquisition date, measured as the excess of the aggregate of the consideration transferred, any non-controlling interest in the acquiree and the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. In addition, for business combinations resulting in a bargain purchase, that is, for transactions where the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed measured in accordance with IFRS 3, exceeds the aggregate of the consideration transferred, the acquisition-date fair value of the acquirer’s previously held equity interest in the acquiree, and any non-controlling interest in the acquiree, the excess amount is recognized as profit in the Consolidated Statement of Comprehensive Income.Costs that are incurred by the acquirer in relation to the completion of a business combination are expensed when they are incurred, except for costs related to the issuance of debt instruments or equity instruments.In the event that the initial accounting treatment for a business combination is not completed by the end of the fiscal year in which the business combination occurs, the items for which the accounting treatment is incomplete are measured at provisional amounts based on best estimates. The period during which these provisional amounts can be revised is the one-year period from the date of acquisition (the measurement period). If new information is obtained during the measurement period and that information would have had an effect on the measurement of amounts recognized as of the date of acquisition, then the provisional amounts recognized as of the date of acquisition are revised retrospectively.(2)SubsidiariesSubsidiaries are entities that are controlled by the Company. Decisions as to whether or not the Company and its subsidiaries have control over an entity are based on comprehensive consideration of various elements that indicate the possibility of control, including not only the holding of voting rights but also the existence of potential voting rights that are actually exercisable and whether employees dispatched from the Company or its subsidiaries account for a majority of the directors.The financial statements of subsidiaries are consolidated into the Consolidated Financial Statements of the Company from the date of acquisition of control to the date of loss of control. If the accounting policies of a subsidiary differ from those of the Company, adjustments are made as necessary to bring them into conformity with the accounting policies of the Company.The Consolidated Financial Statements include the financial statements of certain subsidiaries that have been prepared as of a reporting period end that differs from the Company’s reporting period end, because it is impracticable to unify the reporting period ends. The reasons why it is impracticable include the impossibility of doing so under the legal codes of regions in which the subsidiaries are located. However, the difference between the end of the reporting period of these subsidiaries and the end of the reporting period of the Company does not exceed three months. If the reporting period end for the financial statements of subsidiaries used in the preparation of the Consolidated Financial Statements differs from the reporting period end of the Company, adjustments are made to reflect significant transactions or events that occur – 12 -during the period between the subsidiaries’ reporting period-end and the Company’s reporting period-end.Changes in the ownership interest in a subsidiary, such as through increase or disposal of interests, are accounted for as equity transactions if control over the subsidiary is maintained, and any difference between the amount by which non-controlling interests are adjusted and the fair value of the consideration paid or received is recognized directly in shareholders’ equity.(3)Loss of controlIf control over a subsidiary is lost, the Company derecognizes the subsidiary’s assets and liabilities and the non-controlling interests related to the subsidiary. Interest retained after the loss of control is remeasured at fair value as of the date of the loss of control, and any gain or loss on such remeasurement is recognized in profit or loss as well as the gain or loss on disposal of the interest sold.(4)Business combinations under common controlFor business combinations in which all of the parties to the business combination are under the control of the Company or its subsidiaries, both prior to the combination and after the combination, the carrying amounts of the acquiree’s assets and liabilities are transferred to the acquirer.(5)Associates and joint venturesAssociates are companies, other than joint ventures or joint operations, over which the Company and its subsidiaries exercise influence, on such matters as management strategies and financial policies, that is significant but does not reach the level of control. Decisions as to whether or not the Company and its subsidiaries have significant influence over an entity are based on comprehensive consideration of various elements. These elements include the holding of voting rights (if 20% to 50% of the voting rights of the investee company are held directly or indirectly, then there is a presumption of significant influence over the investee company), as well as the existence of potential voting rights that are actually exercisable, and the percentage of directors who have been dispatched from the Company or its subsidiaries.A joint arrangement is a contractual arrangement in which multiple ventures undertake economic activities under joint control, and all significant operating and financial decisions require unanimous consent of parties sharing control.A joint venture is a specific type of joint arrangement under which operations are independent from each of the investing companies and the investing companies have rights only to the net assets of the arrangement.The equity method is applied to investments in associates and joint ventures. These investments are recognized at cost. Subsequent to acquisition, the Company and its subsidiaries recognize, in profit or loss and other comprehensive income, their share of the investee’s profit or loss and other comprehensive income, and the carrying amount of the investment is increased or decreased accordingly. The balance of goodwill recognized on acquisition is included in the carrying amount of the investment. Also, dividends received from associates and joint ventures reduce the carrying amounts of the related investments. If the accounting policies of such investee differ from those of the Company, adjustments are made as necessary to bring them into conformity with the accounting policies of the Company.The Consolidated Financial Statements include investments in associates and joint ventures with reporting period ends that differ from that of the Company because it is impracticable to unify the reporting period ends. The reasons why it is impracticable include the existence of a shareholder that has control over the associates or undertakes economic activities under the joint arrangement but has a reporting period that differs from the Company’s reporting period, and the impossibility of doing so under the legal codes of regions in which the associates and joint ventures are located. However, the difference between the end of the reporting period of these associates and joint ventures and the end of the reporting period of the Company does not exceed three months. Adjustments are made to reflect significant transactions or events that result from the difference in the reporting period ends.- 13 -If significant influence over associates or joint venture is lost and the application of the equity method is discontinued, gain or loss on disposal of investments in associates and joint ventures is recognized in profit or loss. The remaining interest is remeasured at fair value, and any gain or loss on such remeasurement is recognized in profit or loss as well.(6)Joint operationsJoint operations are a specific type of joint arrangement in which the participating investors directly have rights to the related assets and obligations for the related liabilities.The Consolidated Financial Statements include amounts related to joint operations. These are the assets to which the Company and its subsidiaries have rights, the liabilities and expenses for which the Company and its subsidiaries have obligations, and the share of the Company and its subsidiaries in profits that have been earned.(7)Transactions eliminated on consolidationReceivable and payable balances and transaction volumes among the Company and its subsidiaries, and unrealized gains and losses resulting from transactions among the Company and its subsidiaries, are eliminated in the preparation of the Consolidated Financial Statements.Unrealized gains and losses arising from transactions between the Company and its subsidiaries and its associates and joint ventures are eliminated to the extent of the interest in the investee held by the Company and its subsidiaries.2.Foreign Currency Translation(1)Foreign currency transactionsForeign currency transactions are translated into functional currencies using the spot foreign exchange rate as of the date of the transaction.As of the end of the reporting period, monetary assets and liabilities denominated in foreign currencies are retranslated into functional currencies using the spot foreign exchange rate as of the end of the reporting period. Non-monetary items that are denominated and measured at fair value in foreign currencies are retranslated into functional currencies using the spot foreign exchange rate as of the date on which the fair value was determined.Exchange differences resulting from retranslation are recognized in profit or loss. However, exchange differences resulting from retranslation of equity instruments which changes in fair value after acquisition are recorded in other comprehensive income and exchange differences resulting from cash flow hedges are recognized as other comprehensive income.(2)Translation of foreign currency denominated financial statements of foreign subsidiaries and foreign associates and joint venturesIn translating the foreign currency denominated financial statements of foreign subsidiaries and foreign associates and joint ventures (foreign operations), the spot foreign exchange rate as of the end of the reporting period is used to translate assets and liabilities and the periodic average foreign exchange rate for the accounting period is used to translate revenues and expenses.Differences resulting from the translation of the foreign currency denominated financial statements of foreign operations are recognized in other comprehensive income (Translation adjustments).When a foreign operation is disposed of, cumulative translation adjustments related to that foreign operation are reclassified to profit or loss at the point when the gain or loss on disposal is recognized. However, the portion of cumulative translation adjustments attributed to non-controlling interest reduces non-controlling interests.- 14 -(3)Hedges of a net investment in foreign operationsFor net investment in certain foreign operations, the Company and its subsidiaries apply hedge accounting to exchange differences that arise between the functional currencies of the foreign operations and the functional currency of the parent company.The effective portion of changes in the fair value of hedging instruments for a net investment in foreign operations is recognized in other comprehensive income (Translation adjustments). The ineffective portion of the hedge is recognized as profit or loss.When foreign operations are disposed of, the changes in the fair value of the hedging instruments that had been recorded in other comprehensive income are reclassified to profit or loss as part of gains or losses on disposal.3.Financial Instruments(1)Financial assets other than derivativesIn accordance with IFRS 9 “Financial Instruments,” the Company and its subsidiaries initially recognize financial assets other than derivatives on the accrual date for trade receivables and other receivables, and on the transaction date for sales and purchase of other financial assets. An overview of the classification and measurement models of financial assets other than derivatives is as follows.At the point of initial recognition of the financial assets, those that meet both of the two conditions below are categorized as financial assets measured at amortized cost, and others are categorized as financial assets measured at fair value:•Those assets are held under a business model whose objective is to collect contractual cash flows; and•The contractual cash flows associated with those assets comprise only payments of principal and interest on the outstanding principal balance, and the dates of those cash flows are specified.At the point of recognition, financial assets measured at amortized cost are measured at fair value plus costs directly related to the acquisition. At the end of each reporting period, they are measured at amortized cost using the effective interest method.Financial assets measured at fair value are further categorized into those for which changes in fair value after initial recognition are recorded in profit or loss (FVTPL financial assets) and those for which changes in fair value after initial recognition are recorded in other comprehensive income (FVTOCI financial assets).As for equity instruments measured at fair value, those with the objective of obtaining gains on short-term sales are categorized as FVTPL financial assets, and the others, primarily held long-term with the objective of strengthening transaction relationships, are categorized as FVTOCI financial assets. As for debt instruments measured at fair value, those which meet both of the conditions below are categorized as FVTOCI financial assets, and the others are categorized as FVTPL financial assets:•Those assets are under a business model whose objectives are both collecting contractual cash flows and selling the financial assets; and•The contractual cash flows associated with those assets comprise only payments of principal and interest on the outstanding principal balance, and the dates of those cash flows are specified.Financial assets measured at fair value are measured at fair value at the point of initial recognition. Costs directly attributable to the acquisition are included in the amount initially recognized for FVTOCI financial assets, but for FVTPL financial assets, these costs are recognized in profit or loss when they are incurred and are not included in the initial recognition as an asset.Financial assets measured at fair value are subsequently measured at fair value at the end of each reporting period. Changes in fair value are recognized in profit or loss for FVTPL financial assets and in other comprehensive income for equity FVTOCI financial assets. For debt FVTOCI financial assets, changes in fair value after deducting foreign exchange gain or loss and impairment loss (and its reversal) are recognized in other comprehensive income. For both FVTPL financial assets and FVTOCI financial – 15 -assets, dividends received on equity instruments are recognized in profit or loss.When an equity FVTOCI financial asset is sold, the difference between the carrying amount and the consideration received is recognized in other comprehensive income (FVTOCI financial assets), and the accumulated other comprehensive income on the equity FVTOCI financial asset recognized before the derecognition (accumulated FVTOCI financial assets) is reclassified to retained earnings. When a debt FVTOCI financial asset is sold, the difference between the carrying amount and the consideration received is recognized in profit or loss, and the accumulated other comprehensive income on the debt FVTOCI financial asset before the derecognition (accumulated FVTOCI financial assets) is reclassified to profit or loss.A financial asset is derecognized when the contractual rights to the cash flows from the financial asset expire, or when the contractual rights to receive cash flows from a financial asset are transferred in such a manner that all of the risks and economic value are effectively transferred.(2)Cash equivalentsCash equivalents include short-term investments (original maturities of three months or less) that are highly liquid, readily convertible, and have only an insignificant risk of change in value, as well as short-term time deposits (original maturities of three months or less).(3)Financial liabilities other than derivativesFinancial liabilities other than derivatives are measured at fair value less costs directly related to the issuance of the liability, at the point when the contractual liability arises.Financial liabilities other than derivatives are classified as financial liabilities measured at fair value or financial liabilities measured at amortized cost. Financial liabilities measured at fair value are remeasured at fair value at the end of each reporting period, and changes in fair value are recognized in profit or loss, while those measured at amortized cost are measured at amortized cost based on the effective interest method.Financial liabilities are derecognized when the obligor pays the obligee and the obligation is discharged, or when the contractual obligation is cancelled or expires.(4)Derivative instruments and hedging activitiesThe Company and its subsidiaries hold derivatives, including foreign exchange forward contracts, interest rate swap contracts, and commodity futures contracts, with the principal objective of hedging risks such as foreign exchange rate risk, interest rate risk, and commodity price risk. Derivatives are recognized at fair value as either assets or liabilities, regardless of the purpose or intent for holding them. The accounting treatment for changes in fair value depends on the intended use of the derivatives and the resulting hedge effectiveness.•A hedge of the variability of the fair value of a recognized asset or liability, or of an unrecognized firm commitment, wherein the hedging relationship meets the hedge effectiveness requirements, such as the existence of an economic relationship between the hedged item and the hedging instrument, and for which the hedging relationship, risk management objective, and hedge implementation strategy are documented at the inception of the hedge, is designated as a fair value hedge. Changes in the fair value of the derivatives, as well as changes in the fair value of the hedged items, are recognized in profit or loss (or other comprehensive income when equity FVTOCI financial assets are designated as hedges).•A hedge of the variability of future cash flows arising in relation to a forecasted transaction or a recognized asset or liability, wherein the hedging relationship meets the hedge effectiveness requirements, such as the existence of an economic relationship between the hedged item and the hedging instrument, and for which the hedging relationship, risk management objective, and hedge implementation strategy are documented at the inception of the hedge, is designated as a cash flow hedge. For those designated as cash flow hedges, changes in the fair value of the derivative are recognized in other comprehensive income as Cash flow – 16 -hedges. This treatment is continued until the variability in future cash flows arising in relation to the forecasted transactions or the recognized assets or liabilities are realized. The ineffective portion of the hedge is recognized in profit or loss.•Changes in the fair value of hedging instruments for a net investment in foreign operations are handled as described in “(3) Hedges of a net investment in foreign operations” of “2. Foreign Currency Translation.”•Changes in the fair value of derivatives other than those above are recognized in profit or loss.In applying the rules above for fair value hedges, cash flow hedges, and hedges of a net investment in foreign operations, in order to assess the economic relationship between the hedged item and the hedging instrument, the Company and its subsidiaries evaluate at the inception of the hedge, and on an ongoing basis, whether or not the derivative will be effective in offsetting changes in the fair value or future cash flows of the hedged item.Hedge accounting is discontinued prospectively from the point at which the hedging relationship no longer meets the qualifying criteria.(5)Presentation of financial assets and liabilitiesWhen both of the following conditions are met, financial assets and financial liabilities are offset and the net amount is presented in the Consolidated Statement of Financial Position.•The Company currently has a legally enforceable right to offset the recognized amounts; and•The Company intends to settle on a net amount basis or to simultaneously realize the asset and settle the liability.4.InventoriesInventories mainly comprise selling products, finished goods, real estate for sale, raw materials, and work in progress.Inventories held for purposes other than trading are measured at the lower of cost or net realizable value and any change in the carrying amount of inventories due to remeasurement is recognized in cost of sales. Net realizable value is calculated by using the sale value or the estimated selling price in the ordinary course of business less the estimated costs and estimated costs to sell required until completion.Inventories held for trading purposes are measured at fair value less costs to sell. Any change in fair value is recognized in profit or loss for the period in which it arose.The cost of inventories is measured using the specific identification method if inventories are not ordinarily interchangeable, or mainly using the weighted average method if inventories are ordinarily interchangeable.5.Property, Plant and Equipment(1)Recognition and measurementThe cost model is applied, and property, plant and equipment are measured at cost less accumulated depreciation and accumulated impairment losses.The cost of property, plant and equipment includes estimates of installation cost and cost directly attributable to bringing property, plant and equipment to working condition and cost of dismantling or removing property, plant and equipment and restoring sites on which they are located and includes borrowing costs requiring capitalization pursuant to IAS 23 “Borrowing Costs.”If multiple differing and significant components of property, plant and equipment can be identified, for each of the components, a residual value, useful life, and depreciation method is determined, and it is accounted for as a separate item of property, plant and equipment.The difference between the net proceeds from the disposal of an item of property, plant and equipment and the carrying amount of the item is recognized in profit or loss.- 17 -(2)DepreciationProperty, plant and equipment other than right-of-use assets, except for items that are not subject to depreciation, such as land, are mainly depreciated using the straight-line method or the unit-of-production method over their estimated useful lives (buildings and structures: 2-60 years, machinery and vehicles: 2-33 years, fixtures, fittings and office equipment: 2-20 years) from the time when they become available for use. Right-of-use assets are depreciated using the straight-line method over the shorter of the lease period or the estimated useful life.At the end of each period, the residual value, useful lives, and depreciation methods of property, plant and equipment are reviewed and the impact is adjusted prospectively.6.Investment PropertyInvestment property is property held either to earn rental income or for gain on resale due to an increase in real estate prices or property held for both purposes. Investment property does not include real estate that is sold in the ordinary course of business or used in the production or supply of goods or services or for administrative purposes.A cost model is applied, and investment property is measured at cost less accumulated depreciation and accumulated impairment losses. Investment properties other than right-of-use assets, except for items that are not subject to depreciation, such as land, are depreciated mainly using the straight-line method over its estimated useful life (2-50 years) from the time when it becomes available for use. Right-of-use assets are depreciated using the straight-line method over the shorter of the lease period or the estimated useful life.7.Goodwill and Intangible Assets(1)GoodwillGoodwill is not amortized. Impairment tests of goodwill are conducted based on cash-generating units at least once a year, or whenever there are changes in situations or events that indicate the possibility of impairment.(2)Intangible assetsA cost model is applied, and intangible assets are measured at cost less accumulated amortization and accumulated impairment losses. Further, development expenditures are recognized as intangible assets if development costs can be measured reliably, future economic benefits are probable, and the Company or its subsidiaries intend and have sufficient resources to complete development and use or sell the result of the development.Except for intangible assets for which useful lives cannot be determined, intangible assets are mainly depreciated using the straight-line method over their estimated useful lives (trademarks and other intangible assets: 5-42 years, and software: 3-5 years) from the time when they become available for use. The amortization expenses allocated to each accounting period are recognized in profit or loss.At the end of each period, the residual value, useful lives, and depreciation methods of intangible assets are reviewed and the impact is adjusted prospectively.The Company and its subsidiaries have trademarks and other intangible assets for which the useful life cannot be determined. Intangible assets for which the useful life cannot be determined are not amortized. Impairment tests of intangible assets for which the useful life cannot be determined are conducted based on cash-generating units at least once a year, or whenever there are changes in situations or events that indicate the possibility of impairment.- 18 -8.LeasesIn accordance with IFRS 16 “Leases,” the Company and its subsidiaries decides whether or not a contract is a lease. Determining a contract includes a lease is decided based on examination of the economic nature of transactions, regardless of whether or not a contract’s legal form is that of a lease contract.(1)Leases as lesseeIf a contract is, or contains a lease, right-of-use assets and lease liabilities are recognized at the commencement date of the lease.Lease liabilities are measured using the present value of unpaid lease payments. Lease payments are allocated to finance costs and repayments of lease liabilities based on the effective interest method with finance costs presented in “Interest expense” in the Consolidated Statement of Comprehensive Income.The cost model is applied to measure right-of-use assets, and the value, measured at acquisition cost less accumulated depreciation and accumulated impairment losses, is presented in the Consolidated Statement of Financial Position by including it under “Property, plant and equipment” and “Investment property.” The acquisition cost includes the initial direct costs and other items in addition to the amount initially measured for the lease liability. Right-of-use assets are depreciated over the underlying asset’s estimated useful life if ownership rights of the underlying asset are transferred to the lessee before the termination of the lease term or if exercise of a bargain purchase option is expected, and in other cases right-of-use assets are depreciated using the straight-line method over the shorter of the lease period or the estimated useful life.(2)Leases as lessorIf the contract is a lease or contains a lease, and the lease transfers substantially all the risks and rewards incidental to ownership of the underlying asset, it is classified as a finance lease and any lease other than finance leases is classified as an operating lease.For finance leases, net investments in the leases are recognized as lease receivables. Lease payments receivable are allocated to finance income and lease receivables based on the effective interest method with finance income presented in “Interest income” in the Consolidated Statement of Comprehensive Income. Further, if the main purpose of the finance lease is the sale of goods and the finance lease has been implemented in accordance with sales policies, the lower of the fair value of the assets subject to leases or minimum lease payments receivable discounted at the market rate of interest is recognized as “Revenues” in the Consolidated Statement of Comprehensive Income, and the purchase price of the assets subject to leases is recognized as “Cost of sale of goods” in the Consolidated Statement of Comprehensive Income.For operating leases, except in cases where another systematic basis is more representative of the pattern of the lessee’s benefit, lease payments receivable are recognized in profit or loss on a straight-line basis over the lease term.9.Non-current assets held for sale Non-current assets and disposal groups are classified as non-current assets or disposal groups held for sale when a commitment has been made for the execution of a sale plan and the recovery is expected to arise from the sale rather than continuing use. Such assets are classified as current assets if it is highly probable that the asset will be sold within one year and it is available for immediate sale in its present condition. Non-current assets or disposal groups classified as held for sale are measured using the lower of the carrying amounts, or the fair values less costs to sell.- 19 -10.Impairment(1)Financial assets measured at amortized cost and debt FVTOCI financial assetsFor financial assets measured at amortized cost and debt FVTOCI financial assets, an impairment loss is recognized in profit or loss by estimating expected credit losses.If, at the end of the reporting period, the credit risk on a financial instrument has not increased significantly since its initial recognition, the amount of loss allowance is calculated based on expected credit losses resulting from default that are possible within 12 months after the end of the reporting period (12-month expected credit losses). If at the end of the reporting period the credit risk on a financial instrument has increased significantly since its initial recognition, the amount of loss allowance is calculated based on the expected credit losses resulting from default that are possible over the entire expected life of the instrument (lifetime expected credit losses). The assessment of whether the credit risk has increased significantly is made based on reasonable and supportable information including past-due information as well as whether or not any credit event occurs.For trade receivables, contract assets, and lease receivables, notwithstanding the foregoing, the amount of loss allowance is always calculated based on the lifetime expected credit losses.Expected credit losses are estimated based on the difference between the contractual cash flows and the expected amount of recoverable cash flows. In this estimation, past credit loss experience, current financial positions of debtors, and reasonable and supportable information available on future forecasts have been incorporated.(2)Property, plant and equipment, investment property, goodwill, intangible assets, and investment in associates and joint venturesAt the end of each quarter, property, plant and equipment, investment property, goodwill, intangible assets, and investment in associates and joint ventures are assessed to determine whether there are any indications of impairment. If it is determined that there are indications of impairment, the impairment tests stated below are conducted. In addition, regardless of whether or not there are indications of impairment, impairment tests of goodwill and intangible assets for which the useful life cannot be determined and for intangible assets that are not available for use, are conducted periodically at least once a year.Impairment tests for each cash-generating unit are conducted. Regarding the identification of cash-generating units, if an individual asset’s cash flows independent from those of other assets can be identified, the individual asset is classified as a cash-generating unit. If an individual asset’s cash flows independent from those of other assets cannot be identified, assets are grouped together into the smallest group of assets that can be identified as generating independent cash flows, and designated as a cash-generating unit. For goodwill, using units equal to operating segments or smaller units, cash-generating units are determined based on the lowest level at which internal management of goodwill is conducted.When conducting impairment tests of cash-generating units that include goodwill, impairment tests of assets other than goodwill are first conducted. After any required impairment of the assets other than goodwill has been recognized, impairment tests of goodwill are conducted.Conducting impairment tests entails estimating the recoverable amount of the cash-generating units. The recoverable amount is the higher of fair value less costs to sell or value in use. Furthermore, the value in use is the total present value of future cash flows expected from the continued use and disposal after use of the cash-generating units.If the recoverable amount of cash-generating units is less than the related carrying amount, the carrying amount is reduce