Financial instruments

12 Months Ended

Mar. 31, 2025

5.	Financial instruments

(1)	Financial instruments by measurement method

The carrying amount of Sony’s assets and liabilities by measurement method as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
Assets:
Financial assets required to be measured at amortized cost (“AC”)
Investments and advances in the Financial Services segment
Debt securities		396,481		521,054
Housing loans in the banking business		3,574,468		3,763,261
Other loans		16,892		21,950
Trade and other receivables*
Trade receivables		2,140,220		1,923,433
Other receivables		5,971		12,364
Other financial assets
Time deposit		48,416		6,179
Security deposit		107,316		150,950
Non-current other receivables in the Pictures segment		155,525		104,943
Other		47,849		70,514
Financial assets required to be measured at fair value through profit or loss (“FVPL”)
Investments and advances in the Financial Services segment
Debt securities		1,295,877		1,394,539
Equity securities		3,210,296		3,740,189
Other financial assets
Debt securities		22,388		20,555
Equity securities		258,939		487,454
Derivative assets		72,423		86,141
Financial assets designated to be measured at FVPL
Investments and advances in the Financial Services segment
Debt securities		1,243,109		893,972
Financial assets required to be measured at fair value through other comprehensive income (“FVOCI”)
Investments and advances in the Financial Services segment
Debt securities		9,593,519		8,849,130
Other financial assets
Debt securities		140		139
Financial assets designated to be measured at FVOCI
Investments and advances in the Financial Services segment
Equity securities		7,305		5,880
Other financial assets
Equity securities		309,710		382,947

Total assets		22,506,844		22,435,594

Current assets		2,669,709		2,534,666
Non-current assets		19,837,135		19,900,928

*	The amounts of trade and other receivables exclude contract assets within trade and other receivables, and contract assets in the consolidated statements of financial position.

Cash and cash equivalents are excluded from the table above. Refer to Note 27.


	Yen in millions
	March 31
	2024		2025
Liabilities:
Financial liabilities required to be measured at AC
Short-term borrowings		1,812,605		1,843,959
Current portion of long-term debt		217,711		287,445
Trade and other payables
Trade payables		1,803,920		1,927,633
Other payables		221,542		123,454
Deposits from customers in the banking business *1		3,845,607		4,243,962
Long-term debt		2,058,117		2,066,842
Deferred consideration *2		107,368		95,942
Investment contract liabilities		60,392		62,772
Other financial liabilities		65,790		79,340
Financial liabilities required to be measured at FVPL
Other financial liabilities
Derivative liabilities		29,287		154,526
Contingent consideration		50,343		25,785
Financial liabilities designated to be measured at FVPL
Other financial liabilities
Redeemable noncontrolling interests		54,028		52,963

Total liabilities		10,326,710		10,964,623

Current liabilities		7,881,832		8,323,430
Non-current liabilities		2,444,878		2,641,193

*1	Deposits from customers in the banking business include the non-current portion that is recorded within other financial liabilities in the consolidated statements of financial position.

*2	Deferred consideration is recorded within other financial liabilities or trade and other payables in the consolidated statements of financial position.

(2)	Financial instruments measured at fair value on a recurring basis

The following section describes the valuation techniques used by Sony to measure different financial instruments at fair value, including an indication of the level in the fair value hierarchy in which each instrument is generally classified.

Debt instruments and equity instruments

Where quoted prices of financial instruments are available in an active market, these instruments are classified in Level 1 of the fair value hierarchy. Level 1 financial instruments include exchange-traded equity instruments. If quoted market prices are not available for the specific financial instruments or the market is inactive, then fair values are estimated by using pricing models, quoted prices of financial instruments with similar characteristics or discounted cash flow method and mainly classified in Level 2 of the fair value hierarchy. Level 2 financial instruments include debt instruments with quoted prices that are not traded as actively as exchange-traded instruments, such as the majority of government bonds and corporate bonds. In certain cases where there is limited activity or less transparency around inputs to the valuation, these instruments are classified within Level 3 of the fair value hierarchy. Level 3 financial instruments primarily include certain private equity investments, investment funds, securitized products which are not classified within Level 1 or Level 2 and domestic and foreign corporate bonds for which quoted prices are not available in a market and where there is less transparency around inputs. Sony estimates the fair value for private equity investments primarily by using comparable company analysis and discounted cash flow method. The price book-value ratio and price earnings ratio of comparable companies, as well as cost of capital and EBITDA multiples for the terminal value used in discounted cash flow method, are primarily used as significant unobservable inputs in the fair value measurement of equity securities classified as Level 3. The fair value increases (decreases) as the price book-value ratio and price earnings ratio of comparable companies rise (decline). In addition, the fair value increases (decreases), as the cost of capital declines (rises) and EBITDA multiples rise (decline), both of which are used in discounted cash flow method. Sony estimates the fair value for certain investment funds by using the net asset value. Sony estimates the fair value for securitized products and domestic and foreign corporate bonds for which quoted prices are not available in a market and where there is less transparency around inputs by using third-party information such as indicative quotes from dealers without adjustment or discounted cash flow method. For validating the fair values of Level 3 financial instruments, Sony primarily uses internal models which include management judgment or estimation of assumptions that market participants would use in pricing the asset.

Derivatives

Exchange-traded derivatives valued using quoted prices are classified within Level 1 of the fair value hierarchy. However, few classes of derivative contracts are listed on an exchange; thus, the majority of Sony’s derivative positions are valued using internally developed models that use as their basis readily observable market parameters, meaning parameters that are actively quoted and can be validated to external sources, including pricing services. Depending on the types and contractual terms of derivatives, fair value can be modeled using a series of techniques, such as the Black-Scholes model, which are consistently applied. For derivative products that have been established for some time, Sony uses models that are widely accepted in the financial services industry. These models reflect the contractual terms of the derivatives, including the period to maturity, and market-based parameters such as interest rates, volatility, and the credit rating of the counterparty. Further, many of these models do not contain a high level of subjectivity as the techniques used in the models do not require significant judgment, and inputs to the model are readily observable from actively quoted markets. Such instruments are generally classified within Level 2 of the fair value hierarchy. If significant unobservable inputs are used in the models, such instruments are classified within Level 3.

In determining the fair value of Sony’s interest rate swap derivatives, Sony uses the present value of expected cash flows based on market observable interest rate yield curves commensurate with the term of each instrument. For foreign currency derivatives, Sony’s approach is to use forward contract valuation models employing market observable inputs, such as spot currency rates and time value. These derivatives are classified within Level 2 since Sony primarily uses observable inputs in its valuation of its derivative assets and liabilities.

The fair value of Sony’s assets and liabilities that are measured at fair value on a recurring basis as of March 31, 2024 and 2025 is as follows:


	Yen in millions
	March 31, 2024
									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Investments and advances in the Financial Services segment (Current)		Other financial assets (Current)		Investments and advances in the Financial Services segment (Non-current)		Other financial assets (Non-current)
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese national government bonds		-		423,129		-		423,129		-		-		423,129		-
Japanese local government bonds		-		1,846		-		1,846		-		-		1,846		-
Japanese corporate bonds		-		27,296		20		27,316		-		-		27,296		20
Foreign government bonds		39,363		192,325		-		231,688		-		-		231,688		-
Foreign corporate bonds		-		11,981		2,933		14,914		-		-		11,981		2,933
Investment funds		-		552,017		67,355		619,372		-		-		599,937		19,435
Equity securities		3,451,655		8,146		9,434		3,469,235		-		-		3,210,296		258,939
Derivative assets
Interest rate contracts		-		49,619		-		49,619		-		1,009		-		48,610
Foreign exchange contracts		-		20,425		-		20,425		-		18,774		-		1,651
Equity contracts		-		-		2,379		2,379		-		2,379		-		-
Financial assets designated to be measured at FVPL
Debt securities
Japanese national government bonds		-		1,021,309		-		1,021,309		4,302		-		1,017,007		-
Japanese local government bonds		-		13,945		-		13,945		5,310		-		8,635		-
Japanese corporate bonds		-		3,302		-		3,302		3,302		-		-		-
Foreign government bonds		-		39,472		-		39,472		7,390		-		32,082		-
Foreign corporate bonds		-		159,158		5,923		165,081		49,578		-		115,503		-
Financial assets required to be measured at FVOCI
Debt securities
Japanese national government bonds		-		7,057,395		-		7,057,395		300		-		7,057,095		-
Japanese local government bonds		-		48,712		-		48,712		550		-		48,162		-
Japanese corporate bonds		-		743,804		138,848		882,652		11,414		-		871,238		-
Foreign government bonds		-		1,221,208		-		1,221,208		-		-		1,221,068		140
Foreign corporate bonds		-		266,362		34,757		301,119		28,363		-		272,756		-
Securitized products		-		60,565		22,008		82,573		-		-		82,573		-
Financial assets designated to be measured at FVOCI
Equity securities		67,834		-		249,181		317,015		-		-		7,305		309,710

Total assets		3,558,852		11,922,016		532,838		16,013,706		110,509		22,162		15,239,597		641,438


									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Other financial liabilities (Current)		Other financial liabilities (Non-current)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Interest rate contracts		-		6,450		-		6,450		406		6,044
Foreign exchange contracts		-		17,493		-		17,493		16,297		1,196
Equity contracts		3,428		1,916		-		5,344		5,344		-
Contingent consideration		-		-		50,343		50,343		26,193		24,150
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		-		-		54,028		54,028		-		54,028

Total liabilities		3,428		25,859		104,371		133,658		48,240		85,418


	Yen in millions
	March 31, 2025
									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Investments and advances in the Financial Services segment (Current)		Other financial assets (Current)		Investments and advances in the Financial Services segment (Non-current)		Other financial assets (Non-current)
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese national government bonds		-		411,764		-		411,764		-		-		411,764		-
Japanese local government bonds		-		1,225		-		1,225		-		-		1,225		-
Japanese corporate bonds		-		19,828		33		19,861		-		-		19,828		33
Foreign government bonds		41,867		179,346		-		221,213		-		-		221,213		-
Foreign corporate bonds		-		24,657		2,849		27,506		-		-		24,657		2,849
Investment funds		-		666,662		66,863		733,525		-		-		715,852		17,673
Equity securities		4,210,845		7,120		9,678		4,227,643		-		-		3,740,189		487,454
Derivative assets
Interest rate contracts		-		65,433		-		65,433		-		493		-		64,940
Foreign exchange contracts		-		15,255		-		15,255		-		13,821		-		1,434
Equity contracts		910		911		2,346		4,167		-		4,167		-		-
Bond contracts		1,286		-		-		1,286		-		1,286		-		-
Financial assets designated to be measured at FVPL
Debt securities
Japanese national government bonds		-		757,357		-		757,357		3,494		-		753,863		-
Japanese local government bonds		-		8,596		-		8,596		8,596		-		-		-
Foreign government bonds		-		50,569		-		50,569		5,639		-		44,930		-
Foreign corporate bonds		-		71,408		6,042		77,450		25,659		-		51,791		-
Financial assets required to be measured at FVOCI
Debt securities
Japanese national government bonds		-		6,134,141		-		6,134,141		35,000		-		6,099,141		-
Japanese local government bonds		-		71,752		-		71,752		11,055		-		60,697		-
Japanese corporate bonds		-		693,016		111,792		804,808		11,087		-		793,721		-
Foreign government bonds		-		1,315,058		-		1,315,058		4,612		-		1,310,307		139
Foreign corporate bonds		-		353,862		61,068		414,930		29,447		-		385,483		-
Securitized products		-		59,702		48,878		108,580		-		-		108,580		-
Financial assets designated to be measured at FVOCI
Equity securities		86,339		-		302,488		388,827		-		-		5,880		382,947

Total assets		4,341,247		10,907,662		612,037		15,860,946		134,589		19,767		14,749,121		957,469


									Presentation in the consolidated statements of financial position
	Level 1		Level 2		Level 3		Total		Other financial liabilities (Current)		Other financial liabilities (Non-current)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Interest rate contracts		-		15,835		-		15,835		1,016		14,819
Foreign exchange contracts		-		15,778		-		15,778		15,778		-
Equity contracts		514		-		118,606		119,120		514		118,606
Bond contracts		3,793		-		-		3,793		3,793		-
Contingent consideration		-		-		25,785		25,785		11,594		14,191
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		-		-		52,963		52,963		10,912		42,051

Total liabilities		4,307		31,613		197,354		233,274		43,607		189,667

Cash and cash equivalents are excluded from the tables above. Refer to Note 27.

Transfers of debt securities from Level 2 to Level 1 were 2,384 million yen and 2,557 million yen for the fiscal years ended March 31, 2024 and 2025, respectively, as quoted prices in active markets for certain debt securities became available. Transfers of debt securities from Level 1 to Level 2 were 830 million yen and 2,081 million yen for the fiscal years ended March 31, 2024 and 2025, respectively, as quoted prices in active markets for certain debt securities became unavailable.

Transfers of equity securities from Level 2 to Level 1 were 1,480 million yen for the fiscal year ended March 31, 2025, as quoted prices in active markets for certain equity securities became available. There were no transfers of equity securities from Level 2 to Level 1 for the fiscal year ended March 31, 2024.

Previously, the amount of transfers was calculated by assuming that transfers between levels occurred at the beginning of each quarterly consolidated accounting period. However, beginning in the fiscal year ended March 31, 2025, the calculation of the amount of transfers has been changed to assume that transfers between levels occurred as of April 1 if transfers between levels occur during the interim consolidated accounting period or as of October 1 if they occur after October 1. The amount of transfers between levels for the fiscal year ended March 31, 2024 is calculated in the same way.

The valuation techniques used to measure the fair value of assets and liabilities classified as Level 3, significant unobservable inputs, and their range are as follows:

Valuation

technique(s)

Significant
unobservable
inputs

Range

March 31, 2024

March 31, 2025

Financial assets required to be measured at FVOCI

Debt securities

Japanese corporate bonds

Discounted cash flow

Credit spread

27bp-72bp

53bp-71bp

Securitized products

90bp-170bp

80bp-140bp

Financial liabilities required to be measured at FVPL

Derivative liabilities

Equity contracts

Option pricing

(Black-Scholes)

Volatility

47.7%-57.0%

* bp = basis point

The decrease (increase) in fair value is the result of rise (decline) of credit spreads.

For the above assets classified as Level 3, the fair value would not change significantly, if one or more of the significant unobservable inputs were changed to reflect reasonably possible alternative assumptions.

The

changes

in fair value of Level 3 assets and liabilities for the fiscal years ended March 31, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31, 2024
			Total gains (losses) *1
	Beginning balance		Net income *2			Other comprehensive income * 3			Purchases		Sales and settlements			Transfers to Level 3 *4		Transfers out of Level 3 45			Other			Ending balance
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese corporate bonds		38		-			-			20		(18	)		-		-			(20	)		20
Foreign corporate bonds		3,377		171			-			317		-			-		-			(932	)		2,933
Investment funds		60,796		3,781			736			8,677		(6,635	)		-		-			-			67,355
Equity securities		6,789		595			1			1,951		(152	)		-		-			250			9,434
Derivative assets
Equity contracts		4,692		(2,816	)		503			-		-			-		-			-			2,379
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		3,541		642			-			1,740		-			-		-			-			5,923
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		171,622		8			(32,782	)		-		-			-		-			-			138,848
Foreign corporate bonds		24,672		1,315			255			29,150		(19,148	)		-		(1,487	)		-			34,757
Securitized products		40,591		1,483			34			7,905		(24,437	)		-		(3,568	)		-			22,008
Financial assets designated to be measured at FVOCI
Equity securities		324,028		-			(6,987	)		6,342		(73,874	)		-		(1,175	)		847			249,181
Liabilities:
Financial liabilities required to be measured at FVPL
Contingent consideration		51,512		182			6,614			4,363		(12,328	)		-		-			-			50,343
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		47,326		(3,396	)		5,345			5,294		(541	)		-		-			-			54,028


	Yen in millions
	Fiscal year ended March 31, 2025
			Total gains (losses) *1
	Beginning balance		Net income *2			Other comprehensive income * 3			Purchases		Sales and settlements			Transfers to Level 3 *4		Transfers out of Level 3 45			Other *6			Ending balance
Assets:
Financial assets required to be measured at FVPL
Debt securities
Japanese corporate bonds		20		-			-			33		-			-		-			(20	)		33
Foreign corporate bonds		2,933		(53	)		-			-		(31	)		-		-			-			2,849
Investment funds		67,355		2,580			(94	)		35,176		(37,968	)		-		-			(186	)		66,863
Equity securities		9,434		(1,725	)		(1	)		2,391		(421	)		-		-			-			9,678
Derivative assets
Equity contracts		2,379		-			(33	)		-		-			-		-			-			2,346
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		5,923		119			-			-		-			-		-			-			6,042
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		138,848		9			(27,065	)		-		-			-		-			-			111,792
Foreign corporate bonds		34,757		(939	)		(452	)		48,023		(17,628	)		-		(2,693	)		-			61,068
Securitized products		22,008		(1,605	)		37			40,906		(12,468	)		-		-			-			48,878
Financial assets designated to be measured at FVOCI
Equity securities		249,181		-			(16,430	)		7,200		(2,185	)		-		(1,699	)		66,421			302,488
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Equity contracts		-		121,082			(2,476	)		-		-			-		-			-			118,606
Contingent consideration		50,343		(3,013	)		(260	)		3,101		(24,221	)		-		-			(165	)		25,785
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		54,028		(610	)		(348	)		6,199		(6,306	)		-		-			-			52,963

*1	For liability items, gains are presented as negative and losses are presented as positive.

*2	Gains (losses) recognized in net income are included in financial services revenue, other operating (income) expense, net, financial income and financial expenses in the consolidated statements of income.

Gains (losses) recognized in other comprehensive income are included in changes in equity instruments measured at fair value through other comprehensive income, changes in debt instruments measured at fair value through other comprehensive income and exchange differences on translating foreign operations in the consolidated statements of comprehensive income.

Previously, the amount of transfers was calculated by assuming that transfers between levels occurred at the beginning of each quarterly consolidated accounting period. However, from the fiscal year ended March 31, 2025, the calculation of the amount of transfers has been changed to assume that transfers between levels occurred as of April 1 if transfers between levels occur during the interim consolidated accounting period or as of October 1 if they occur after October 1. The amount of transfers between levels for the fiscal year ended March 31, 2024 is calculated in the same way.

*5	Certain financial assets were transferred from Level 3 because observable market data became available.

*6	The increase in equity securities designated to be measured at fair value through other comprehensive income is mainly due to a change in the scope of consolidation.

The

changes

in unrealized gains (losses) recognized in net income for Level 3 assets and liabilities held as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	Fiscal year ended March 31
	2024			2025
Assets:
Financial assets required to be measured at FVPL
Debt securities
Foreign corporate bonds		171			(39	)
Investment funds		3,887			(1,801	)
Equity securities		495			(840	)
Derivative assets
Equity contracts		(2,816	)		-
Financial assets designated to be measured at FVPL
Debt securities
Foreign corporate bonds		646			119
Financial assets required to be measured at FVOCI
Debt securities
Japanese corporate bonds		8			9
Foreign corporate bonds		1,315			(939	)
Securitized products		1,509			(1,610	)
Liabilities:
Financial liabilities required to be measured at FVPL
Derivative liabilities
Equity contracts		-			(121,082	)
Contingent consideration		(1,488	)		(1,223	)
Financial liabilities designated to be measured at FVPL
Redeemable noncontrolling interests		3,270			600

Gains (losses) recognized in net income are included in financial services revenue, other operating (income) expense, net, financial income and financial expenses in the consolidated statements of income.

Sony generally elects to designate investments in equity instruments held to promote its businesses and to maintain and enhance the business relationship as financial assets measured at fair value through other comprehensive income based on the purposes of holding the investments.

Equity instruments measured at fair value through other comprehensive income as of March 31, 2024 and 2025 comprise the following:


	Yen in millions
	March 31
	2024		2025
Marketable equity instruments		67,834		86,339
Non-marketable equity instruments		249,181		302,488

Total		317,015		388,827

Significant marketable equity instruments measured at fair value through other comprehensive income as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
KADOKAWA Corporation		7,545		52,951
ANYCOLOR Inc.		8,568		10,815
Bilibili Inc.		29,410		-

The balances of the

non-marketable

instruments measured at fair value through other comprehensive income by major sector categories as of March 31, 2024 and 2025 are as follows:


	Yen in millions
	March 31
	2024		2025
Entertainment *1		187,294		181,000
Manufacturing *2		34,610		91,099
Information technology, Communication and Service *3		24,348		27,987

*1	Major investments included Epic Games, Inc.

*2	Major investments included Nichia Corporation as of March 31, 2024.

Major investments included Japan Advanced Semiconductor Manufacturing, Inc. and Nichia Corporation as of March 31, 2025.

*3	Major investments included Semiconductor Energy Laboratory Co., Ltd.

In order to enhance the efficiency of using assets held effectively, Sony derecognizes equity instruments measured at fair value through other comprehensive income upon the sale of the investment. Information relating to investments derecognized during the fiscal years ended March 31, 2024 and 2025 is as follows:


	Yen in millions
	Fiscal year ended March 31
	2024		2025
Fair value at derecognition		86,265		32,275
Cumulative amount recognized in other comprehensive income, net of tax*		12,326		(29,508	)
Dividend received		122		-

*	The cumulative amount recognized in other comprehensive income, net of tax, was transferred to retained earnings upon derecognition of the equity instruments.

(3)	Financial instruments measured at amortized cost

The fair values by fair value hierarchy level of certain financial instruments that are measured at amortized cost as of March 31, 2024 and 2025 are summarized as follows:


	Yen in millions
	March 31, 2024
	Fair value								Carrying amount
	Level 1		Level 2		Level 3		Total		Total
Assets:
Debt securities
Japanese corporate bonds		-		9,957		-		9,957		9,950
Foreign corporate bonds		-		3,413		-		3,413		3,386
Securitized products		-		-		378,389		378,389		378,736
Other		-		41		4,368		4,409		4,409
Housing loans in the banking business		-		-		3,634,011		3,634,011		3,574,468

Total assets		-		13,411		4,016,768		4,030,179		3,970,949

Liabilities:
Long-term debt including the current portion		-		1,606,340		78,935		1,685,275		1,704,102
Investment contract liabilities		-		59,578		-		59,578		60,392

Total liabilities		-		1,665,918		78,935		1,744,853		1,764,494


	Yen in millions
	March 31, 2025
	Fair value								Carrying amount
	Level 1		Level 2		Level 3		Total		Total
Assets:
Debt securities
Japanese local government bonds		-		11,696		-		11,696		11,626
Japanese corporate bonds		-		24,273		-		24,273		24,916
Foreign corporate bonds		-		937		-		937		935
Securitized products		-		-		439,132		439,132		439,281
Other		-		29,820		14,364		44,184		44,296
Housing loans in the banking business		-		-		3,709,148		3,709,148		3,763,261

Total assets		-		66,726		4,162,644		4,229,370		4,284,315

Liabilities:
Long-term debt including the current portion		-		1,621,264		101,632		1,722,896		1,754,817
Investment contract liabilities		-		60,558		-		60,558		62,772

Total liabilities		-		1,681,822		101,632		1,783,454		1,817,589

The table above does not include financial instruments measured at amortized cost whose carrying amounts approximate their fair values mainly due to their short-term nature.

The fair values of long-term debt, including the current portion classified as Level 2, were estimated mainly based on discounted future cash flows using Sony’s current rates for similar liabilities.

The fair values of investment contract liabilities classified as Level 2 were determined by using the present value of expected cash flows based on risk-free interest rate yield curves adjusted for items such as credit risk.

Financial instruments classified as Level 3 mainly include housing loans in the banking business, securitized products and certain bonds issued by Sony. In determining the fair value of such financial instruments, Sony uses the present value of expected cash flows based on risk-free interest rate yield curves adjusted for items such as credit risk.

(4)	Income and expenses related to financial instruments in the Financial Services segment

Income and expenses related to financial instruments in the Financial Services segment are recorded in other financial services revenue and other financial services expenses in the consolidated statements of income. Income and expenses related to financial instruments in all segments other than Financial Services segment are recorded in financial income and financial expenses in the consolidated statements of income. Refer to Note 24 for the details of financial income and financial expenses.

The breakdown of income and expenses related to financial instruments in the Financial Services segment for the fiscal years ended March 31, 2023, 2024 and 2025 is as follows:


	Yen in millions
	March 31, 2023
	Financial instruments required to be measured at FVPL		Financial instruments designated to be measured at FVPL			Financial assets measured at AC		Financial liabilities measured at AC			Debt instruments measured at FVOCI		Equity instruments measured at FVOCI		Total
Income* 1
Net gains (losses) recognized in profit or loss		56,150		(109,480	)		14,242		(58,484	)		141,189		-		43,617
Total interest income		-		-			38,787		-			184,519		-		223,306
Dividend income		-		-			-		-			-		195		195
Expenses
Total interest expenses		-		-			-		29,867			-		-		29,867
Impairment losses (gains) on financial assets		-		-			144		-			8		-		152



	Yen in millions
	March 31, 2024
	Financial instruments required to be measured at FVPL		Financial instruments designated to be measured at FVPL			Financial assets measured at AC			Financial liabilities measured at AC			Debt instruments measured at FVOCI			Equity instruments measured at FVOCI		Total
Income* 1
Net gains (losses) recognized in profit or loss		857,653		(120,317	)		5,279			(105,974	)		257,902			-		894,543
Total interest income		-		-			52,060			-			191,209			-		243,269
Dividend income		-		-			-			-			-			459		459
Expenses
Total interest expenses		-		-			-			72,488			-			-		72,488
Impairment losses (gains) on financial assets		-		-			(42	)		-			(3	)		-		(45	)


	Yen in millions
	March 31, 2025
	Financial instruments required to be measured at FVPL* 2		Financial instruments designated to be measured at FVPL			Financial assets measured at AC			Financial liabilities measured at AC		Debt instruments measured at FVOCI			Equity instruments measured at FVOCI		Total
Income* 1
Net gains (losses) recognized in profit or loss		149,946		(123,876	)		12,969			14,830		(48,650	)		-		5,219
Total interest income		-		-			59,507			-		203,044			-		262,551
Dividend income		-		-			-			-		-			186		186
Expenses
Total interest expenses		-		-			-			79,366		-			-		79,366
Impairment losses (gains) on financial assets		-		-			(91	)		-		17			-		(74	)

*1	Income includes investment returns which occurred in the insurance business. Refer to Note 13.

*2	Financial instruments required to be measured at FVPL include the fair value changes attributable to the hedged risks of debt instruments measured at fair value through other comprehensive income designated as the hedged items in fair value hedges.