Notes to Consolidated Financial Statements SMFG from these operating sections, reviews their assessment. The  reserves are provided for based on the results of these  assessments. The reserve for possible loan losses of other consolidated  subsidiaries for general claims is provided for in the amount  deemed necessary based on the historical loan-loss ratios, and  for doubtful claims in the amount deemed uncollectible based  on assessment of each claim. For collateralized or guaranteed claims on bankrupt borrow- ers and effectively bankrupt borrowers, the amount exceeding  the estimated value of collateral and guarantees is deemed to  be uncollectible and written off against the total outstanding  amount of the claims. The amount of write-off was ¥867,866  million ($10,437 million) and ¥843,781 million at March 31,  2011 and 2010, respectively. Unrecognized prior service cost is amortized using the  straight-line method, primarily over 9 years, over the employ- ees’ estimated average remaining service period from the fiscal  year of its incurrence. Unrecognized net actuarial gain or loss is amortized using  the straight-line method, primarily over 9 years, over the  employees’ average remaining service period, commencing  from the next fiscal year of incurrence. “Partial Amendments to Accounting Standard for  Retirement Benefits (Part 3)” (Accounting Standard Board of  Japan (“ASBJ”) Statement No. 19, issued on July 31, 2008)  became effective from the fiscal year beginning on and after  April 1, 2009. Accordingly, SMFG has applied them from the  fiscal year ended March 31, 2010. This accounting method  has no impact on the consolidated financial statements for the  fiscal year ended March 31, 2010. SMFG  2011 80 As for the portfolio hedges to offset market fluctuation,  SMBC assesses the effectiveness of such hedges by clas- sifying the hedged items (such as deposits and loans) and  the hedging instruments (such as interest rate swaps) by  their maturity. As for the portfolio hedges to fix cash flows,  SMBC assesses the effectiveness of such hedges by verifying  the correlation between the hedged items and the hedging  instruments.  SMBC applies deferred hedge accounting stipulated in  “Treatment for Accounting and Auditing of Application  of Accounting Standard for Financial Instruments in  Banking Industry” (Japanese Institute of Certified Public  Accountants (“JICPA”) Industry Audit Committee Report  No. 24) to portfolio hedges on groups of large-volume,  small-value monetary claims and debts.  (7) Reserve for employee bonuses The reserve for employee bonuses is provided for payment of  bonuses to employees, in the amount of estimated bonuses,  which are attributable to the respective fiscal year. (8) Reserve for executive bonuses The reserve for executive bonuses is provided for payment of  bonuses to executives, in the amount of estimated bonuses,  which are attributable to the respective fiscal year. (9) Reserve for employee retirement benefits The reserve for employee retirement benefits is provided for  payment of retirement benefits to employees, in the amount  deemed accrued at the fiscal year-end, based on the projected  retirement benefit obligation and the fair value of plan assets  at the fiscal year-end. (12) Reserve for reimbursement of deposits The reserve for reimbursement of deposits which were  derecognized as liabilities under certain conditions is provided  for the possible losses on the future claims of withdrawal based  on the historical reimbursements. (13) Reserve for loss on interest repayment The reserve for loss on interest repayment is provided for the  possible losses on future claims of repayment of interest based  on historical interest repayment experience. (14) Reserve under the special laws The reserve under the special laws is a reserve for eventual  future operating losses from financial instruments transactions  pursuant to Article 46-5 of the Financial Instruments and  Exchange Act. (15) Translation of foreign currency assets and liabilities Assets and liabilities of SMFG and SMBC denominated in  foreign currencies and accounts of SMBC overseas branches are  translated into Japanese yen mainly at the exchange rates  prevailing at the consolidated balance sheet date, with the  exception of stocks of subsidiaries and affiliates translated at  rates prevailing at the time of acquisition. (16) Lease transactions (a) Recognition of income on finance leases Interest income is allocated to each period, based on the  interest method. (b) Recognition of income on operating leases Primarily, lease-related income is recognized on a  straight-line basis over the term of the lease, based on the  contractual amount of lease fees per month. (c) Recognition of income and expenses on installment sales Primarily, installment-sales-related income and installment- sales-related expenses are recognized on a due-date accrual  basis over the period of the installment sales. (17) Hedge accounting (a) Hedging against interest rate changes  As for the hedge accounting method applied to hedging  transactions for interest rate risk arising from financial  assets and liabilities, SMBC applies deferred hedge  accounting. (10) Reserve for executive retirement benefits The reserve for executive retirement benefits is provided for  payment of retirement benefits to directors, corporate auditors  and other executive officers, in the amount deemed accrued at  the fiscal year-end based on the internal regulations.  (11) Reserve for point service program The reserve for point service program is provided for the  potential future redemption of points awarded to customers  under the “SMBC Point Pack,” credit card points programs,  and other customer points award programs. The amount  is calculated by converting the outstanding points into a  monetary amount, and rationally estimating and recognizing  the amount that will be redeemed in the future. Other consolidated subsidiaries’ assets and liabilities  denominated in foreign currencies are translated into Japanese  yen at the exchange rates prevailing at their respective balance  sheet dates.