JGAAP-IFRS

comparison
English version 3.0
[equivalent of Japanese version 4.0]
Contents

Contents ............................................................................ 2
Introduction ....................................................................... 3
Presentation of Financial Statements, Accounting Policies,
Changes in Accounting Estimates and Errors, Assets Held for
Sale and Discontinued Operations ......................................... 4
Consolidation ...................................................................... 7
Equity Method ................................................................... 14
Joint Ventures/Arrangements ............................................. 17
Business Combinations ....................................................... 18
Inventory .......................................................................... 21
Intangible Assets a nd Research and Development Costs ......... 23
Fixed Assets ..................................................................... 26
Investment Property .......................................................... 29
Impairment of assets .......................................................... 31
Leases .............................................................................. 33
Financial Instruments ......................................................... 36
Foreign Currency ............................................................... 56
Income Tax ........................................................................ 60
Provisions and Contingencies .............................................. 64
Construction Contracts ...................................................... 67
Revenue Recognition .......................................................... 68
Share-Based Payments ....................................................... 71
Employee Benefits, excluding Share-Ba sed Pa yments ............. 74
Appendix 1 - The Adoption of IFRS in Japan .......................... 78
Appendix 2 - IFRS Related Resources ................................... 79

2
Introduction

Today, in a move towards improving the comparability of financial statements and to reducing
the costs of raising capital in international markets and so on, countries around the world are
converging their national accounting standards with International Financial Reporting
Standards (“IFRS”) or are adopting IFRS itself.

In Japan too, The Accounting Standards Board of Japan (“ASBJ”) and the International
Accounting Standards Board (“IASB”) concluded the “Tokyo Agreement” in August 2007 and
agreed to the acceleration of convergence. Specifically, it outlined that the significant
differences between Japanese generally accepted accounting principles (“JGAAP”) and IFRS
would be eliminated by the end of 2008 and that the remaining differences would be
eliminated by 30 June 2011. Through the convergence project consistent with that
agreement, the differences between IFRS and JGAAP are eliminated considerably.

Furthermore, in February 2009 the Financial Services Agency of Japan issued a proposed road
map for adopting IFRS, and serious consideration of adoption of IFRS in Japan commenced.

There are still a number of differences between JGAAP and IFRS because convergence based
on the “Tokyo Agreement” is ongoing and as revisions continue to be made and new standards
issued in IFRS.

In this booklet, we outline the differences between the two sets of standards by accounting
topic. It is not possible to describe comprehensively every difference which could arise in
accounting for all transactions, and we have focused as much as possible on those differences
which are considered to be most common in current practice.

We have taken care in preparing this booklet. However as the information is summarised, this
booklet is intended to be used as general guidance only and is not intended to be used as
detailed advice or in place of professional judgment. Please refer to the original texts for the
detailed guidance. Also, we recommend that you consult with specialists about particular
transactions.

Ernst & Young ShinNihon LLC, Ernst & Young Global and any member firm thereof, will not be
responsible should any damages or losses arise as a result of the use of this booklet. The
information contained herein is based on accounting standards effective as at 30 June 2011.

3
Presentation of Financial Statements, Accounting
Policies, Changes in Accounting Estimates and
Errors, Assets Held for Sale and Discontinued
Operations
► Significant Differences
JGAAP
Accounting (Regulation for Terminology, Forms
periods required and Preparation of Consolidated
to be presented Financial Statements: Presentation)
The prior period and the current
period consolidated financial
statements must be presented
comparatively.
Components of (Regulation for Terminology, Forms
financial and Preparation of Consolidated
statements Financial Statements: Presentation)
The following statements (※1)must
be prepared:
► Consolidated Balance Sheet
► Statement of Consolidated
Comprehensive Income (a single
statement approach) or an
Income Statement and a
Statement of Other
Comprehensive Income (a two
statement approach) (※2)
► Consolidated Statement of
Changes in Shareholders’
Equity
► Consolidated Cash Flow
Statements
► Consolidated Supplementary
Information
※1 Even if an entity applies an
accounting policy retrospectively,
makes a retrospective restatement of
items in its financial statements or
reclassifies items in its financial
statements, it does not need to
prepare an opening balance sheet for
the earliest period presented.
※2 Both a single statement approach
and a separate (two) statement
approach are permitted.
4
IFRS
(IAS1.38, 39)
Comparative information, at a
minimum for one previous period,
shall be disclosed for all amounts
reported in the financial statements.
(IAS1.10)
The following statements must be
prepared ※1 :, 2
► Statement of Financial Position
► Statement of Comprehensive
Income (a single statement
approach) ※4 or an Income
Statement and a Statement of
Other Comprehensive Income (a
two statement approach) ※3
► Statement of Changes in Equity
► Statement of Cash Flows
► Accounting Policies and Other
Explanatory Information
※1 Titles other than those listed
above may be used for these
statements.
※2 If an entity applies an accounting
policy retrospectively, makes a
retrospective restatement of items in
its financial statements or reclassifies
items in its financial statements, it
must prepare an opening balance
sheet for the earliest period
presented in addition to the above.
※3 Both a single statement approach
and a separate (two) statement
approach are permitted.
(Revised standard: IAS1.10A(b))
※4 A statement of profit or loss and
other comprehensive income (a
single statement)
 JGAAP
Presentation of (Regulation for Terminology, Forms
extraordinary and Preparation of Financial
gains and losses Statements 62,63)
Items related to extraordinary gains
and losses are presented by category
in accordance with their nature.
IFRS
(IAS1.87)
No profit or loss items are allowed to
be presented as extraordinary items
in the statement of comprehensive
income, the income statement (when
presented) or in the notes.

Other In principle, it is not expected that ( IAS 1.95,96)

comprehensive there will be items of comprehensive Certain items are recognised in other
income not income that, as in IFRS, will not be comprehensive income and are not
reclassified to reclassified to profit and loss reclassified to profit or loss in
profit or loss subsequently. subsequent periods.

(Revised standard IAS 1.82A)

Within other comprehensive income
items which will not be reclassified
subsequently to profit or loss; and
items which will be reclassified
subsequently to profit or loss when
specific conditions are met shall be
separately presented.

Presentation of (Regulation for Terminology, Forms (IAS1.83)

the total of and Preparation of Consolidated (revised standard IAS 1.81B)
profit/loss and Financial Statements 65.3 69 7.2) Profit (or loss) and total
comprehensive Profit (or loss) attributable to comprehensive income for the period
income minority interests is presented in the attributable to non-controlling
attributable to consolidated profit and loss interests shall be presented.
minority statement.
interests for the The amount of comprehensive
reporting period income attributable to owners of the
( comprehensive parent and to minority interests will
income) be disclosed as allocations in the
consolidated financial statements.
Departure from No such rule exists. (IAS1.19)
a requirement of In the extremely rare circumstances
a standard to in which compliance with a
give a fairer requirement in an IFRS would be so
presentation misleading that it would conflict with
or be contrary to the Framework for
the Preparation and Presentation of
Financial Statements, it is necessary
to depart from that requirement (the
‘true and fair override’).

Non-current There are no specific rules. (IFRS5.6,15)

assets classified However, under the Standard for the
as held for sale Impairment of Fixed Assets, note 2,
(and disposal as examples of indicators of
groups) impairment, disposal of a business
operation and restructurings,
disposal earlier than initially planned,
changes in purpose of use etc. are
given.
5
If the carrying value of assets will be
recovered principally through a sale
transaction rather than through
continuing use, the asset (or disposal
group) shall be classified as held for
sale and shall be measured at the
lower of carrying amount and fair
value less costs to sell.
 JGAAP IFRS
Depreciation of There are no specific rules. (IFRS5.25)
non-current However, impaired assets must be Non-current assets (or disposal
assets (or depreciated from the book value from groups) classified as held for sale are
disposal groups) which the amount of impairment loss not depreciated.
classified as held is already deducted (Standard for the
for sale Impairment of Fixed Assets 3.1).

Presentation of There are no specific rules. (IFRS 5.38)

non-current Non-current assets and liabilities
assets classified classified as held for sale (or disposal
as held for sale groups), and any cumulative income
or expense recognised in other
comprehensive income or loss
relating to a non-current asset (or
disposal group) classified as held for
sale, shall be separately presented
within assets, liabilities and equity in
the statement of financial position
and within the statement of
comprehensive income, respectively.

※The major classes of items within

assets and liabilities described above,
except for certain items, shall be
disclosed in the statement of financial
position or notes (IFRS 5.38,39)

Presentation of There are no specific rules. (IFRS5.30,33)

discontinued The following total amounts must be
operations separated as a single item from the
amounts arising from continuing
operations in the statement of
comprehensive income (profit and
loss statement):
► the post-tax profit or loss of
discontinued operations;
► the post-tax gain or loss
recognised on the measurement
to fair value less costs to sell or
on disposal of the assets (or
disposal group).
※ An analysis of post–tax profit and
loss except for certain items shall
be disclosed in the statement of
comprehensive income ( or
income statement ) or notes.

6
Consolidation
► Significant differences
JGAAP
Scope of (Accounting Standard for
consolidation Consolidated Financial Statements
6, 7, 13)
The scope of consolidation is based
on the concept of control.
A parent company controls another
company when it has control over the
body which makes the financial,
operating and business decisions (the
decision making body) of that other
company.
There are no specific rules about the
effect of potential voting power or
whether the decision maker is a
principal or an agent when judging
the existence of control.
On the other hand, similar to ‘de facto
control’ in IFRS10, even if less than
half of the voting rights are held,
there are rules that require an entity
to make the judgment as to whether
control exists by also including the
voting rights held by closely related
parties or parties with the same
intention after considering the
structure of the Boards of Directors,
the financial position, and the
existence of any contracts which
control policy making ability etc. of
such parties.
7
IFRS
(IAS27.4,12,13,14)
The scope of consolidation is based on
the concept of control.
Control exists when the parent entity
is able to govern the financial and
operating policies of an entity so as
to obtain benefits from that entity’s
activities.
When assessing whether an entity has
control over another entity,
potentially exercisable or convertible
instruments with voting rights are
considered.
(New standard IFRS10.7)
The scope of consolidation is based on
the concept of control.
An investor controls an investee if and
only if the investor has all the
following:
(a) power over the investee;
(b) exposure, or rights, to variable
returns from its involvement with the
investee; and
(c) the ability to use its power over the
investee to affect the amount of the
investor’s returns.
(New standard IFRS10.B, B47)
When assessing control, an investor
considers its potential voting rights as
well as potential voting rights held by
other parties, to determine whether it
has power.
(New standard IFRS10.B41, B42)
It is possible, that an investor with less
than a majority of the voting rights
has rights that are sufficient to give it
power, the so-called ‘de facto control’.
(New standard IFRS10.18, B58)
When an investor with
decision-making rights (a decision
maker) assesses whether it controls
an investee, it shall determine
whether it is a principal or an agent.
 JGAAP
Scope of (Accounting Standard for
consolidation Consolidated Financial Statements
(exception) 14)
The following entities are excluded
from the scope of consolidation:
► subsidiaries where control is
temporary;
► subsidiaries which, if
consolidated, would give rise to
the risk of substantially
misleading the judgment of
interested parties
Special purpose (Treatment of the revision of the
entities (SPEs) scope of consolidation of subsidiaries
and structured and affiliated companies)
entities (SE) (Treatment in practice regarding the
control and the influence standards in
relation to investment vehicles)
Certain SPEs which meet certain
conditions are presumed not to meet
the definition of subsidiaries.
The scope of consolidation of
investment vehicles is in principle
judged based on the existence of
control over operations.
Uniform (Accounting Standard for
accounting Consolidated Financial Statements
policies of 17)
consolidated (Practical Interim Solution on
subsidiaries Unification of Accounting Policies
Applied to Foreign Subsidiaries for
Consolidated Financial Statements)
Accounting policies and procedures
for like transactions in similar
circumstances applied by the parent
and the subsidiary, in principle, shall
be unified.
However, if the financial statements
of the foreign subsidiary are prepared
in accordance with IFRS or USGAAP,
as an interim measure, these can be
used after adjustment of five specific
items.
8
IFRS
(IAS27.4, 12)
All entities, which are in substance
controlled must be consolidated, there
are no exceptions similar to the
JGAAP exceptions.
(New standard IFRS10 Appendix A,
IFRS9.3.2.1)
In accordance with IFRS10, all
subsidiaries must be consolidated.
There are no exemptions as in JGAAP.
(SIC12.8)
SPEs shall be consolidated when the
substance of the relationship between
an entity and the SPE indicates that
the SPE is controlled by the entity.
(New standard IFRS10)
As set out in IFRS10.7, structured
entities (SEs) that an investor controls
must also be consolidated.
(IAS27.24, 25)
(New standard IFRS10.19, B87)
Consolidated financial statements
shall be prepared using uniform
accounting policies for like
transactions and other events in
similar circumstances.
If a member of the group uses
accounting policies other than those
adopted in the consolidated financial
statements for like transactions and
events in similar circumstances,
appropriate adjustments are made to
its financial statements in preparing
the consolidated statements.
 JGAAP
Non-cotermino (Accounting Standard for
us reporting Consolidated Financial Statements
periods Note 4)
When the difference between the end
of the reporting period of the
subsidiary and that of the parent is
less than three months, the financial
statements of the subsidiary can be
used as they are for consolidation
purposes. In that case, adjustments
shall be made for the effects of
significant intragroup transactions.
Presentation of (Accounting Standard for
profit or loss Consolidated Financial Statements
attributable to 39)
non-controlling In the Consolidated Profit and Loss
interests (two statement approach) and the
(minority Consolidated Profit and Loss and
interests) Comprehensive Income (single
statement approach), after deducting
or adding income tax to profit before
incomes taxes and similar, the profit
before minority interests is
presented, then minority interests are
deducted or added to present the
profit and loss for the period.
In the two statement approach,
Consolidated comprehensive Income,
and in the single statement approach,
Consolidated Profit and Loss and
Comprehensive Income, as part of
presenting comprehensive income,
both amounts attributed to the
owners of the parent and amounts
attributed to minority interests are
shown.
9
IFRS
(IAS27.22, 23, 41(c))
(New standard IFRS 10.B92, B93)
The financial statements of the parent
and its subsidiaries used in the
preparation of the consolidated
financial statements shall be prepared
as of the same date.
When the end of the reporting period
of the parent is different from that of
a subsidiary, the subsidiary prepares,
for consolidation purposes, additional
financial statements as of the same
date as the financial statements of the
parent unless it is impracticable to do
so (after making every reasonable
effort).
In the case that it is impracticable to
align the reporting period ends, ,
adjustments shall be made for the
effects of significant transactions or
events that occur between that date
and the date of the parent’s financial
statements (the gap period is limited
to no more than three months).
(IAS1.82, 83)
(Revised IAS1.81B)
Profit or loss and total comprehensive
income for the period are presented
including non-controlling interests
(minority interests), and amounts
attributable to non-controlling
interests and to the parent company
are disclosed as allocations in the
financial statements.
 JGAAP
Allocation of (Accounting Standard for
losses of a Consolidated Financial Statements
subsidiary to 27)
non-controlling If the proportionate losses of
interests subsidiaries relating to the minority
interests’ share exceed the amount
that the minority interests are obliged
to bear, any such excess amount is
charged to the parent company.
IFRS
(IAS27.28)
(New standard IFRS10, B94)
Even when non-controlling interests
result in a deficit balance, total
comprehensive income is attributed to
both non-controlling interests and the
parent company.

Loss of control (Accounting Standard for (IAS27.34)

of a subsidiary Consolidated Financial Statements (New standard IFRS10.25, B97-99)
29 ) The parent company recognises any
(Accounting Standard for Business remaining interest at fair value at the
Separations 38, 48(1)①) date that control is lost.
(Application Guidance on Accounting
Standards for Business Combinations
and Business Separations 275, 276,
288(2))
As the result of a disposal etc, when
the remaining investment represents
an investment in an associate, the
investment is accounted for using the
equity method. When the remaining
investment does not meet the
definition of an associate, it is valued
based on its carrying value in the
separate financial statements of the
parent.

10
 JGAAP IFRS
Change in a (Accounting Standard for (IAS 27. 30)
parent’s Consolidated Financial Statements (New standard IFRS10.23)
ownership 28-30) Changes in a parent’s ownership
interest in a (Accounting Standard for Business interest in a subsidiary that do not
subsidiary that Separations 48, 38,17-19, 39) result in a loss of control are
does not result For purchases of an additional share accounted for as equity transactions.
in a loss of in a subsidiary, any difference
control between the value of the interest
acquired and the amount invested is
recognised as goodwill (or negative
goodwill). For disposals, any
difference between the reduction in
the interest sold and the reduction in
the investment amount is recorded as
a profit or loss on disposal of the
shares in the subsidiary.
For increases or decreases in
interests in a subsidiary as a result of
stock issues etc. or business
combinations and such like, the
difference between the increase in
the interest and increase in the
investment are treated as goodwill (or
negative goodwill) and the difference
between the decrease in the interest
and the decrease in the investment
are treated as differences arising on
change in interest (i.e. within equity).

Separate
financial (Accounting Standard for Financial (IAS 27.38)
statements Instruments 17 ) (Revised IAS27.10)
In the separate financial statements, Investments in associates and
investments in subsidiaries and interests in joint ventures must be
associates are accounted for at accounted for by either:
historical cost. ► cost, or
► in accordance with IFRS9/ IAS39

However, when investments

accounted for at cost are classified as
“held for sale” in accordance with
IFRS5, such investments are
accounted for in accordance with
IFRS5.

11
 JGAAP IFRS
Loss of control (Accounting Standard for (IAS27.34)
of a subsidiary Consolidated Financial Statements (New standard IFRS10.25, B97-99)
29 ) The parent company recognises any
(Accounting Standard for Business remaining interest at fair value at the
Separations 38, 48(1)①) date that control is lost.
(Application Guidance on Accounting
Standards for Business Combinations
and Business Separations 275, 276,
288(2))
As the result of a disposal etc, when
the remaining investment represents
an investment in an associate, the
investment is accounted for using the
equity method. When the remaining
investment does not meet the
definition of an associate, it is valued
based on its carrying value in the
separate financial statements of the
parent.

Change in a (Accounting Standard for (IAS 27. 30)

parent’s Consolidated Financial Statements (New standard IFRS10.23)
ownership 28-30) Changes in a parent’s ownership
interest in a (Accounting Standard for Business interest in a subsidiary that do not
subsidiary that Separations 48, 38,17-19, 39) result in a loss of control are
does not result For purchases of an additional share accounted for as equity transactions.
in a loss of in a subsidiary, any difference
control between the value of the interest
acquired and the amount invested is
recognised as goodwill (or negative
goodwill). For disposals, any
difference between the reduction in
the interest sold and the reduction in
the investment amount is recorded as
a profit or loss on disposal of the
shares in the subsidiary.
For increases or decreases in
interests in a subsidiary as a result of
stock issues etc. or business
combinations and such like, the
difference between the increase in
the interest and increase in the
investment are treated as goodwill (or
negative goodwill) and the difference
between the decrease in the interest
and the decrease in the investment
are treated as differences arising on
change in interest (i.e. within equity).

12
 JGAAP IFRS
Separate
financial (Accounting Standard for Financial (IAS 27.38)
statements Instruments 17 ) (Revised IAS27.10)
In the separate financial statements, Investments in associates and
investments in subsidiaries and interests in joint ventures must be
associates are accounted for at accounted for by either:
historical cost. ► cost, or
► in accordance with IFRS9/ IAS39

However, when investments

accounted for at cost are classified as
“held for sale” in accordance with
IFRS5, such investments are
accounted for in accordance with
IFRS5.

Separate
financial (Accounting Standard for Financial (IAS 27.38)
statements Instruments 17 ) (Revised IAS27.10)
In the separate financial statements, Investments in associates and
investments in subsidiaries and interests in joint ventures must be
associates are accounted for at accounted for by either:
historical cost. ► cost, or
► in accordance with IFRS9/ IAS39

However, when investments

accounted for at cost are classified as
“held for sale” in accordance with
IFRS5, such investments are
accounted for in accordance with
IFRS5.

13
Equity Method
► Significant differences
JGAAP
Equity method- (Accounting Standards for
scope Investments, Using the Equity Method
6)
Non-consolidated subsidiaries and
investments in associates are, in
principle, accounted for using the
equity method.
Equity method- (Application Guideline on determining
scope the scope of consolidation for
(exception) subsidiaries and associates 25, 26)
The following investments are
excluded from the application of the
equity method:
► associates where control is
temporary;
► associates, which, if the equity
method were to be applied, would
give rise to the risk of
substantially misleading the
judgment of interested parties
Uniform (Accounting Standards for
accounting Investments, Using the Equity Method
policies of 9)
associates (Practical Interim Solution on
Unification of Accounting Policies
Applied to Foreign Affiliates for
Consolidated Financial Statements)
Accounting policies and procedures
for like transactions in similar
circumstances used by the investor
and the associate (including its
subsidiaries), in principle, shall be
unified.
Also, the “Practical Interim Solution
on Unification of Accounting Policies
Applied to Foreign Affiliates for
Consolidated Financial Statements”
14
IFRS
(IAS28.1,13)
(Revised standard IAS28.16)
In principle, all investments in
associates are accounted for using
the equity method.
(IAS28.13,14)
All entities over which an entity has
significant influence are accounted
for using the equity method.
However, investments which are
classified as held for sale in
accordance with IFRS5 are accounted
for in accordance with IFRS5.
(Revised standard IAS28.20)
An entity shall apply IFRS 5 to an
investment, or a portion of an
investment, in an associate that
meets the criteria to be classified as
held for sale. Any retained portion of
an investment in an associate that has
not been classified as held for sale
shall be accounted for using the
equity method until disposal of the
portion that is classified as held for
sale takes place.
(IAS 28.26, 27)
(Revised IAS28.35,36)
The investor’s financial statements
shall be prepared using uniform
accounting policies for like
transactions and events in similar
circumstances.
If an associate uses accounting
policies other than those of the
investor for like transactions and
events in similar circumstances,
adjustments shall be made to conform
the associate’s accounting policies to
those of the investor when the
associate’s financial statements are
used by the investor in applying the
equity method.
 JGAAP
may be applied to foreign associates
as an interim measure.
If it is extremely difficult to obtain
information for unification of
accounting policies, this is considered
to be a rational reason for not using
uniform accounting policies as
outlined in the Audit Guidance on the
Practical Interim Solution on
Unification of Accounting Policies
Applied to Foreign Subsidiaries for
Consolidated Financial Statements.
Non-cotermino (Accounting Standards for
us reporting Investments, Using the Equity Method
periods 10)
The most recent available financial
statements of the associate are used
by the investor in applying the equity
method.
When the end of the reporting period
of the investor is different from that
of the associate, necessary
adjustments are made or notes given
for the effects of significant
transactions or events.
15
IFRS
(IAS28. 24. 25)
(Revised IAS28.33, 34)
The most recent available financial
statements of the associate are used
by the investor in applying the equity
method. When the end of the
reporting period of the investor is
different from that of the associate,
the associate prepares, for the use of
the investor, financial statements as
of the same date as the financial
statements of the investor unless it is
impracticable to do so.
When it is impractical to align the
period ends, adjustments shall be
made for the effects of significant
transactions or events that occur
between that date and the date of the
investor’s financial statements
(limited to a gap of no more than
three months).
 JGAAP
Impairment of (Practical Guidance on Accounting
associates (and Standards for Investments Using the
joint ventures Equity Method 9)
accounted for (Practical Guidance on Consolidation
using the equity Procedures 32)
method) Where an investor recognises an
impairment loss in respect of an
associate in its separate financial
statements, and the resulting book
value after the recognition of the
impairment loss is below the book
value in the consolidated financial
statements, any goodwill is
immediately depreciated to the extent
of that difference.
Discontinuance (Accounting Standards for
of equity Investments, Using the Equity Method
method 15)
(Accounting Standard for Business
Separations 41(2), 48(1)①)
(Application Guidance on Accounting
Standards for Business Combinations
and Business Separations 278(2),
290(2))
When an entity ceases to be an
associate as the result of a sale or
another event, any remaining
investment in shares is valued at the
carrying value of the investment in
the separate financial statements of
the investor.
When an entity ceases to be an
associate or jointly controlled
operation as the result of a business
combination, the shares of the
acquirer or acquiree are valued at the
carrying value in the separate
financial statements of the investor
(in principle at the market value of the
shares of the combined entity after
the business combination).
16
IFRS
(IAS28.31-33)
(Revised IAS28.40-42)
Goodwill forms part of the carrying
amount of an investment in an
associate and is not separately
recognised. Therefore it is not
tested for impairment separately.
Instead, the entire carrying amount of
the investment is tested for
impairment as a single asset,
whenever application of the
requirements in IAS 39 indicates that
the investment may be impaired.
The impairment test itself shall be
carried out in accordance with IAS 36.
Any reversal of that impairment loss
is recognised to the extent that the
recoverable amount of the investment
subsequently increases.
(IAS28.19)
(Revised standard IAS 28.22)
When equity accounting is
discontinued, the investment is
accounted for as a financial asset in
accordance with IFRS 9 and the fair
value of the investment at the date it
ceases to be an associate is its fair
value on initial recognition.
Joint Ventures/Arrangements
► Significant differences
JGAAP
Joint ventures/ (Accounting Standard for Business
arrangements Combinations 39 (2))
Jointly controlled entities are
accounted for using the equity
method.
Separate (Accounting Standard for Business
financial Combinations 301)
statements: Investments in jointly controlled
jointly controlled entities are presented in the
entities separate financial statements in the
appropriate classification such as
affiliates etc.
(Accounting Standard for Financial
Instruments 17)
Investments in subsidiaries and
associates are recorded at cost in
the balance sheet of the separate
(non-consolidated) financial
statements.
17
IFRS
(IAS31.30,38)
Within joint ventures, jointly
controlled entities are accounted for
by either of the following methods:
► proportionate consolidation; or
► equity method.
(New standard IFRS11.20, 24)
Of joint arrangements, for a joint
operation an investor accounts for
his own assets, liabilities, and
revenue and expenses as well as/ or
his share of the jointly controlled
assets, liabilities, and revenue and
expenses of the joint operation. For
joint ventures, the equity method is
applied.
(IAS27.38)
(Revised standard IAS 27.10)
In the separate financial statements
of the investing entity, investments
in subsidiaries, associates and jointly
controlled entities are accounted for
either:
► at cost; or
► in accordance with IFRS 9/IAS39.
However, when investments are
classified as held for sale in
accordance with IFRS5, they are
accounted for in accordance with
IFRS5.
Business Combinations

► Significant differences
JGAAP IFRS
Definition of a (Accounting Standard for Business (IFRS3R Appendix A)
business Combinations 5) A business combination is a
combination A business combination is when an transaction or other event in which
entity (company or similar entity) or an acquirer obtains control of one or
a business operation, which forms an more businesses.
entity, combines with another entity
or business operation, which forms
an entity, to become one reporting
unit.
Accounting for (Accounting Standard for Business (IFRS3.4)
business Combinations 17) The acquisition method is applied,
combinations The purchase method is applied for the pooling method is not permitted.
business combinations other than
jointly controlled entities and (IFRS3.2)
transactions with entities under IFRS 3 does not apply to the
common control. formation joint ventures or the
combination of entities or
businesses under common control.
Acquisition-relat (Accounting Standard for Business (IFRS3.53)
ed costs Combinations 26) Expensed when the services are
(expenses Included in the cost of the business received, with the exception of debt
directly related combination (as a result form part of or equity issue costs which are offset
to the business goodwill). against the carrying amount of such
combination debt or equity on initial recognition.
which form part
of the purchase
cost)
Contingent (Accounting Standard for Business (IFRS3.39, 58 BC349)
consideration Combinations 27) The acquirer shall recognise the
and subsequent The acquirer recognises the acquisition-date fair value of
adjustments to consideration and adjusts goodwill contingent consideration as part of
goodwill after delivery or exchange is fixed the consideration transferred in
and market value is reasonably exchange for the acquiree,
determinable. Adjustment is not regardless of the probability of
limited to a tentative reporting economic benefit arising (it is
period (such as one year). considered that fair value can be
reliably measured).
Aside from changes as a result of
additional information that the
acquirer obtains after the acquisition
date about facts and circumstances
that existed at the acquisition date
within the measurement period, no
change is made to consideration or
to goodwill.

18
 JGAAP
Recognition of (Accounting Standard for Business
contingent Combinations 30)
liabilities Contingent liabilities are recognised
when they are expenses or losses for
certain conditions estimated to
occur after acquisition, and the
likelihood of occurrence is reflected
in the measurement of
consideration.
Intangible assets (Accounting Standard for Business
acquired in a Combinations 28, 29)
business (Application Guideline for Business
combination Combinations 59, 370)
Intangible assets must be recognised
outside of goodwill when they can be
separately identified and can be
measured rationally.
Rights There is no specific guidance.
reacquired
through a
business
combination (for
example,
trademarks
previously sold
by the acquirer)
Initial (Accounting Standard for Business
recognition of Combinations 31)
goodwill and Goodwill is the amount by which the
measurement of acquisition cost of the entity or the
non-controlling business acquired exceeds the net
interests amount which is allocated to the
(minority assets acquired or the liabilities
interests) assumed (the so-called “purchased
goodwill approach”).
(Accounting Standard for
Consolidated Financial Statements
20)
All assets and liabilities of a
subsidiary are measured at their fair
values on acquisition date (the
so-called “full market value
method”).
*There is no option, as in IFRS, to
measure the entire minority
interests at fair value.
19
IFRS
(IFRS3.232)
Contingent liabilities, which are
present obligations arising from past
events, are recognised regardless of
the probability likelihood of
occurrence an outflow of economic
resources arising when fair value can
be measured reliably.
(IFRS3.B31, IAS38.33)
Identifiable intangible assets must be
recognised separately from goodwill.
In business combinations, the
reliable measurement criterion is
always considered to be satisfied.
(IFRS3.29)
Where the rights meet the criteria
for recognition as intangible assets,
they are recognised as such
separately from goodwill based on
the remaining contractual term.
(IFRS3.19,32)
One of the following methods may
be selected on an acquisition by
acquisition basis:
1) the fair value of the entire entity
acquired is measured including
the non-controlling interests’
share, and goodwill is recognised
including that relating to the
non-controlling interests’ share
(the so-called “full goodwill
approach”); or
2) non-controlling interests (NCI)
are measured as the NCI’s share
of the fair value of the net assets
of the acquiree, and goodwill is
recognised only in respect of the
acquirer’s share (the so-called
“purchased goodwill approach”) .
 JGAAP IFRS
Treatment of (Accounting Standard for Business (IFRS3.B63, IAS36.90)
goodwill Combinations 32) Goodwill is not amortised but is
(Accounting Standard for subject to an impairment review
Consolidated Financial Statements each reporting period. Reversals of
24) previous impairments of goodwill are
In principle, goodwill must be prohibited.
amortised within 20 years using the
straight line method or any other
rational method. However, when the
amount is insignificant, it is possible
to expense goodwill in the period in
which it arises.

(Accounting Standard for the

impairment of fixed assets 2.8)
When there is an indicator that
goodwill is impaired, the need to
recognise an impairment loss must
be considered.

20
Inventory
► Significant Differences
JGAAP
Cost of (Regulation for Terminology, Forms
inventories and Preparation of Financial
Statements 90, and related guideline
90)
Purchase discounts are treated as
non-operating income.
Cost methods (Accounting Standard for
Measurement of Inventories 6-2,
34-4)
The following methods are permitted
for determining balance sheets
values; the specific identification
method, FIFO, the average cost
method and the retail cost method.
In certain situations, the latest
purchase price method is allowed.
Allocation of (Cost Accounting Standard 4(1)2,
fixed 47(1)3)
production The allocation of fixed production
overheads overheads is based on the scheduled
(normal capacity or normal capacity of
capacity) production facilities etc.
Relatively large cost variances,
arising due to differences between
actual prices and expected prices, are
allocated to cost of sales and to
inventories at the end of period.
21
IFRS
(IAS2.11)
Trade discounts, rebates and other
similar items are deducted in
determining the costs of purchase.
(IAS2.21-27)
The following methods of assigning
the costs of inventories are
permitted; the specific identification
method, FIFO, and the weighted
average method.
The following guidance on cost
measurement techniques is given in
the standard.
In principle, the actual cost method
should be used, however the standard
cost method and the retail cost
methods are also given as examples
of cost measurement techniques in
IAS2.
The standard cost method and retail
cost method may be used for
convenience if the results
approximate cost.
(IAS2.13)
The allocation of fixed production
overheads is based on the normal
capacity of production facilities.
The allocation of fixed production
overheads is not increased in periods
of low production, but such
unallocated overheads (unfavourable
variances) are recognised as an
expense in the period in which they
are incurred (i.e. they are not
included in period end inventory).
On the other hand, in periods of
abnormally high production, the
amount of fixed overhead allocated to
each unit of production is decreased
(i.e. favourable variances are
allocated to period end inventory).
 JGAAP
Inclusion of ( Statement of Position 130, Industry
borrowing costs Specific Audit Research Group 460)
in cost Interest costs, which meet certain
criteria, may be included in the cost of
inventories in respect of property
development businesses.
Measurement (Accounting Standard for
of inventories Measurement of Inventories 7, 15,
16)
At the period end, if the net sales
value is below acquisition cost, then
the difference between the two values
shall be recognised as a current
period expense.
Inventories held for trading are
carried on the balance sheet at an
amount based on market price, and
any movements in this price are
recognised as current period
expenses. Note, the specific guidance
for inventories held for trading is
similar to the treatment of financial
instruments held for trading in the
Accounting Standard for Financial
Instruments.
Reversals of (Accounting Standard for
write-downs Measurement of Inventories 14, 17)
It is possible to select either a policy
allowing the reversal of previous write
downs or a policy of non-reversal of
such write downs.
However, in extraordinary
circumstances, even if a policy
allowing reversal has been selected,
reversals are not allowed.
22
IFRS
(IAS23.7-8)
For those inventories which meet the
conditions in IAS23, in principle,
borrowing costs must be included in
the cost of inventories.
(IAS2.6,9,34)
Inventories shall be measured at the
lower of cost and net realisable value
(NRV). NRV is the estimated selling
price less the estimated costs of
completion and the estimated costs
necessary to make the sale.
If a write-down is required, the
difference between cost and NRV is
recognised as an expense in the
period when the write-down occurs.
(IAS2.4)
Commodity broker-traders, who
measure their inventories at fair value
less costs to sell, are excluded from
only the measurement requirements
of IAS2.
(IAS2.33)
When the circumstances that
previously caused inventories to be
written down no longer exist, or when
there is clear evidence of an increase
in net realisable value caused by
changed economic circumstances, the
amount of the previous write-down is
reversed (i.e. the reversal is limited to
the amount of the original
write-down).
Intangible Assets and Research and
Development Costs
► Significant differences
JGAAP IFRS
Accounting There is no one comprehensive (IAS38)
standard accounting standard which deals with The basis of recognition and
intangible fixed assets. measurement of intangible assets
differs depending on whether such
assets are purchased separately or
are acquired through a business
combination, or whether they are
internally generated. IAS38 covers
all these situations.

Definition (Regulation for Terminology, Forms (IAS38.8,13,17)

and Preparation of Financial The definition of an intangible asset
Statements 28) includes all of the following
There is no separate definition for conditions:
intangible assets, however the ► an asset controlled by the entity
following are given as examples: as a result of past events;
► goodwill ► an asset from which future
► patents economic benefits are expected
► land lease rights (including to be received; and
surface rights) ► an identifiable non-monetary
► trademarks asset without physical substance.
► utility model rights
► design rights
► mining rights
► fishing rights (including common
of piscary)
► software
► leased intangible assets
and similar

Initial There is no clear guidance in respect (IAS38.18,21)

recognition and of the recognition of intangible Intangible assets shall be recognised
measurement assets. if they meet the definition of an
(recognition intangible and if, and only if:
rules) ► it is probable that the expected
future economic benefits from
the asset will flow to the entity;
and
► the cost of the asset can be
measured reliably.

23
 JGAAP
In-process (Accounting Standard for Business
research and Combinations 28, 29)
development (Guidance on Application of
acquired in a Accounting Standard for Business
business Combinations 59, 367)
combination In a business combination,
acquisition costs are allocated to
such assets, where they are
separately identifiable and where
individual project costs can be
calculated reasonably, at the date of
acquisition based on market price on
the date of the acquisition. Intangible
assets such as transferable legal
rights are considered to be
identifiable assets.
Subsequent expenditure on the
above items is treated in the same
way as expenditure on internally
generated research and development
costs (in other words, it is expensed
when incurred).
Internally (Accounting Standard for research
generated and development costs 3 and Note 3)
intangible assets: Expenditure on research and
research and development shall be recognised as
development an expense when incurred.
expenses
If there are components of software
development costs and production
costs that relate to research and
development, these are also
recognised as an expense when
incurred.
24
IFRS
(IAS38.33,34,42,43)
An acquirer recognises the
in-process research and development
costs of the acquiree as an asset,
separately from goodwill, when the
definition of an intangible asset is
met. The definition of an intangible
asset is met when:
► the item meets the definition of
an asset; and
► the item is separately identifiable.
For separately identifiable intangible
assets, it is generally considered that
their fair values can be reliably
measured.
Subsequent expenditure on the
above items is treated in the same
way as expenditure on internally
generated intangible assets (below).
(IAS38.52-62)
Expenditure on research shall be
recognised as an expense when
incurred.
Development costs are recognised as
intangible assets only if the technical
feasibility of the asset, the intention
to use or sell the asset and a number
of other conditions can all be
demonstrated. If these conditions
cannot be demonstrated, the related
development costs must be
expensed.
There is no separate guidance
relating to the development of
computer software.
 JGAAP
Subsequent (Corporate Accounting Principles
measurement 3 ,4(1)B, 5)
The acquisition cost of the intangible
asset must be allocated to the profit
and loss each fiscal year over its
useful life, using a depreciation
method. The unamortised balance
shall be disclosed (revaluation is not
allowed).
Amortisation In practice, intangible assets are
(useful lives) generally amortised on a straight line
basis in accordance with the tax
regulations.
(However, there is a specific rule for
the amortisation of software in the
standard relating to research and
development costs (4,5).)
Advertising costs There are no specific rules for
advertising costs.
25
IFRS
(IAS38.72,75)
Either the cost model or the
revaluation model must be selected
as an accounting policy for the
subsequent measurement of
intangible assets.
The revalued amount of an intangible
asset is its fair value at the date of
revaluation less any subsequent
accumulated amortisation and any
subsequent accumulated impairment
losses. To apply the revaluation
model, fair values can only be
determined by reference to an active
market.
(IAS38.88,89,102,104,108)
The useful life of an intangible asset
is determined as finite or indefinite.
An asset with a finite useful life is
amortised over its useful life.
The amortisation period and the
amortisation method for an
intangible asset with a finite useful
life, along with its residual value,
shall be reviewed at least at each
financial year-end.
An intangible asset shall be regarded
as having an indefinite useful life
when, based on an analysis of all of
the relevant factors, there is no
foreseeable limit to the period over
which the asset is expected to
generate net cash flows for the
entity.
An asset with an indefinite useful life
is not amortised but is subject to an
impairment test each period.
(IAS38.67,69,69A,70)
Advertising costs shall be recognised
as an expense when incurred. An
asset can only be recognised for
prepaid advertising costs if payment
is made before advertising goods and
materials can be used or before
advertising services are received.
Fixed Assets
► Significant differences
JGAAP
Measurement (Guidance on auditing advanced
of cost of asset depreciation by reduction of book
acquired by value of assets)
exchange In exchanges of dissimilar assets, in
principle, either the asset given up or
the asset received is measured at fair
market value. This fair value becomes
the acquisition cost of the received
asset.
In exchanges of assets of a similar
nature or for similar purposes, the
asset received is measured at the
book value of the asset given up.
Capitalisation (Statement of Position 3
of borrowing Depreciation if Fixed assets 1,4,2)
costs (Self-constructed property)
When an entity constructs its own
property, it calculates the
manufacturing cost based on the Cost
Accounting Standard, and acquisition
cost is based on that manufacturing
cost.
Interest on borrowings required for
construction and for the period before
operation may be included in
acquisition cost.
Dismantling, (Accounting Standard for Asset
disposal and Retirement Obligations 3, 6, 7, 11,
restoration 14)
costs etc. (Guidance on Application of Asset
Retirement Obligations 9)
Asset retirement obligations are
added to the carrying amount of the
related fixed assets.
A legal obligation (or similar) is
recorded as an asset retirement
obligation based on relevant laws
relating to the retirement of fixed
assets or contractual requirements.
The discount rate is determined at the
time the liability is recorded and is not
subsequently changed (note that
where there is an increase in the
26
IFRS
(IAS16.24)
Assets acquired in exchange for
another asset are measured at fair
value unless:
a) the exchange transaction lacks
commercial substance; or
the fair value of neither the asset
received nor the asset given up is
reliably measurable.
b) If the acquired item is not
measured at fair value, its cost is
measured at the carrying amount
of the asset given up.
(IAS23.5)
A qualifying asset is an asset that
necessarily takes a substantial period
of time to get ready for its intended
use or sale.
(IAS23.8)
Borrowing costs directly attributable
to the acquisition, construction or
production of a qualifying asset shall
be included in the acquisition cost of
the asset. Other borrowing costs
shall be expensed when incurred.
(IAS16.16(c), 18, IAS37.10, 14, 19,
45, 47, IFRIC1.3, 8)
The costs of dismantling and
removing an item and restoring the
site of that asset, etc. which meet the
recognition criteria for provisions, are
included in the acquisition cost of an
item of fixed assets in accordance
with IAS37. A provision in IAS 37
includes both legal and constructive
obligations.
When a fixed asset is measured using
the cost model and the discount rate
is subsequently changed, any related
provision shall be re-estimated and
 JGAAP IFRS
estimated future cash flows, the the acquisition cost shall be adjusted
discount rate is changed at that time, for the change.
but where there is a decrease in the
estimated cash flows, the discount
rate is not changed i.e. the original
rate is used).
The expense related to the periodic
The periodic adjustment to the unwinding of the discount shall be
obligation (the unwinding of the recognised as a finance cost during
discount) is classified in the profit and the period in which the unwinding
loss account in the same way as the occurs.
depreciation of the fixed asset to
which the asset retirement obligation
relates.
The exceptional treatment of rental
Where a rental deposit (shikikin) is deposits in JGAAP is not permitted
recorded as an asset, the amount that under IFRS.
is not expected to be refunded may be
reasonably estimated using a
“short-cut” method, and that portion
is allocated to the current period and
charged to the profit and loss
account.

Subsequent There are no specific rules. (IAS16.7, 12, 13)

costs Normally, expenditure which extends
the useful life of an asset or which
improves its operating capacity is
capitalised, and expenditure which
maintains an asset’s current level of
operation is treated as maintenance
costs.
Subsequent costs are capitalised if it
is probable that they will give rise to
future economic benefits for the
entity and if they can be measured
reliably. In all other cases they are
expensed as incurred.

Government (Corporate Accounting Principles (IAS20.24)

grants related Note 24) Government grants related to assets
to assets Government subsidies and are presented either as deferred
construction cost sharing proceeds income or are deducted from the book
can be deducted from the cost of the value of the related asset.
related assets.

(Guidance on auditing advanced

depreciation by reduction of book
value of assets)
When a company records advanced
depreciation as an appropriation of
profit through a transfer to a reserve,
this accounting method can also be
considered to be appropriate by
auditors.

27
 JGAAP
Subsequent Assets are carried at cost less any
measurement accumulated depreciation and any
accumulated impairment losses (the
revaluation model is not permitted).
Unit of There are no specific rules.
depreciation
(components
approach)
Review of (Audit and assurance committee
residual values, report No. 81 2)
useful lives and Depreciation shall be determined on a
depreciation rational basis, and as such
methods depreciation must be carried out each
period in a planned and systematic
way.
Changes of (Guidance on change in accounting
depreciation and correction of errors 11, 18, 19,
method 20)
The depreciation method of fixed
assets is regarded as an accounting
policy. Since a change of depreciation
method is difficult to distinguish from
a change in accounting estimate, it is
treated the same way as a change in
the accounting estimate.
However the nature of change, a valid
reason for the change and the current
effect from the change should be
stated in the notes. Where it is
difficult to reasonably estimate the
future effect of the change, this fact
should also be stated.
28
IFRS
(IAS16.29, 31)
Either the cost model or the
revaluation model must be selected as
an accounting policy and that policy
must be applied to an entire class of
assets.
When the revaluation method is used,
revaluations shall be made regularly
to ensure that the carrying amount
does not differ materially from the
fair value at the end of the reporting
period.
(IAS16.43)
Each part of an item of property,
plant and equipment with a cost that
is significant in relation to the total
cost of the item shall be depreciated
separately.
(IAS16.56, 61)
The residual values, useful lives and
depreciation methods shall be
reviewed at least each financial
year-end.
(IAS16.61)
Changes in the method of
depreciation are treated as changes in
accounting estimates.
Investment Property
► Significant differences
JGAAP
Property used (Accounting Standard for Disclosures
for more than about Fair Value of Investment and
one purpose Rental Property 7 and related
Implementation Guidance and
Practical Solution 7, 17)
A property is normally expected to be
separated into rental property
portions and other portions using cost
accounting and other reasonable
methods.
When the proportion of the property
used for rental purposes is high, the
property can be split for presentation
purposes between rental property and
others.
When the proportion of the property
used for rental purposes is low, the
property as a whole can be booked as
"fixed assets except rental
properties" and is outside of the
scope of rental property disclosures.
Properties (Accounting Standard for Disclosures
under about Fair Value of Investment and
development Rental Property 6)
Rental property (investment
property) includes property under
development, which is intended to be
used as rental property in the future,
and property under redevelopment,
which is intended for continued use as
rental property in the future.
Ancillary (Accounting Standard for Disclosures
services about Fair Value of Investment and
associated with Rental Property 28)
a property When it is difficult to judge the
significance of any ancillary services
offered to tenants, the classification
of the property may be judged on the
basis of form alone. Investment
property which is rented out is subject
to the required disclosures of a rental
property. However, property which is
rented as part of a business operation
is outside the scope of rental property
disclosures (e.g. hotels etc).
29
IFRS
(IAS40.10)
If the relevant portions of a property
with more than one use could be sold
separately or leased out separately
under a finance lease, an entity
accounts for the portions separately.
If the portions could not be sold
separately, the property is classified
as an investment property only if an
insignificant portion is held for the
entity’s own use.
If the portions could not be sold
separately, the property is classified
as other than investment property if
the portion held for the entity’s own
use is other than insignificant.
(IAS40.8(e))
Property which is being constructed
or developed to earn rentals (i.e. for
future use as investment property) is
accounted for as investment
property.
(IAS40.11, 12, 14)
When the ancillary services are
insignificant to the arrangement as a
whole, the related property is treated
as an investment property. When the
services are significant, the property
is treated as an owner-occupied
property.
When the above determination is
difficult, disclosure must be made of
the criteria used in making the
judgment.
 JGAAP
Measurement The cost model is the only method
on initial allowed (there are no specific rules
recognition for fair value accounting as fair values
are disclosure items only).
Fair value There are no specific rules.
measurement
Determination (Guidance on Accounting Standard for
of fair value Disclosures about Fair Value of
Investment and Rental Property 11)
The market value of rental properties
at year end is usually measured by
observable market prices, but if
market prices are not observable,
calculated prices using reasonable
assumptions are used. These
calculated prices for rental properties
are calculated using the method
described in the Real Estate Appraisal
Standards (Ministry of Land,
Infrastructure, Transport and
Tourism) or a similar method.
30
IFRS
(IAS40.30)
The cost or the fair value model may
be selected.
(IAS40.33, 35, 53, 53A, 53B, 54)
If the fair value model is chosen, all
investment properties must be fair
valued, except in specific situations
where fair value cannot be reliably
determined.
Changes in fair values are recorded in
the profit and loss in the period in
which they arise.
The same principles apply to
investment property under
construction however there is a
rebuttable presumption to support
application of this in practice.
(IAS40. 32, 36)
The fair value of an investment
property is the price at which the
property could be exchanged between
knowledgeable, willing parties in an
arm's length transaction.
It is recommended, but not required,
that a valuation by an independent
valuer with a certain level of
experience is used.
Impairment of assets
► Significant differences
JGAAP
Indicators of (Guidance for the application of the
impairment – standard on the impairment of fixed
long lived assets assets 11-17)
More precise, numerical indicators
are used in JGAAP than in IFRS (for
example an indicator would be: if the
market value falls below 50% of book
value).
Impairment (Accounting Standard for the
review process impairment of fixed assets 2 2,3)
2 step approach：
1. Complete a recoverability test
(the carrying value of the asset is
compared to the undiscounted
cash flows to be generated
through the use of the asset and
on its final disposal).
2. As a result, if the carrying value
is higher than the undiscounted
cash flows, the carrying value is
considered to be not recoverable.
An impairment loss is then
recognised for the difference
between the carrying value and
the amount of the discounted
cash flows.
Reversal of (Accounting Standard for the
impairment impairment of fixed assets 3 2)
losses Reversals of impairment losses are
prohibited for all fixed assets.
31
IFRS
(IAS36.12)
As the indicators of impairment are
of a broad nature, there is tendency
for an indication of impairment to be
judged to exist earlier than would be
the case under JGAAP.
Further, one of the examples of an
indicator of impairment given is if the
carrying value of net assets is more
than an entity's market capitalisation.
(IAS36.59)
1 step approach：
When there is an indicator of
impairment, an impairment loss is
determined as the amount by which
the carrying value of an asset
exceeds its recoverable amount.
Recoverable amount is the higher of
(i) fair value less costs to dispose and
(ii) value in use (the present value of
future cash flows derived from using
the asset, including its residual
value).
(IAS36.110，117, 124)
Reversals relating to goodwill are
prohibited however, for other assets,
at the end of each period an
assessment must be made as to
whether there is any indication that a
previously recognised impairment no
longer exists.
When appropriate, the impairment
loss is reversed to the extent that it
does not exceed the carrying amount
that would have been determined
(net of amortisation or depreciation)
had an impairment not been
recognised previously.
 JGAAP
Allocation of (Accounting Standard for the
goodwill impairment of fixed assets 2 8)
When determining the recognition of
an impairment loss, goodwill shall be
allocated across the asset groups of
the business to which the goodwill
relates, generally at a higher level.
If the carrying amount of goodwill can
be allocated to individual asset
groups of the related business, based
on reasonable criteria, then the
recognition of an impairment loss can
be determined after the goodwill has
been allocated to each asset group.
32
IFRS
(IAS36.80,84)
Goodwill shall be allocated to each of
the acquirer's cash generating units,
or groups of cash-generating units.
Each unit or group of units to which
the goodwill is allocated shall:
► Represent the lowest level within
the entity at which the goodwill is
monitored for internal
management purposes, and
► Not be larger than an operating
segment as defined by paragraph
5 of IFRS 8 Operating Segments
before aggregation.
If the initial allocation of goodwill
cannot be completed before the end
of the annual period in which the
business combination is effected,
that initial allocation shall be
completed before the end of the first
annual period after the acquisition
date.
Leases
► Significant differences
JGAAP IFRS
Definition of a (Accounting Standard for Lease (IAS17.4,8,10)
finance lease Transactions 5, Implementation Finance leases are leases which
Guidance on Accounting Standard for transfer substantially all the risks and
Lease Transactions 9) rewards of ownership of an asset
Finance leases are defined to be regardless of whether or not title is
non-cancellable and requiring full transferred.
payout, which means meeting the Whether a lease is a finance lease or
following conditions: an operating lease depends on the
► the present value of the total substance of the transaction rather
lease payments over the term of than the form of the contract.
the non-cancellable lease is 90%
or more of the estimated cash
purchase price of the asset; or
► the lease term is approximately
75% or more of the economic
useful life of the related asset.

33
 JGAAP IFRS
Lessee (Implementation Guidance on (IAS17.20)
accounting for Accounting Standard for Lease At the commencement date of the
finance leases – Transactions 22,34,35,37,45,46) lease term, the lease assets and
convenient Lease assets and lease liabilities are liabilities are recorded at the lower of
method (kanben measured as follows: the fair value of the leased assets
hou) and the present value of the
<If the lessor’s purchase price is minimum lease payments, each
clear> determined at the inception of the
Transfer of ownership: lessor’s lease.
purchase price There is no “convenient method” as
No transfer of ownership: the lower in the Japanese standards.
of the lessor’s purchase price and the
present value of the minimum lease
payments (including the residual
value of the asset)

<If the lessor’s purchase price is

unclear>
The lower of the present value of
lease payments (including the value
of any rights to purchase the asset at
a discount) and the lessee’s
estimated cash purchase price.

If any of the conditions below are

met, the convenient method may be
used, which allows accounting for the
lease as an operating lease:
► leases for depreciable assets,
which are insignificant; where the
cost of the lease is expensed
when the assets are acquired and
the total lease payments are
below a set amount;
► leases with a lease term of less
than 1 year; or
► leases where the total lease
payments are less than JPY 3
million and it is clear from the
business’s operations that they
are not significant (excluding
those leases which transfer
ownership).

Lessor (Implementation Guidance on (IAS17.39)

accounting for Accounting Standard for Lease
finance leases – Transactions 59,60)
– insignificant Where a lease does not transfer
transactions ownership and is insignificant to the
lessor, it is possible to allocate the
interest receivable on a straight line
basis over the lease term.
The recognition of finance income
shall be based on a pattern reflecting
a constant periodic rate of return on
the lessor’s net investment in the
finance lease.
There is no “convenient method” as
in the Japanese standards.

34
 JGAAP
Depreciation of (Accounting Standard for Lease
finance leases Transactions 39)
It is possible to select a different
depreciation policy for a leased asset
than for an entity’s own fixed assets,
depending on the circumstances.
IFRS
(IAS17.27)
The leased asset is depreciated by
the lessee over the lease term on a
basis consistent with the
depreciation policy adopted for its
own depreciable assets.

Operating There are no specific rules. (SIC15)

lease-incentives In principle, incentives shall be
recognised by lessors and lessees as
part of the net consideration for the
use of the leased asset over the lease
term, on a straight-line basis. If
there is another systematic basis of
allocation which is more appropriate
than the straight line method, then it
should be used.

35
Financial Instruments
► Significant differences
JGAAP
Initial (Practical Guidance on Accounting
Measurement Standard for Financial Instruments
102)
JGAAP does not make the same
assumptions as IFRS regarding
non-listed derivatives. This allows an
entity to measure a non-listed
derivative at a valuation amount, so
long as a reasonable price estimate
can be calculated or observed.
Inclusion of (Practical Guidance on Accounting
transaction costs Standard for Financial Instruments
in acquisition 29,56)
cost The related costs of the acquisition
of a financial asset are, in principle,
included in the acquisition cost.
However, costs that arise regularly
and which are not clearly related to
the cost of the acquisition may be
excluded.
Subsequent (Accounting Standard for Financial
measurement Instruments 14, 15-18)
Receivables shall be separately
recognised from securities.
In principle, only securities shall be
classified into the financial
instrument categories.
36
IFRS
(IAS 39.AG76A)
No gain or loss is recognised on the
initial recognition of a
non-marketable financial asset or
financial liability.
(IAS39.43)
For financial assets and liabilities not
at fair value through profit or loss,
transaction costs that are directly
attributable are included in the
acquisition cost.
Transaction costs are not included in
the acquisition cost of financial
assets and liabilities at fair value
through profit or loss.
(IAS 39. 46,55)
All of the entity's financial
instruments shall be classified into
one of 5 categories.
(these are described further below)
 JGAAP
Held-to-Maturity (Practical Guidance on Accounting
(HTM) Standard for Financial Instruments
investments 274, Q&A Q22)
Only securities with no excessive
credit risk can be reclassified as HTM
investments.
(Practical Guidance on Accounting
Standard for Financial Instruments
86)
A structured bond cannot satisfy the
criteria for classification as an HTM
investment, because of the risk
exposure of the principal even if the
embedded derivative is separated.
(Practical Guidance on Accounting
Standard for Financial Instruments
83)
If an entity changes its purpose for
holding securities, it cannot classify
any financial assets as HTM for 2
years (the 2 years includes the
period when the purpose of
possession is changed).
(Practical Guidance on Accounting
Standard for Financial Instruments
82)
An entity cannot reclassify securities
as HTM investments even after the
lapse of the “penalty period” above.
(Accounting Standard for Financial
Instruments 20, Practical Guidance
on Accounting Standard for Financial
Instruments 91)
For HTM investments with a market
value, the amount of any impairment
loss is measured as the difference
between the asset's carrying amount
and its fair value.
37
IFRS
(IAS 39. 46(b))
When measuring HTM financial
instruments at amortised cost, the
effective interest rate is determined
based on estimated future cash flows
reflecting any discount due to
incurred credit losses.
(IAS 39.11)
For a compound financial instrument,
where the host financial instrument
and the embedded derivatives are
separated, the host instrument itself
can be accounted for as HTM
investments.
(IAS 39.9)
An entity shall not classify any
financial assets as HTM if the entity
has, during the current financial year
or during the two preceding financial
years, sold or reclassified more than
an insignificant amount of
held-to-maturity investments before
maturity (more than insignificant in
relation to the total amount of
held-to-maturity investments), other
than sales or reclassifications
meeting certain conditions.
(IAS 39.54)
After the lapse of a"penalty period"
as a result of the above, available for
sale financial instruments can be
reclassified to HTM investments.
(IAS 39.63)
The amount of any impairment loss
on HTM investments is measured as
the difference between the asset's
carrying amount and the present
value of estimated future cash flows.
 JGAAP IFRS
Loans and There is no separate category for (IAS 39.46(a))
receivables loans and receivables as part of the The amortised cost method, based on
classification of securities. an effective interest method, shall be
applied to all loans and receivables
(Accounting Standard for Financial except for those that are short term.
Instruments 14)
Receivables are subsequently
measured after initial recognition by
deducting any applicable allowance
for bad debts from the receivables.

Low or non- There are no specific rules. (IFRS9.B5.1.1, B5.1.2 /

interest bearing In practice, normally these are IAS39.AG64, AG65)
loans or recognised at the loan value Loans with no interest or with a lower
receivables (amortised cost). than market interest rate are
originally measured at fair value,
which may be based on a discounted
cash flow calculation using the
prevailing market interest rate of a
similar instrument, and then
measured after recognition using the
effective interest rate method. If
the fair value of the financial asset or
financial liability at initial recognition
differs from the transaction price,
the entity shall account for that
difference according to its nature.

Scope of fair (Practical Guidance on Accounting (IAS 39.AG80, AG81)

value Standard for Financial Instruments Investments in equity instruments
measurement 63 provisory clause) and derivatives linked to them that
Securities that do not have a quoted do not have a quoted market price in
market price in an active market are an active market can be measured at
measured making the assumption cost if their fair value cannot be
that there is no fair value. measured reliably. However such
cases are presumed to be rare.
(Practical Guidance on Accounting
Standard for Financial Instruments
104)
Where a mature market has not yet
developed for a particular type of
derivative (for example weather
derivatives etc.), the fair value is
quite difficult to measure. In this
case, such derivatives are measured
at acquisition cost and recorded on
the balance sheet.

38
 JGAAP IFRS
Loan (Practical Guidance on Accounting (IFRS9.2.1, 4.2.1 / IAS39.4, 47)
commitments Standard for Financial Instruments Certain loan commitments are
139) recognised as financial liabilities at
A financial institution that acts as a fair value when the commitment is
lender should provide disclosures in made.
the notes to the accounts for its bank
overdraft contracts (or similar) and
lending commitments. These
disclosures should cover the fact that
such items exist, the credit line
amount or the loan commitment,
after deducting the amount already
loaned.

A regular way (Practical Guidance on Accounting (IFRS9.3.1.2/IAS39.38)

purchase or sale Standard for Financial Instruments Regular way purchases or sales of
of financial 22,26) financial assets shall be recognised
assets For contracts to buy and sell and derecognised, as applicable,
securities, if the period between using trade date accounting or
trade date and settlement date is settlement date accounting.
normal in accordance with the
market rules or practices, the buyer
recognises the marketable securities
and the seller derecognises the
marketable securities on the trade
date.
However, for each category of
investment (based on the purpose of
possession), it is permitted for the
buyer to recognise only the market
movement between the trade date
and settlement date, and for the
seller only to recognise the gain or
loss on sale at the trade date.
Loans receivable and loans payable
are recognised when the loan is
made, and are derecognised when
repayment is made.

Derecognition of (Accounting Standard for Financial (IFRS9.3.2.6/IAS39.20)

financial assets Instruments12) Financial assets are derecognised
Financial assets are derecognised based on a risk and rewards
based on the "financial component" approach.
approach. If an entity has neither transferred
nor retained substantially all the risks
and rewards of ownership, then it
must determine whether it has
retained control.
If control has been retained, then the
entity continues to recognise the
asset to the extent of its continuing
involvement.

39
 JGAAP
Obtaining a new (Practical Guidance on Accounting
asset or liability Standard for Financial Instruments
as a result of 37,38,39)
transferring a Any new asset or liability arising
financial asset when a financial asset is
derecognised is recorded at market
value at the date of transfer.
If the market value of the remaining
interest or any new asset (derivative)
arising on the derecognition of
another financial asset cannot be
reasonably measured, the remaining
interest or new asset should be
measured at zero and any gain or
loss on the transfer should be
calculated as if the market value is
zero.
Accounting for (Accounting Standard for Financial
loan Instruments 42, Practical Guidance
participations on Accounting Standard for Financial
Instruments 41)
Derecognition of a receivable is
allowed only when certain conditions
are met, such as when almost all the
risks and economic rewards of that
receivable are transferred.
Accounting for (Accounting Standard for Financial
debt Instruments 42, Practical Guidance
assumptions on Accounting Standard for Financial
(in-substance Instruments 46)
defeasance) The related bonds may be
derecognised only when the
likelihood of a retrospective claim to
the issuer is extremely low.
Exchange of There are no specific rules.
financial
liabilities and
alteration of
conditions
40
IFRS
(IFRS9.3.2.11/IAS39.25)
If as a result of transfer, a financial
asset is derecognised in its entirety
but the transfer results in the entity
obtaining a new financial asset or
assuming a new financial liability, or
a servicing liability, the entity shall
recognise the new financial asset,
financial liability or servicing liability
at fair value.
(IAS39.16,19,21)
There are no specific rules, so the
derecognition of loan participations
is assessed based on the general
requirements for derecognition.
(IFRS9.B3.3.3/IAS39.AG59)
Payment to a third party, including a
trust does not, by itself, relieve the
debtor of its primary obligation to the
creditor, in the absence of legal
release, and does not meet the
criteria for derecognition.
(IFRS9.3.3.2
B3.3.6/IAS39.40,AG62)
An exchange between an existing
borrower and lender of debt
instruments with substantially
different terms, or a substantial
modification of the terms of an
existing financial liability (or a part of
it), shall be accounted for as an
extinguishment of the original
financial liability and the recognition
of a new financial liability.
 JGAAP
Other financial (Accounting Standard for Financial
liabilities Instruments 26)
In principle, financial instruments are
recognised on the balance sheet at
the amount of the debt.
If an entity issues a bond at a price
that is lower or higher than its
denomination, then an entity can use
amortised cost. In this case, in
addition to an effective interest
method, a straight line method is
allowed.
Classification of (Accounting Standard for Financial
financial assets Instruments 15-18)
Marketable securities are classified
as follows:
► securities held for trading;
► debt securities held to maturity;
► shares in subsidiaries and
associates; and
► other marketable securities.
41
IFRS
(IFRS 9.4.2.1, IAS 39.47)
After initial recognition, an entity
shall measure all financial liabilities
at amortised cost using the effective
interest method except for financial
liabilities at fair value through profit
or loss.
(IAS39.2(a),9,45)
Financial assets are classified into
four categories:
► financial assets at fair value
through the profit or loss;
► held-to-maturity investments;
► loans and receivables; and
► available for sale financial assets.
In principle, investments in
subsidiaries, associates and joint
ventures are outside the scope of
IAS39.
(New standard IFRS9.4.1-4.4,5.2.1)
Financial assets are divided into debt
instruments and equity instruments.
► Debt instruments (bonds,・loans
receivable etc.)
Debt instruments are measured at
amortised cost only if the
“business model” test and the
“characteristics of the financial
asset test” are met and the fair
value option is not applied.
(hereinafter referred to as
FVTPL)
► Equity instruments
On acquisition an equity
instrument, which is not held for
trading, can be designated as
measured at fair value through
other comprehensive income. In
all other cases, equity
instruments are measured at fair
value through profit and loss.
 JGAAP
Concept of fair (Practical Guidance on Accounting
value Standard for Financial Instruments
49)
If a financial instrument is listed on
more than one market, then an entity
determines the price in the most
active market.
Except for some unlisted derivatives,
the 'mid price' is generally used as
the quoted market price.
Financial There are no specific rules.
liabilities held for
the purpose of (Accounting Standard for Financial
trading and the instrument 15)
fair value option Securities held for trading are not
included in financial liabilities.
42
IFRS
(IAS 39.AG71)
An entity determines the price at
which a transaction would occur at
the end of the reporting period in
that instrument in the most
advantageous active market to which
the entity has immediate access.
(IAS 39,AG70)
For assets held the current bid price
is used, and for assets to be acquired
(short positions) the current asking
price is normally used.
In May 2011, IFRS 13 was published.
IFRS 13 does not preclude the use of
mid-market pricing or other pricing
conventions that are used by market
participants as a practical expedient
for fair value measurements within a
bid-ask spread.
(IAS 39.9)
Only if certain conditions are met,
can financial liabilities be designated
as at fair value through the profit or
loss ‘the fair value option’.
Financial instruments held for the
purpose of trading and financial
instruments for which the fair value
option has been elected, are
classified and measured at fair value
with valuation differences recognised
in net profit (FVTPL).
 JGAAP IFRS
Fair value option There are no specific rules. (IAS39.9,11A-13)
If certain criteria are met, financial
assets and liabilities, which are not
held for trading purposes, can be
measured at fair value (the fair value
option). Such financial assets and
liabilities must then be fair valued
every period, and a valuation gain or
loss recognised.

(IFRS9.4.1.5)
An entity may, at initial recognition,
irrevocably designate a financial
asset as measured at fair value
through profit or loss if doing so
eliminates or significantly reduces a
measurement or recognition
inconsistency (sometimes referred to
as an ‘accounting mismatch’) that
would otherwise arise from
measuring assets or liabilities or
recognising the gains and losses on
them on different bases.

(IFRS 9.4.2.2)
An entity may, at initial recognition,
irrevocably designate a financial
liability as measured at fair value
through profit or loss under certain
conditions.
However, the change in the fair value
of the financial liability that is
attributable to the change in an
entity’s own credit risk shall be
accounted for as other
comprehensive income, unless doing
so creates or enlarges a
measurement or recognition
inconsistency (sometimes referred to
as ‘an accounting mismatch’). This
OCI is prohibited from being
reclassified to profit or loss.

43
 JGAAP
Classification (Practical Guidance on Accounting
change of Standard for Financial Instruments
financial 80)
instruments The classification of securities (by
the purpose of possession) cannot be
changed without a rational reason.
For example, a change of operating
policy or a similar specific
circumstance would allow an entity
to change its purpose of possession
of a security.
Available-for-sale Only securities can be accounted for
financial assets as ‘other marketable securities’.
(Accounting Standard for Financial
Instruments 18)
‘Other marketable securities’ are
presented when no other categories
are appropriate.
(Accounting Standard for Financial
Instruments 18 (2))
With regard to ‘other marketable
securities’, unrecognised gains are
presented within equity, while
unrecognised losses are presented as
a current loss.
(Accounting Standard for Financial
Instruments Note 7)
The average market price over a one
month period can be used as the fair
value measurement base at the end
of the reporting period for ‘other
marketable securities’.
44
IFRS
(IAS 39.50)
An entity shall not reclassify any
financial instrument as held at fair
value through profit or loss after
initial recognition just because it
changes its operating policy. A
financial asset may be reclassified
out of that “fair value through profit
or loss” category only in rare
circumstances. Even the recent
financial crisis allows only certain
reclassifications.
(IFRS 9.4.4.1)
When, and only when, an entity
changes its business model for
managing financial assets it shall
reclassify all affected financial assets
(debt instruments). Equity
instruments held and financial
liabilities cannot be reclassified.
(IAS 39.9)
As long as they are not held as
FVTPL, any financial assets can be
accounted for as available for sale.
Receivables can be accounted for as
available for sale financial assets.
The method of separate presentation
given under Accounting Standard for
Financial Instruments 18(2) is not
allowed.
(IAS 39.46)
A fair value at the end of reporting
period must always be used without
any exceptions.
 JGAAP
Valuation of (Accounting Standard for Financial
available-for-sale Instruments 18, 20-21)
financial assets The carrying values of securities are
Gains and losses determined using market values, and
related to the valuation differences are
FVTOCI/other recognised (after considering
marketable deferred tax) by one of the following
securities methods:
(equities) ► the total amount is directly
recorded as part of net assets
(not through P&L);
► valuation gains, where the
market value exceeds acquisition
cost, are recognised as a part of
net assets. Valuation losses,
where the market value is below
acquisition cost, are recognised
as a loss in the current period.
When fair value is decreases
dramatically, and there is no
possibility of a recovery or the
decrease is significant, an
impairment loss should be recognised and loss. All other changes are
and the difference between the
carrying value and fair value shall be subsequently reclassified to profit or
reclassified to profit or loss.
Reversal of impairment losses is
prohibited.
Foreign (Practical Guidance on Accounting
exchange gains Standard for Financial Instruments
and losses on 16)
foreign currency For foreign currency denominated
denominated “other marketable securities”, any
available-for-sale foreign currency translation
financial assets differences arising on the cost or
and other amortised amount are treated in the
marketable same way as valuation differences.
securities However, for foreign currency
denominated bonds, foreign currency
differences arising from changes in
the foreign currency denominated
market value can be treated as
valuation differences, and any other
differences can be treated as foreign
exchange gains or losses.
45
IFRS
(IAS39.55(b),AG83)
For available-for-sale financial
assets, fair value adjustments (after
considering deferred tax) are taken
to other comprehensive income until
derecognition. This excludes,
however, interest charges arising
from the effective interest method,
impairment losses and foreign
exchange differences
For non-monetary securities (such as
equity instruments) foreign exchange
differences are recognised in other
comprehensive income.
(New standard IFRS9.4.2, 5.7.5)
The classification “available-for-sale
financial assets” is abolished. If the
entity makes the election at initial
recognition to measure equity
instruments at fair value through
other comprehensive income, only
dividend income is recorded in profit
recorded in equity and are not
loss.
(IAS39.AG83,IAS21.28)
If the available–for-sale financial
assets are foreign currency
denominated monetary items (i.e.
bonds), any foreign exchange gains
and losses are recognised in profit or
loss.
(new standard IFRS 9. B5.7.2-B5.7.4
/ IAS 21.28)
Foreign exchange gains and losses on
monetary assets and monetary
liabilities are to be recognised in
profit or loss.
Exchange differences arising on an
equity instrument classified as FVOCI
and denominated in a foreign
currency are recognised through
OCI.
 JGAAP
Amortisation and (Practical Guidance on Accounting
the effective Standard for Financial Instruments
interest rate 70)
method Amortisation is based on the
effective interest rate method in
principle, however the straight line
method is also allowed for
convenience, providing it is applied
consistently.
An effective interest rate method
takes into account the interest
amount only.
Investments in (Accounting Standard for Financial
unlisted equities Instruments19, Practical Guidance
(shares with no on Accounting Standard for Financial
market value) Instruments 63)
For shares which are not traded or
for which there is no market value
based on that trading, if market value
is extremely difficult to measure,
then measurement at cost is allowed.
Separation of (Accounting Standard for Financial
bad debts Instruments 20-21, 27-28)
allowances and Impairment of financial instruments
impairment is considered separately by the
following categories: bad debts on
receivables; and impairments of
securities.
(Accounting Standard for Financial
Instruments 27, Practical Guidance
on Accounting Standard for Financial
Instruments 106)
Based on the financial condition of
the creditor and its operating results
etc., impairments are considered by
each of the following categories:
general receivables; receivables with
risk of default; and bankrupt,
delinquent, and doubtful receivables.
46
IFRS
(IAS39.9,46,47)
Normally, the effective interest rate
(EIR) method is applied.
(IAS 39.9)
EIR includes all fees and points paid
or received between parties to the
contract that are an integral part of
the effective interest rate,
transaction costs, as well as all other
premiums or discounts and incurred
losses. It does not consider future
credit losses.
(IAS39.AG80,AG81)
Except in cases where appropriate
models are not available,
investments in unlisted equity
instruments are measured at fair
value.
(New standard
IFRS9.5.2.1,B5.5-B5.8)
The above exemption is abolished
and all investments in equity
instruments must be measured at fair
value. However, in limited
circumstances, cost may be an
appropriate estimate of fair value.
There is guidance in the standard as
to when that would not be
appropriate.
(IAS39.63-65, 66,67-70)
Impairment is considered for each of
the following categories: impairment
of financial assets carried at
amortised cost; impairment of
financial assets carried at cost; and
impairment of available-for-sale
assets.
 JGAAP
Bad debt (Accounting Standard for Financial
allowances and Instruments 20-21)
impairment For securities, where the fair value
(equities) decreases dramatically (unless there
is a possibility of recovery), the
carrying value of those financial
assets is reduced to fair value
(market value), and the related loss is
recognised in profit or loss.
For shares whose market value is
extremely difficult to measure, if the
value in substance decreases
dramatically, the carrying amount
shall be reduced to the in substance
value and the loss shall be accounted
for through profit or loss.
(Practical guidance on Accounting
Standard for Financial Instruments
93)
It is assumed that the market value
of a security is extremely difficult to
measure.
47
IFRS
(IAS39.63-65, 66,67-70)
Impairment of financial instruments
is considered using the model
appropriate for each of the following
categories: impairment of financial
assets carried at amortised cost;
impairment of financial assets
carried at cost; and impairment of
available-for-sale assets.
Where there is objective evidence of
impairment, regardless of
recoverability, an impairment loss is
recognised.
Securities are assumed to have
market value.
(IAS39.63,66)
For financial instruments accounted
for at amortised cost, where there is
objective evidence of impairment,
regardless of recoverability, the
carrying value of those financial
assets is reduced to the estimated
present value of future cash flows,
and the related loss is recognised in
profit or loss.
For equity instruments, both a
significant decrease in fair value and
a long term decrease in fair value can
be objective evidence of impairment.
 JGAAP
Impairment of ( Accounting Standard for Financial
loans and Instruments 27, 28)
receivables Bad debt allowances are estimated
differently depending on the
category of financial asset as follows:
► General receivables: Calculated
based on the historical rates of
doubtful debts and reasonable
assumptions.
► Receivables with risk of default:
Depending on the situation of the
receivable, either of the
following methods are applied
consistently:
► calculation of the doubtful
debt amount, based on the
irrecoverable balance
remaining after reducing it
by the amount expected to
be collected from collateral
and similar items.
► estimation of the amount of
doubtful debts as the
difference between the
present value of future cash
flows and book value.
Bankrupt, delinquent, and doubtful
receivables: The estimated doubtful
debt amount is the irrecoverable
amount remaining after deduction of
amounts expected to be collected
through realisation of collateral.
48
IFRS
(IAS39.58,59,63,66,67)
Where there is objective evidence of
impairment, regardless of
recoverability, the carrying value of
financial assets is reduced to the
estimated present value of future
cash flows and the related loss is
recognised in profit or loss. For
available-for-sale financial assets,
the reduction in fair value recognised
in other comprehensive income is
reclassified to profit or loss when the
asset is impaired.
(IFRS9.5.2.1-5.2.2,5.4.1,
B5.12-B5.15)
The separate classification of loans
and receivables is abolished, but for
those items which are measured at
amortised cost, the assessment of
impairment is carried out in
accordance with IAS39.
 JGAAP
Impairment Marketable securities held for trading
reversals continue to be measured at market
value after impairment, however
impairments of debt securities held
to maturity and other marketable
securities must not be reversed.
49
IFRS
(IAS39.65,66,69,70)
If, in a subsequent period, the
amount of the impairment loss
decreases and the decrease can be
related objectively to an event
occurring after the impairment was
recognised, the previously
recognised impairment loss shall be
reversed.
However, for equity instruments
where fair value cannot be reliably
measured, for derivative assets
linked to such equity instruments,
and for equity instruments classified
as available-for-sale, impairment
losses shall not be reversed.
(New standard IFRS9.5.4.1,
B5.12-B5.15)
For equity instruments there will be
no further issue concerning
impairment (or reversal thereof) as
fair value measurement will be used.
For debt instruments measured at
amortised cost, there is no change to
IAS39 regarding the reversal of
impairment.
For investments classified at FVTOCI,
only dividend income is accounted
for in profit or loss, and cumulative
other comprehensive income shall
not be reclassified to profit or loss
subsequently. Therefore,
impairment and impairment loss
issues do not arise.
(IAS 39.65)
For financial assets carried at
amortised cost, if in a subsequent
period, the amount of the impairment
loss decreases and the decrease can
be related objectively to an event
occurring after the impairment was
recognised, the previously
recognised impairment loss shall be
reversed.
 JGAAP
Valuation of (Accounting Standard for Financial
financial Instruments 26)
liabilities Balance sheet amounts are based on
the amount of the liability at
maturity. However, the amortised
cost method should be used where
the proceeds and the amount of the
liability due on maturity differ.
Classification of There is no comprehensive standard
financial dealing with the classification of debt
liabilities and and equity, however normally
equity classification is based on legal form.
instruments
Convertible (Accounting Standard for Financial
bonds – Instruments 36, Implementation
accounting by Guidance on Corporate Accounting
the issuer Standards No. 18)
Either of two methods may be used:
record the bond as a single amount
without separation, or separate the
bond and the share rights portion.
Financial liability (Interim Treatment relating to the
issue costs Accounting for Deferred Tax Assets 3
(2))
► Principle: account for issue costs
as non-operating expenses
► However, such costs can be
accounted for as deferred assets
and may be amortised throughout
the bond redemption period using
the interest method, or using a
straight-line method provided
that method is applied
consistently.
50
IFRS
(IAS39.47)
With the exception of those financial
liabilities valued at fair value through
profit or loss, an entity shall measure
all financial liabilities at amortised
cost using the effective interest
method.
(IAS32.11,16A-16D,15,18)
IAS32 deals comprehensively with
the classification of equity and
liabilities. Classification is determined
based on the substance of the
contract and definitions of financial
liability (asset) and equity.
(IAS32.15,28)
After evaluating the terms of the
contract, the financial instrument is
classified as debt or equity according
to the substance of the contract.
(IAS32.35, IAS39.9)
Bond issue costs are recognised by
including them in the effective rate of
interest, and as such they are
amortised as interest.
 JGAAP IFRS
Costs related to (Accounting Standard Treasury (IAS32.35,37)
equity Shares and Reversals of Legal Transaction costs of equity
transactions Reserves 14) transactions shall be accounted for
(Tentative Treatment relating to the as a deduction from equity, net of
Accounting for Deferred Tax Assets 3 any related income tax benefit.
(1))
► Costs related to the acquisition,
disposal, or extinguishment of
treasury stock are accounted for
as non-operating expenses.
► Costs related to share exchanges
as part of financial activities to
enlarge the business (including
share exchanges as part of a
reorganisation) should be
accounted as deferred assets,
and amortised using the
straight-line method within three
years from the day of the
exchange.

Transaction There are no standards regarding the (IAS32.38)

costs related to allocation of transaction costs to a Transaction costs that relate to the
compound liability component and an equity issue of compound financial
financial component. instruments are allocated to the
instruments liability and equity components of the
instrument in proportion to the
allocation of proceeds.

51
 JGAAP
Derivatives- (Practical Guidance on Accounting
definition Standard for Financial Instruments 6)
A derivative is a financial instrument
with the following characteristics:
► The value of the rights or
obligations respond to changes
in an underlying variable and the
contract has 1) an underlying
variable and 2) either a fixed
nominal amount or determinable
settlement amount, or both a
fixed nominal amount and a
determinable settlement
amount.
► There is no initial net investment
or no significant net investment
compared to that which would be
required for other similar types
of contracts that would have a
similar response to changes in
market conditions.
► Net settlement (payment of the
difference) of the contract is
required or accepted; net
settlement can be easily carried
out separately to the contract, or
even if physical settlement
occurs, in substance it leaves the
counterparty in no different
position than if net settlement
had occurred.
52
IFRS
(IFRS 9. Appendix A/IAS39.9)
A derivative is a financial instrument
or other contract with all three of the
following characteristics:
a) its value changes in response to
changes in an underlying
variable (i.e. specified interest
rate, financial instrument price,
commodity price, foreign
exchange rate, index of prices or
rates, credit rating or credit
index, or another variable),
provided, in the case of a
non-financial variable, that the
variable is not specific to a party
to the contract;
b) it requires no initial net
investment or an initial net
investment that is smaller than
would be required for other
types of contracts that would be
expected to have a similar
response to changes in market
factors; and
c) it is settled at a future date.
 JGAAP
Embedded (Accounting Standards for Other
derivatives Compound Instruments)
It is necessary to separate embedded
derivatives if all of the following
conditions are met:
► it is possible that the underlying
asset or liability could be
affected by the risks arising from
the embedded derivative;
► a separate instrument with the
same terms as the embedded
derivative would meet the
definition of a derivative; and
► the impact of changes in fair
value are not reflected in profit
and loss.
However, where embedded
derivatives are separated for
management purposes and certain
conditions are met, they may be
separated.
Hedge (Accounting Standard for Financial
accounting Instruments 32)
As a general rule, profits, losses or
valuation differences related to the
hedging instrument are deferred as a
part of net assets (equity).
However, where “other marketable
securities” are the hedged item, fair
value hedges are permitted, where
the market fluctuations of the
hedged item are recorded in profit or
loss.
53
IFRS
(IAS39.11)
An embedded derivative shall be
separated from the host contract if
all of the below are met:
► the economic characteristics and
risks of the embedded derivative
are not closely related to those
of the host contract;
► a separate instrument with the
same terms as the embedded
derivative would meet the
definition of a derivative; and
► the hybrid (combined)
instrument is not measured at
fair value with changes in fair
value recognised in profit or loss.
(IFRS9 4.3.1-4.3.3)
An embedded derivative with a host
contract that is a financial asset shall
not be separated. The derivative is to
be included with the host contract
and shall be measured at amortised
cost or fair value through profit and
loss depending on the characteristics
of the cash flows of the entire
contract.
Note: for contracts with non-financial
asset hosts, the separation criteria of
IAS39 continue to apply.
(IAS39.86,89,95)
There are three types of hedge
accounting as follows:
► Fair value hedges: changes in
fair value arising from exposures
relating to the hedged item and
changes in the fair value of the
hedging item are both
recognised in the profit and loss.
► Cash flow hedges: the effective
portion of the changes in fair
value of the hedging instrument
is recognised in other
comprehensive income.
► Hedges of a net investment in a
foreign operation.
 JGAAP IFRS
Ineffective (Implementation Guidance on (IAS39.95(b))
portions of Financial Instruments 172) The ineffective portion of the gain or
hedges The ineffective portion of the gain or loss on the hedging instrument shall
loss can be deferred where the be recognised in profit or loss (this is
hedging instrument as a whole is particularly notable for cash flow
judged to be effective and the hedges).
requirements for hedge accounting
are fulfilled.
Where the ineffective portion of the
hedge can be separately identified in
a rational manner, it may be
recognised in profit or loss in the
current year.

Accounting for (Implementation Guidance on (IAS39.97,98)

forecast Financial Instruments 170,338)
transactions Deferred profits or losses from cash
flow hedges relating to forecast
transactions are recognised as an
adjustment to the book value of the
asset acquired, and are reflected in
profit and loss when the cost of the
related asset affects profit or loss.
However, if the asset acquired is an
interest accruing financial asset like a
loan, the profits or losses arising on
the hedge may be treated as a
deferred hedge with profits or losses
recorded in net assets (equity).
When an asset or liability is
subsequently acquired and the gain
or loss on the cash flow hedge of the
forecast transaction has been
recognised in OCI:
► for non-monetary items, that gain
or loss is reclassified to profit or
loss as the non-monetary item
affects profit and loss, or is
reclassified to adjust the carrying
amount of the non-monetary
item;
► for monetary items, that gain or
loss is reclassified to profit or loss
as the monetary item affects
profit and loss.

Using the foreign (Accounting Standard for Financial There are no such rules, and this
currency Instruments 43) method is not allowed.
contract rate
(furiate shori) When the requirements of hedge
accounting are met, foreign currency
denominated receivables and
payables may be translated using the
rate in the forward currency
contract.

Interest rate (Accounting Standard for Financial There are no such rules, and this
swap special Instruments 107) method is not allowed.
method Where certain conditions are met, an
interest swap contract is not
recognised at market value, but
rather the swap interest is directly
adjusted to increase or decrease the
interest on the relevant financial
assets or liabilities.

54
 JGAAP
Documentation (Accounting Standard for Financial
requirements Instruments 31)
(Practical Guidance on Accounting
Standard for Financial Instruments
144,145)
Hedge documentation may be
abbreviated if certain conditions are
met.
Assessment of (Implementation Guidance on
hedge Financial Instruments
effectiveness 143(2),146,156,158)
If the main provisions of the hedging
instrument and the hedged item are
the same and changes in market
rates or cash flows are expected to
perfectly offset, the hedge
effectiveness assessment may be
abbreviated.
If an initial test shows that the hedge
is highly effective and even if a
subsequent test shows it to be
ineffective, if the range of
fluctuations is small and are expected
to be temporary, hedge accounting
may be continued.
For hedges which fix cash flows, if
the cumulative change in the cash
flows of the hedging instrument and
the hedged item are highly
correlated, they are accepted as
effective.
55
IFRS
(IAS39.88(a) and others)
Hedge documentation shall not be
abbreviated.
(IAS39.88(e),F.4.2,F.4.7,F.5.5 and
others)
The assessment of hedge
effectiveness cannot be cut short as
in JGAAP.
Expected hedge effectiveness may be
assessed on a cumulative basis if the
hedge is so designated, and that
condition is incorporated into the
appropriate hedging documentation.
Therefore, even if a hedge is not
expected to be highly effective in a
particular period, hedge accounting
is not precluded if effectiveness is
expected to remain sufficiently high
over the life of the hedging
relationship.
Further, in the ongoing assessment
of the effectiveness of a cash flow
hedge, it is necessary to compare the
changes in the fair value of the cash
flows of the hedging instrument with
the changes in the discounted
expected cash flows arising from the
hedged item.
Foreign Currency
► Significant differences
JGAAP
Determination of Functional currency is not clearly
functional defined.
currency
Foreign currency (Accounting Standard for Foreign
transactions Currency Transactions Note 1)
A foreign currency transaction is
defined as a transaction for which
the trading price or other transaction
price is denominated in a foreign
currency (that is, a transaction
denominated in a currency other
than Japanese yen).
Classification of (Accounting Standard for Foreign
foreign Currency Transactions 2,3)
operations Foreign operations are classified as
foreign branches or as foreign
subsidiaries and similar.
56
IFRS
(IAS21.8－12,21)
Management must determine the
functional currency by considering
the primary economic environment
in which the entity operates.
A foreign currency transaction shall
be recorded, on initial recognition in
the functional currency, by
translating the foreign currency
amount at the spot exchange rate
between the functional currency and
the foreign currency at the date of
the transaction.
(IAS21.8,20)
A transaction that is denominated or
requires settlement in a currency
other than the functional currency
(IAS21.8)
A foreign operation is an entity that
is a subsidiary, associate, joint
venture or branch of a reporting
entity, the activities of which are
based or conducted in a country or
currency other than those of the
reporting entity.
A foreign operation is not further
classified as a foreign branch or as a
foreign subsidiary as in JGAAP.
 JGAAP IFRS
Translation of (Accounting Standard for Foreign (IAS21.39,40,44)
foreign currency transactions 2,3) The results and financial position of
operations Branches foreign operations shall be translated
The foreign currency transactions of into the presentation currency of the
foreign branches are accounted for reporting entity (after their
in the same way as the transactions recognition in functional currency)
of the head office, in principle, with using the following method, provided
the following exceptions: that the functional currency is not
► Income and expenses can be the currency of a hyperinflationary
translated at average rates for economy.
the period. ► Assets and liabilities for each
balance sheet presented shall be
► Under certain conditions, the
translated at the closing rate at
closing rate at the date of the
the date of that balance sheet.
balance sheet can be used to
translate all balance sheet items. ► Income and expenses for each
In this case, income and expenses statement of comprehensive
can also be translated at the income (income statement) shall
same rate. be translated at the exchange
rates at the dates of the
► The exchange differences arising
transactions. Average rates for
from the use of a translation
the period are often used if the
method other than that used by
exchange rates do not fluctuate
head office are recognised as
significantly.
exchange gains or losses in the
income statement. ► All resulting exchange
differences arising from the
above translations shall be
Subsidiaries
recognised as a separate
Assets and liabilities in foreign
component of equity.
subsidiaries and similar entities are
translated into yen at the exchange
rates at the date of the balance
sheet.
► Equity related items acquired by
the parent are translated at the
exchange rate at the time of the
acquisition and subsequently
acquired items are translated at
the date of each transaction.
► Revenue and expenses are
translated at average rates in
the period in principle, however
the closing rate at the date of
the balance sheet can also be
used. Transactions with the
parent are translated using the
parent’s exchange rate, any
differences which arise are
recognised as exchange gains or
losses in the income statement.
► Exchange differences are
recognised as a separate
component of equity.

57
 JGAAP
Disposal or (Accounting Standard for Foreign
partial disposal of Currency Transactions and related
a foreign Implementation Guidance and
operation Practical Solution 42)
When the parent's proportion of
ownership interest decreases as a
result of a change in equity, the
related decreased portion of foreign
currency translation adjustments
shall be recognised as a profit or loss
on sale of investments in the
consolidated Income Statement.
Net investment in There are no specific rules relating to
a foreign the exchange differences arising
operation from a net investment in a foreign
operation.
Accordingly, foreign exchange
differences arising on such monetary
items are recognised in profit or loss
in the separate and consolidated
financial statements of the reporting
entity.
58
IFRS
(IAS21. 48A)
On the disposal of an entity’s entire
interest in a foreign operation, the
cumulative amount of the exchange
differences relating to that foreign
operation shall be reclassified from
equity to profit or loss (as a
reclassification adjustment) only if
one of the following conditions is
met:
► The loss of control of a
subsidiary
► The loss of significant influence
over an associate
► The loss of joint control over a
jointly controlled entity
(IAS 21. 48C)
On the partial disposal of a subsidiary
that includes a foreign operation, the
entity shall re-attribute the
proportionate share of the
cumulative amount of the exchange
differences recognised in other
comprehensive income to the
non-controlling interests in that
foreign operation (when control
continues).
In any other partial disposal of a
foreign operation the entity shall
reclassify to profit or loss only the
proportionate share of the
cumulative amount of the exchange
differences recognised in other
comprehensive income.
(IAS21.32)
Exchange differences arising on a
monetary item that forms part of a
reporting entity’s net investment in a
foreign operation are recognised in
profit or loss in the separate financial
statements of the reporting entity.
However, in the consolidated
financial statements, such exchange
differences are recognised initially in
other comprehensive income and are
reclassified to profit or loss on
disposal of the net investment.
 JGAAP
Forward foreign (Accounting Standard for Foreign
exchange currency transactions Notes 6 and 7)
contracts Foreign currency receivables and
payables may be translated on the
basis of rates in the related forward
contract (furiate shori), as a
temporarily allowed treatment.
Financial There is no standard relating to
reporting in financial reporting in
hyperinflationary hyperinflationary economies.
economies
59
IFRS
(IAS39)
When hedge accounting is applied,
the JGAAP method described on the
left is not permitted.
(IAS21.42)
The results and financial position of
an entity whose functional currency
is the currency of a hyperinflationary
economy shall be translated into a
different presentation currency using
the following procedures:
► All amounts (i.e. assets,
liabilities, equity items, revenue
and expenses, including
comparatives) shall be translated
at the closing rate at the date of
the most recent balance sheet.
Income Tax
► Significant differences
JGAAP
Tax effect on (Practical Guidance on Accounting
goodwill Standard for Tax effect accounting
for consolidated financial statements
27)
Deferred tax assets or deferred tax
liabilities are not recognised in
relation to goodwill.
60
IFRS
(IAS12.15)
A deferred tax liability arising from
the initial recognition of goodwill shall
not be recognised.
(IAS12.21B)
However, in some countries the
amortisation of goodwill is allowed for
tax purposes. A deferred tax liability,
for taxable temporary differences
which arise after the initial
recognition of goodwill as a result of
the amortisation of goodwill for tax
purposes, is recognised.
(IAS12.32A)
If the carrying amount of goodwill
arising in a business combination is
less than its tax base, a deferred tax
asset shall be recognised as part of
the accounting for that business
combination, to the extent that it is
probable that taxable profit will be
available against which the deductible
temporary difference could be
utilised.
 JGAAP
Assessment of (Practical Guidance on Accounting
the Standard for Tax effect accounting
recoverability for separate financial statements 21,
of deferred tax Audit committee report No66,3)
assets The recoverability of deferred tax
assets relating to deductable
temporary differences, and any
necessary valuation allowance, should
be thoroughly and prudently
determined considering the following
items:
► sufficiency of taxable income
based on earning power;
► existence of tax planning;
► sufficiency of taxable temporary
differences
When judging recoverability, detailed
guidance, which includes numerical
criteria (within five years, or within a
year etc.), for each category of entity
are stipulated.
(Practical Guidance on Accounting
Standard for Tax effect accounting
for consolidated financial statements
16)
The criteria in “Practical Guidance on
Accounting Standard for tax effect
accounting for separate financial
statements 21" are not applied when
considering the recoverability of
deferred tax assets arising from the
elimination of unrealised profits on
consolidation. Such deferred tax
assets are considered to be
recoverable.
Tax effect of (Practical Guidance on Accounting
the elimination Standard for Tax effect accounting
of unrealised for consolidated financial statements
profit 13,14)
The carrying amount of this type of
deferred tax asset is measured by
multiplying the unrealised profit by
the effective tax rate, which is
calculated using the seller’s rate on its
taxable income for the year.
61
IFRS
(IAS12.24,27-31)
A deferred tax asset shall be
recognised for all deductible
temporary differences to the extent
that it is probable that taxable profit
will be available against which the
deductible temporary difference can
be utilised.
A two step approach under which a
valuation allowance is recognised is
not adopted, rather a deferred tax
asset is recognised directly for the
amount of recoverable deferred tax
after considering the following items:
► sufficiency of taxable income
based on earning ability;
► existence of tax planning;
► sufficiency of taxable temporary
differences
Certain guidance is provided for
judging the recoverability of deferred
tax assets (however, the categories of
the assets or numerical criteria are
not stipulated as in JGAAP).
When considering the recoverability
of deferred tax assets arising from the
elimination of unrealised profits on
consolidation, a determination is
made based on the general principles
above (there is no exceptional rule as
in JGAAP).
(IAS12.47)
There is no exception as in JGAAP
(above). Therefore, in principle,
deferred tax assets and liabilities shall
be measured at the rate which is
expected to apply to company which
holds the asset (the purchaser).
 JGAAP
Recognition of (Accounting Standard for
current and Presentation of Comprehensive
deferred tax Income and amendment to a related
Accounting Standard 8)
There are no specific rules with
regard to the presentation of current
tax and deferred tax, but they are
generally considered to be included in
profit or loss for the period (except
for as below).
However, tax effects on items
recorded in other comprehensive
income (i.e. unrealised gains or losses
on securities, gains or losses on
hedges and foreign currency
translation adjustments) are not
included in profit or loss for the period
but are also included in other
comprehensive income.
Classification of (Accounting Standard for tax effect
deferred tax accounting 3,1)
assets Deferred tax assets and liabilities are
(liabilities) in classified into current or non-current
the statement items as appropriate.
of financial
position
(balance sheet)
Presentation in (Accounting Standard for Tax effect
the statement accounting 3 3)
of The amounts that shall be paid as
comprehensive corporate tax for the period along
income (income with deferred tax expenses (or
statement) deferred tax income) are presented
on the face of the income statement
separately.
62
IFRS
(IAS12.58,61A)
Current and deferred tax shall be
recognised as income or expense and
included in profit or loss for the
period, except for:
► tax arising from a transaction or
event recorded either in other
comprehensive income or directly
in equity;
tax arising from a business
combination.
Current tax and deferred tax that
relates to items that are recognised
outside of the profit or loss, in the
same or a different period, shall be
accounted for as follows:
► If related to transactions in other
comprehensive income, then the
tax shall be recognised in other
comprehensive income.
► If related to transactions that are
recognised directly in equity, then
the tax shall be recognised
directly in equity.
(IAS1.56)
When an entity presents current and
non-current assets as separate
classifications on the face of its
balance sheet, it shall not classify
deferred tax assets (liabilities) as
current assets (liabilities).
Deferred tax assets (liabilities) are
classified as non-current assets
(liabilities).
(IAS12.6,77,77A,80)
The current tax expense (current tax
income) and deferred tax expense
(deferred tax income) relating to net
income and loss from ordinary
activities shall be presented as a tax
expense (tax income) in the statement
of comprehensive income. The major
components of that tax expense (tax
income) shall be disclosed separately
in the notes.
 JGAAP
Offsetting (Accounting Standard for Tax effect
deferred tax accounting 3 2)
assets and Deferred tax assets (liabilities)
liabilities classified as current assets (liabilities)
and non-current assets (liabilities) are
offset within each of these categories.
(Practical Guidance on Accounting
Standard for Tax effect accounting
for consolidated financial statements
42)
Deferred tax assets and deferred tax
liabilities shall be offset if they relate
to the income taxes of the same
taxable entity.
63
IFRS
(IAS12.74-76)
In rare circumstances and not limited
to the same taxable entity, if certain
conditions are met (for example, the
entity has a legally enforceable right),
deferred tax assets and deferred tax
liabilities of different taxable entities
are offset.
*In JGAAP, deferred tax assets
(liabilities) are classified as current
assets (liabilities) and non-current
assets (liabilities), and are offset
within those current/non-current
categories. However, in IFRS, all
deferred tax assets (liabilities) are
classified as non-current assets
(liabilities) and therefore there is no
restriction of offset for current or
non-current classifications as in
JGAAP.
Provisions and Contingencies
► Significant differences
JGAAP
Criteria for (Corporate Accounting Principles
recognition of a Explanatory Notes18)
provision A provision shall be recognised when
all of the conditions below are met:
► it relates to a specific future cost
or loss;
► it arises from a past event;
► it has a high probability of
occurrence; and
► the amount can be estimated
reasonably.
Constructive There are no specific rules.
obligations
Present Even if it is not a present obligation, a
obligation of provision shall be recognised when it
provisions satisfies the above conditions.
Major (Corporate Accounting Principles
inspections or Explanatory Notes 18)
repair costs Special repair provisions are given as
an example of non-current liabilities.
The amount of the provision which
relates to the current period is
recognised as a current period profit
or loss.
64
IFRS
(IAS37.14)
A provision shall be recognised when
all of the following conditions are met:
► an entity has a present obligation
(legal or constructive) as a result
of a past event;
► it is probable that an outflow of
resources embodying economic
benefits will be required to settle
the obligation; and
► a reliable estimate can be made
of the amount of the obligation.
(IAS37.10)
Liabilities include both legal and
constructive obligations.
A constructive obligation is an
obligation that derives from an
entity’s actions where:
(a) by an established pattern of past
practice, published policies or a
sufficiently specific current
statement, the entity has indicated to
other parties that it will accept certain
responsibilities; and
(b) as a result, the entity has created
a valid expectation on the part of
those other parties that it will
discharge those responsibilities.
(IAS 37.14(a))
It is not acceptable to recognise
provisions unless they represent
present obligations.
(IAS16.14)
Future costs of major inspections of
items of PPE, which have not yet been
carried out, are not permitted to be
recognised as provisions. When the
recognition criteria are fulfilled, such
costs are recognised in the carrying
amount of the item of PPE and are
included in the depreciation charge.
 JGAAP
Discounting the There are no specific rules.
provision
(Accounting Standard for Asset
Retirement Obligations 6)
An asset retirement obligation is
calculated based on its discounted
value. The discount rate used is the
risk free pre-tax interest rate which
reflects the time value of money.
Environmental (Accounting Standard for Asset
clean-up and Retirement Obligations 4)
decommissioni Recognition of asset retirement
ng costs obligations is required for legal or
equivalent obligations.
Onerous There are no specific rules.
contracts
Restructuring There are no specific rules.
costs These are provided for based on the
general requirements for provisions.
65
IFRS
(IAS37.45-47)
Where the effect of the time value of
money is material, the amount of a
provision shall be the present value of
the expenditures expected to be
required to settle the obligation.
The discount rate (or rates) shall be a
pre-tax rate (or rates) that reflect(s)
current market assessments of the
time value of money and the risks
specific to the liability. The discount
rate(s) shall not reflect risks for which
the future cash flow estimates have
been adjusted.
(IAS37.19.21)
The general principles of IAS37 are
applied to provisions for
environmental clean-up and
decommissioning costs etc. In other
words, if a legal obligation or a
constructive obligation exists, a
provision shall be recognised.
(IAS37.10,66-69)
An onerous contract is a contract in
which the unavoidable costs of
meeting the obligations under the
contract exceed the economic
benefits expected to be received
under it.
If an entity has a contract that is
onerous, the present obligation under
the contract shall be recognised and
measured as a provision.
(IAS37.70-83)
A provision for a constructive
obligation to restructure is recognised
under the general recognition criteria
of IAS37 when an entity:
a) has a detailed formal plan for the
restructuring and
b) has raised a valid expectation in
those affected that it will carry
out the restructuring by starting
to implement that plan or by
announcing its main features to
those affected by it.
 JGAAP
Contingent There are no specific rules.
assets:
definition and
disclosure
Measurement (Corporate Accounting Principles
of a provision Explanatory Notes 18)
within a range Only a rational basis is accepted for
of expected the estimation of a provision, and so
outcomes there is no requirement to give an
explanation of the details of the
measurement method.
(Accounting Standard for Asset
Retirement Obligations 6)
An asset retirement obligation is
calculated by discounting future cash
flows, using either the most likely
outcome or the expected value
method.
66
IFRS
(IAS37.10,89)
A contingent asset is a possible asset
that arises from past events and
whose existence will be confirmed
only by the occurrence or
non-occurrence of one or more
uncertain future events not wholly
within the control of the entity.
Where an inflow of economic benefits
is probable, an entity shall disclose a
brief description of the nature of the
contingent assets at the end of the
reporting period, and, where
practicable, an estimate of their
financial effect should be disclosed.
(IAS37.39,40)
Where the provision being measured
involves a large population of items,
the best estimate is the expected
value (if all possible outcomes in the
range have the same probability of
occurrence, the mid-point can be
used).
Where a single obligation is being
measured, the individual most likely
outcome may be the best estimate of
the liability.
Construction Contracts
► Significant differences
JGAAP IFRS
When the (Accounting Standard for (IAS11.32)
outcome of a Construction Contracts 9) A method based on the recoverability
construction The contract completion method is of construction costs is applied (that
contract cannot applied. is, revenue shall be recognised only to
be measured the extent of contract costs incurred
reliably for which recovery is probable).

Resolution of (Implementation Guidance on (IAS11.35)

the uncertainty Accounting Standard for Construction From the point when the uncertainties
of the outcome Contracts 3,14) over the outcome of the construction
Changing from the use of the work are resolved, the stage of
percentage of completion method completion method is applied.
should not be made only because of
certainty derived from subsequent
events. However, this does not apply
to subsequent determinations which
should have been made at the
commencement of the contract.

67
Revenue Recognition
► Significant differences
JGAAP
Basic concept (Corporate Accounting Principles 2
3B)
Revenue related to the sale of goods
or rendering of services should be
recognised in accordance with the
realisation principle.
Identification of Aside from the "Practical Guidance
the transaction for Software Transactions and the
Standard on Accounting for
Construction Contracts", there are
no general rules regarding the
identification of transactions, or
whether those transactions require
separation or combination.
Presentation of Aside from the "Practical Guidance
revenue for Software Transactions", there are
no general rules regarding the
presentation of revenue.
Contracts with (Corporate Accounting Principles
deferred Note 6)
payment terms Even if the difference between the
(e.g. instalment fair value and the nominal amount of
sales contracts) consideration is, in substance,
interest income, the interest element
does not have to be accounted for
separately.
In addition to the normal sales
method, accepted methods of
accounting for such sales are the due
date method and the cash basis.
68
IFRS
(IAS18.7)
Revenue is defined as the gross
inflow of economic benefits during
the period arising in the course of the
ordinary activities of an entity when
those inflows result in increases in
equity, other than increases relating
to contributions from equity
participants.
The standard specifies requirements
for recognising revenue from the sale
of goods, the rendering of services,
and from interest, royalties and
dividends. In addition, practical
examples of applying the general
principles of IAS 18 are given in the
Appendix.
(IAS18.13)
It is necessary to apply the revenue
recognition criteria to the separately
identifiable components of a single
transaction in order to reflect the
substance of that transaction.
On the other hand, more than one
transition should be treated as a
single transaction when the
commercial effect cannot be
understood otherwise.
(IAS18.8, Appendix21)
Amounts collected as an agent on
behalf of a principal, which do not
bring economic benefits to the entity,
do not result in increases in equity
and therefore only commission
income is recognised.
(IAS18.11,IE8)
Revenue is measured at the fair value
of the consideration received.
For transactions with a financial
element, like instalment sales
contracts, consideration is
determined using an imputed rate of
interest and the interest element is
separately recognised.
The due date method and recognition
on a cash basis are not allowed.
 JGAAP
Sales Incentives (Regulation for Terminology, Forms
and Preparation of Financial
Statements 93)
A cash discount on sales is expensed
as non-operating expenses.
A sales incentive is either deducted
from sales or recorded as selling and
administrative expenses for practical
purposes.
Sales of goods (Corporate Accounting Principles
2,3B,Note 6)
There is no specific definition of
realisation nor are there standard
requirements for revenue
recognition. In general, realisation
refers to economic transactions
conducted with third parties, in other
words when the goods or services are
converted to a form of monetary
asset. The realisation principle is
applied as guidance for the
recognition of sales. However, in
practice, a delivery basis and a
shipping basis for revenue
recognition are also applied, and so
the timing of recognition depends on
established commercial practice.
Rendering of There are no specific rules.
services
Rendering of There are no specific rules.
services: where
the outcome
cannot be
reliably
measured
69
IFRS
(IAS 18.9,10)
The amount of revenue is measured
at the fair value of the consideration
received or receivable taking into
account the amount of any trade
discounts and volume rebates
allowed by the entity.
(IAS18.14)
Revenue from the sale of goods shall
be recognised only if:
► the entity has transferred to the
buyer the significant risks and
rewards of ownership of the
goods;
► the buyer of the goods controls
those goods;
► the amount of revenue can be
measured reliably;
► it is probable that there will be an
inflow of economic benefits to
the entity; and
► the costs incurred can be
measured reliably.
(IAS18.20)
When the following conditions are
met:
► the amount of revenue and costs
can be measured reliably,
► it is probable that the economic
benefits associated with the
transaction will flow to the entity
► the stage of completion of the
transaction can be measured
reliably,
Then the revenue associated with the
transaction shall be recognised by
reference to the stage of completion
of the transaction.
(IAS18.26)
Revenue shall be recognised only to
the extent of the expenses
recognised that are recoverable.
 JGAAP IFRS
Dividends (Accounting Standard for Financial (IAS 18.30 (c) )
received Instruments and related Dividends shall be recognised when
Implementation Guidance and the shareholder's right to receive
Practical Solution 94) payment is established.
In terms of marketable securities,
dividends are recognised based on
the expected declared amount per
share on the ex-dividend date, for
each class of security.
For non-marketable securities,
dividends are recognised on the date
when the declaration of dividends is
approved by a shareholder's meeting
or another authorised board meeting.
However, dividends are allowed to be
recognised on the date received
provided that the recording entity
uses the same accounting method
consistently for all securities.

Separate There are no clear rules. (IFRIC13.3, 5-7)

identification of In practice it seems that in many
transactions cases the full amount of revenue is
(customer recorded at the time of sale and a
loyalty provision for the expected cost of
programmes) fulfilling the customer loyalty
obligation is recorded.
When customer loyalty credits are
awarded at time a sale is made, the
fair value of consideration is divided
with reference to the relative fair
values of the goods sold and the
credits awarded. The portion of
revenue for the goods sold is
recognised at the time of the sale and
the portion of revenue in respect of
the credits awarded is recognised
when the points are utilised.

70
Share-Based Payments
► Significant differences
JGAAP
In scope (Accounting Standard for
transactions and Share-based Payment 17)
effective date The guidance in this standard is to be
applied to stock options, options such
as rights relating to the company’s
stock and payments made through
stock transfers from the date of the
implementation of the Companies Act
(1 May 2006).
Classes of (Accounting Standard for
share-based Share-based Payment 28)
payment Applies to stock options and
transactions situations where consideration for
goods or services is given through
equity-settled share-based payments.
Equity-settled (Accounting Standard for
share based Share-based Payment 6,14,15)
payments – ► Transactions with employees:
measurement Stock options granted as
date consideration for goods or
services: grant date
► Transactions with parties other
than employees:
Stock options granted as
consideration for goods or
services: contract date
Stock delivered as consideration
for goods or services: contract
date
71
IFRS
(IFRS2.53,54,58)
For equity settled share-based
payments, IFRS2 shall be applied to
grants of shares, share options or
other equity instruments that were
granted after 7 November 2002 and
had not yet vested as at the effective
date of IFRS2. The entity is
encouraged, but not required, to
apply IFRS2 to other grants of equity
instruments if the entity has
disclosed publicly the fair value of
those equity instruments,
determined at the measurement
date.
(IFRS2.2)
IFRS2 is applied to equity-settled and
cash-settled share-based payment
transactions, and transactions which
provide a choice of cash or equity
settlement.
(IFRS2.11-13)
► Transactions with employees:
grant date
► Transactions with parties other
than employees: date goods are
obtained or services rendered
 JGAAP
Equity settled (Accounting Standard for
share based Share-based Payment 6,14,15)
payments – ► Transactions with employees:
measurement Stock options at grant date:
method measure using a widely accepted
measurement technique that
gives a reasonable estimated
value.
► Transactions with parties other
than employees: calculate using
whichever of the two methods
below gives the most reliable
valuation:
► fair value of the stock option (or
stock) used as consideration;
► fair value of the goods or
services received.
(whichever gives the most
reliable valuation is judged
based on The Application
Guidance 23)
(Accounting Standard for
If the fair value
Share-based Payment 13)
of the equity
There are no specific rules.
instruments
However, for unlisted companies, it is
granted cannot
possible to account for stock options
be estimated
based on the estimated intrinsic
reliably
value per option, as a substitute for
fair value. In this case, the intrinsic
value per option at the grant date is
estimated, and is not revised later.
Equity There are no specific rules.
instruments with
reload feature
72
IFRS
(IFRS2.10-13)
► Transactions with employees:
measure at the fair value of the
equity instruments granted
► Transactions with parties other
than employees: measure at the
fair value of the goods or
services received. Only where
the fair value of the goods or
services received cannot be
estimated reliably, measure at
the fair value of the equity
instruments granted.
(IFRS2.24)
In rare cases, if the fair value of the
equity instruments cannot be
estimated reliably at the
measurement date, the equity
instruments are measured at their
intrinsic value. This is measured
initially at the date the entity obtains
the goods or the counterparty
renders service, and subsequently at
each reporting date and at the date
of final settlement, with any change
in intrinsic value recognised in profit
or loss.
The goods or services received are
recognised based on the number of
equity instruments that ultimately
vest or (where applicable) are
exercised.
(IFRS2.22)
For options with a reload feature, the
reload feature shall not be taken into
account when estimating the fair
value of options granted at the
measurement date. Instead, a reload
option shall be accounted for as a
new option grant, if and when a
reload option is subsequently
granted.
 JGAAP
Treatment after (Accounting Standard for
vesting date Share-based Payment 8)
If an option is exercised and new
stock is issued, the portion of the
amount recorded as share warrants
that relates to the exercise of the
option is transferred to paid-in
capital.
Cancellation or There are no specific rules.
settlement of
grant
Lapse due to non (Accounting Standard for
exercise of Share-based Payment 9)
options When options lapse because they are
not exercised, the portion of the
amount recorded as share warrants
(or options) that relates to those
options is transferred as a gain in the
profit and loss account.
73
IFRS
(IFRS2.23)
The entity shall make no subsequent
adjustment to total equity after
vesting date. However, this
requirement does not preclude the
entity from recognising a transfer
within equity, i.e. a transfer from one
component of equity to another.
(IFRS2.28)
► Account for the cancellation or
settlement as an acceleration of
vesting;
► Any payment made on the
cancellation or settlement of the
grant shall be accounted for as
the repurchase of an equity
interest. However, to the extent
that the payment exceeds the fair
value of the equity instruments
(measured at the repurchase
date), the recording entity shall
recognise an expense for that
excess.
(IFRS2.23)
No adjustment is made to the existing
equity balance. However, an entity
is not precluded from recognising a
transfer within equity.
Employee Benefits, excluding
Share-Based Payments
► Significant differences
JGAAP
Defined Benefit (Accounting Standard for Retirement
Pension Plans – Benefits 2, 2
Benefit Practical Guidance on Accounting for
Obligations Retirement Benefits 2)
In principle, the value of accrued
benefit obligations is calculated using
the straight line method. Other
methods such as a payroll basis, a
percentage of salary method and a
points basis may be used by way of
exception.
Defined Benefit (Accounting Standard for Retirement
Pension Plans – Benefits Note 1)
Plan Assets When pension plan assets exceed
retirement benefit obligations, the
difference is recognised as a prepaid
pension expense.
74
IFRS
(IAS19.64,67)
(Revised standard IAS 19.67,70)
In principle, the Projected Unit Credit
Method (accrued benefit valuation
method) shall be used. However, the
straight-line method is required if
employee service in later years leads
to a materially higher level of benefit
than in earlier years.
(IAS19.58)
Where there is a surplus of pension
plan assets over obligations, an asset
is recognised up to the limit of the
total of:
a) any unrecognised net actuarial
losses and past service costs; and
b) the present value of any
economic benefits available as
refunds from the plan or
reductions in future contributions
to the plan (the asset ceiling).
(Revised standard IAS19.64)
When an entity has a surplus in a
defined benefit plan, it shall measure
the net defined benefit asset at the
lower of the surplus in the defined
benefit plan and the asset ceiling
 JGAAP
Defined Benefit (Accounting Standard for Retirement
Pension Plans - Benefits partial revision (3) 2, Notes
Discount rate to the same standard 6)
There is no hierarchy with which to
consider the discount rate.
The discount rate is determined
based on the interest rates of highly
stable long term bonds. This is the
interest rate at period end available
on long term government,
governmental institution and high
quality corporate bonds.
Defined Benefit (Accounting Standard for Retirement
Pension Plans – Benefits 3. 2(3))
Expected Return The expected return on plan assets is
Rate calculated per individual pension plan
asset at the beginning of the period
using a reasonable expected return
rate.
Defined Benefit (Accounting Standard for Retirement
Pension Plans – Benefits 3,2)
Past Service In principle, past service costs are
Cost recognised as expenses, and are
amortised over a fixed period (within
the period of the remaining average
service lives).
The amortisation periods for past
service costs and for actuarial gains
and losses may be determined
separately.
For actuarial gains and losses,
amortisation may commence from
the period following the period in
which they arose, however this is not
allowed for past service costs.
(Accounting Standard for Retirement
Benefits Note 11)
Past service costs relating to retired
employees can be distinguished from
other past service costs and can be
expensed in full when they arise.
75
IFRS
(IAS19.78)
(Revised standard IAS 19.83)
The following procedure is followed.
The rate used to discount
post-employment benefit obligations
(both funded and unfunded) shall be
determined by reference to market
yields at the end of the reporting
period on high quality corporate
bonds in a currency and with a
maturity consistent to the benefit
obligations. In countries where there
is no deep market in such bonds, the
market yields (at the end of the
reporting period) on government
bonds shall be used.
(Revised standard IAS 19.123)
The net interest on the net defined
benefit liability (asset) shall be
determined by multiplying the net
defined benefit liability (asset) by the
discount rate stated above.
(IAS19.96)
In cases where benefits have already
vested, an entity shall recognise the
related past service cost immediately.
In cases where vesting is not
immediate, an entity shall recognise
the related past service cost as an
expense on a straight-line basis over
the average period until the benefits
become vested.
(Revised standard IAS 19. 103)
An entity shall recognise past service
cost as an expense at the earlier of
the following dates:
a) when the plan amendment or
curtailment occurs; and
b) when the entity recognises
related restructuring costs
termination benefits.
 JGAAP
Defined Benefit (Accounting Standard for Retirement
Pension Plans – Benefits 3, 2)
Actuarial Gains (Accounting Standard for Retirement
and Losses Benefits Note 9)
In principle, actuarial gains and losses
are recognised as expenses and
amortised over a fixed period (within
the period of the remaining average
service lives).
As per the above, the amortisation
periods for past service costs and for
actuarial gains and losses may be
determined separately.
For actuarial gains and losses,
amortisation may commence from
the period following the period in
which they arose.
Defined Benefit (Accounting Standard for Retirement
Pension Plans – Benefit 3,1)
Expense Current service cost and interest cost
are expensed as the components of
defined benefit cost and if the
pension plan is funded, the current
expected return on the plan assets
shall be deducted.
76
IFRS
(IAS19.92,93A,93B,93D)
It is possible to chose any of the
follow accounting policies:
► The corridor method: actuarial
differences within a certain
“corridor” are not recognised.
► However an entity may recognise
these differences in profit and
loss faster than over the
expected average remaining
working lives of the employees,
provided that it consistently uses
a systematic method.
► An entity which selects an
accounting policy to recognise
the actuarial differences in the
period in which they occur, may
recognise the differences outside
the profit and loss account, in
other comprehensive income.
(Revised standard IAS 19.8, 57,63)
An entity shall recognise the net
defined benefit liability (asset) in the
statement of financial position.
Remeasurements of the net defined
liability (asset) are to be recognised in
other comprehensive income,
including actuarial gains and losses.
(Actuarial gains and losses must not
be recognised as profit or loss in
subsequent years)
(Revised standard IAS 19.120)
An entity shall recognise the
components of defined benefit cost,
except to the extent that another
IFRS requires or permits their
inclusion in the cost of an asset, as
follows:
a) service cost in profit or loss;
b) net interest on the net defined
benefit liability (asset) in profit or
loss; and
c) remeasurements of the net
defined benefit liability (asset) in
other comprehensive income
 JGAAP IFRS
Minimum There are no specific rules. (IFRIC14.18-26)
funding In some cases, to protect employees,
requirement a minimum level of funding is
required by the plan or the law.
Such funding requirements are called
minimum funding requirements. If the
minimum funding requirement is
larger than the actual plan assets, the
deficiency should be recognised as an
additional liability.

Defined benefit (Implementation Guidance on There is no short-cut method.

pension- Financial Instruments 34)
convenient Small sized entities are permitted to
method account for retirement benefit
obligations using the convenient
method or the short-cut method.

Retirement There are no specific rules. (IAS19.1,3,6)

benefits other (Revised standard IAS19,2,4,7)
than pensions With the exception of those benefits
covered by IFRS2 (Share Based
Payment), all employee retirement
benefits other than pensions are also
within the scope of IAS19.
Note: the post-employment benefits
of directors are also included.

Paid vacation There are no specific rules. (IAS19.11-16)

accrual Provisions for accumulating
compensated absences must be
recognised.

77
Appendix 1 - The Adoption of IFRS in
Japan
Since 2001, there has been a tremendous increase in the adoption of IFRS around the world. The
precise way in which this has happened has varied among jurisdictions. This appendix
summarises how Japan is approaching the adoption of IFRS.

In 2007, an agreement between the Accounting Standards Board of Japan (ASBJ), and the IASB,
known as ‘The Tokyo Agreement’, was announced. The Tokyo Agreement advanced the gradual
convergence of Japanese GAAP and IFRS, which had been taking place for a number of years.
Following the initial convergence projects under this agreement, in 2008 the European
Commission accepted Japanese GAAP in its markets as part of its process to accept certain
GAAP as equivalent to IFRS for listing non-EU companies in a European ‘regulated market’ (as
defined by the European Commission). Further convergence of Japanese GAAP has continued as
new standards are issued or expected to be issued. Since adoption of IFRS is being considered
for consolidated financial statements only, this convergence process is expected to continue as
Japanese GAAP is used by Japanese companies in their standalone financial statements.

In June 2009, the Business Advisory Council (BAC) a key advisory body to the Financial Services
Agency approved a roadmap for the adoption of IFRS in Japan and the relevant related matters
have subsequently been incorporated into the regulation for consolidated financial statements.
The key points of this roadmap are:

► Option of voluntary adoption of IFRS from fiscal years ended after 31 March 2010 for
companies with global financial or operating activities; and
► Decision on the mandatory adoption of IFRS to be made in 2012.

In June 2011, the BAC announced that if mandatory application of IFRS were to be decided, a
period of five to seven years would be given for preparing for adoption. This is a longer period than
proposed in the June 2009 roadmap. A number of Japanese companies have already taken, or are
planning to take, the option to apply IFRS voluntarily.

78
Appendix 2 - IFRS Related Resources
Please use our knowledge fully.
Ernst & Young Shinnihon LLC website
We offer a variety of online resources that provide more
detail about IFRS as well as things to consider as you
research the potential impact of IFRS on your company.
http://www.shinnihon.or.jp/services/ifrs/index.html
A variety of Japanese language tools and publications：
► IFRS Outlook and Supplements to IFRS
Outlook- These include a variety of
publications focused on specific standards and
industries. (English versions in GAAIT)
► Jouhou sensor – our magazine combining
accounting and tax information. In this
magazine the IFRS section ‘IFRS jitsumu kouza’
includes articles by EYSN’s IFRS professionals
on the interpretation of IFRS for specific topics
and in a practical way.
International GAAP®
This comprehensive book from Ernst & Young is updated
annually and provides practical guidance for
understanding and interpreting IFRS on a globally
consistent basis.
International GAAP® - Japanese language
Japanese language version of the above.
A Complete Comparison: Japanese GAAP and IFRS
- Japanese language only
Detailed explanation by topic with many examples of the
differences between the fundamental concepts of
Japanese accounting standards and IFRS, the resulting
differences in accounting treatments, and related practical
points. This book also includes differences in presentation
and disclosure rules.
79
Ernst & Young Online
Ernst & Young’s information site for clients, that gathers
the latest news from around the world, provides
web-based learning, model financial statements a
variety of other knowledge.
http://www.ey.com/IFRS
IFRS Web-based learning – includes a number of
web-based modules that address the basic
accounting concepts and knowledge of IFRS.
Global Accounting & Auditing Information Tool
(GAAIT)
English only. Subscription fee based.
A multinational GAAP research tool that allows
continuous access to important International GAAP®
information:
► Example option
International GAAP® online- includes Ernst &
Young’s International GAAP® book, illustrative
financial statements and disclosure checklists, all
of the official IASB standards, exposure drafts and
discussion papers, and full sets of IFRS reporting
entities’ annual reports and accounts.
Please send enquiries about our IFRS services to:
Ernst & Young ShinNihon LLC
Hibiya Kokusai Bldg.
2-2-3 Uchisaiwaicho, Chiyoda-ku
Tokyo, Japan 100-0011
Tel: 03 3503 3508 (IFRS Department)
Email: IFRS@shinnihon.or.jp
Ernst & Young ShinNihon LLC

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About Ernst & Young ShinNihon LLC

Ernst & Young ShinNihon LLC is a member firm of
Ernst & Young. We are the leading audit firm in
Japan, with the largest number of people, and with
offices throughout the country. We are committed
to providing the highest quality audit and
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surround Japan.For more information, please visit
www.shinnihon.or.jp

© 2011 Ernst & Young ShinNihon LLC

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