Notes to Consolidated Financial Statements (i) Property  plant and equipment and depreciation  (j) Leases (k) Pension and severance plans (l) Provision for loss on repurchase of computers  (m) Income taxes  (n) Earnings per share  (o) Derivative financial instruments (p) Change in significant accounting policy 30 Property  plant and equipment  including renewals and additions  are carried at cost.  Depreciation is computed principally by the declining-balance method at rates based on the estimated useful lives  of the respective assets  which vary according to their general classification  type of construction and function. Maintenance and repairs  including minor renewals and improvements  are charged to income as incurred. Receivable accounts recognized by the lessors in finance lease transactions are recorded as lease receivables and  assets acquired by lessees in finance lease transactions are recorded in the corresponding asset accounts. The Company and most consolidated subsidiaries in Japan: Pension costs of major defined benefit plans are based on annual contributions calculated by a projected benefit valuation method. Accrued severance benefits are stated at the present value of the vested benefit obligation which would be required to be paid if all employees voluntarily terminated their services at the balance sheet dates. Most consolidated subsidiaries outside Japan:  Pension costs of major defined benefit plans are calculated by a projected unit credit method. Certain computers manufactured by the Group are sold to Japan Electronic Computer Company Limited (“JECC”) and other leasing companies and financial institutions for leasing to the ultimate users under contracts which require that the Group repurchase the computers if they are returned by the users after a certain period. Based on past experience  an estimated amount for the loss arising from such repurchases is provided at the point of sale and is charged to income. The Group has adopted the balance sheet liability method of tax effect accounting in order to recognize the effect of all temporary differences in the recognition of assets and liabilities for tax and financial reporting purposes. Basic earnings per share is computed based on the weighted average number of shares of common stock outstanding during the respective years.  Diluted earnings per share is computed based on the weighted average number of shares after consideration of  the dilutive effect of the shares of common stock issuable upon the exercise of warrants and the conversion of convertible bonds. Gains and losses on derivative financial instruments used to reduce exposure on receivables and liabilities denominated in foreign currencies are recognized over the lives of the contracts. Gains and losses arising from the related receivables and liabilities are offset. The differentials to be paid or received relating to swap contracts are recognized over the lives of the contracts. Prior to the year ended March 31  1999  the Company and its consolidated subsidiaries in Japan treated finance leases in the same way as operating leases  which is generally accepted in Japan. As Fujitsu Leasing Co.  Ltd. became a consolidated subsidiary effective the year ended March 31  2000  the Group has adopted a method under which the Group  as a lessee  records the leased assets and the corresponding lease obligations  and  as a lessor  records the lease receivables under finance leases. The effect on consolidated net income and total assets caused by this change was immaterial.