March 2, 2006

The ASBJ and the IASB hold third meetingon joint project towards convergence
On March 1 and 2, 2006 in Tokyo, the Accounting Standards Board of Japan (ASBJ) and theInternational Accounting Standards Board (IASB) held the third joint meeting toward the final
goal of achieving convergence between Japanese GAAP and International Financial ReportingStandards (IFRSs).

Four board members including Professor Shizuki Saito, Chairman, andstaff on behalf of the ASBJ and four board members including Sir David Tweedie, Chairman,
and staff on behalf of the IASB attended the meeting.
Update of the current development
The ASBJ and the IASB shared with each other the progress that has been made on the first six
items, which are valuation method of inventories, segment reporting, related party disclosures,
uniformity of accounting policies on overseas subsidiaries, investment property, and cost ofissuing new shares.

Seeing that the deliberations on these items are making steady progress

towards convergence, the ASBJ and the IASB agreed to add three items as follows:•Asset retirement obligation,•Construction contracts, and•Disclosure of financial instruments at fair value.

Next step of the joint project: New plan
The ASBJ and the IASB also discussed how the Boards could accelerate convergence.

As

proposed by the ASBJ, the Boards agreed to shift from the current “phased” approach, in which
differences between the accounting standards that are relatively easy to initiate discussion about
are addressed first, to a new “whole picture” approach, in which all of the differences between
the accounting standards are addressed from an entire perspective.
This new approach classifies the major differences which can be eliminated in a relatively shorttime into a “short-term project,” and remaining differences into a “longer-term project.”In theshort-term projects, the major differences will be eliminated, or at least will be in the right
direction to be eliminated through discussion by 2008. Nine items are currently included in the
short-term projects.

The longer-term projects address differences which need relatively longer

periods to converge, including performance reporting, revenue recognition, retrospective
1

restatement, scope of consolidation (including SPE), and intangibles (including R&D expenses).
The ASBJ and the IASB will discuss these items in the joint project based on their respective
deliberations or research work.
The new approach is expected to clarify the joint project as a whole and show that it is an
on-going process towards convergence by regularly reviewing all of the differences between theaccounting standards and progress of deliberations in the short-term and the longer-term
projects.
The next meeting will be held in London in September 2006.
Professor Shizuki Saito, Chairman of the ASBJ said:
In light of the progress and our mutual confidence enhanced until now, we agreed on a newplan which clarifies an entire perspective of our project and will further accelerate achieving
the convergence.

The ASBJ will commence the deliberation to authorize its conceptualframework based on the series of discussion papers “Conceptual Framework of Financial
Accounting” for the purpose of facilitating discussions with the IASB.

I firmly believe thatthose efforts will bring new aspects to the joint project and enable us to achieve our common
goal earlier. The ASBJ will contribute to the development of the new standards which theIASB and the FASB are undertaking.

Sir David Tweedie, Chairman of the IASB said:
The ideal of having one set of high quality global accounting standards has been broadly
accepted for many years.

Now, however, the world is moving rapidly to makeconvergence on a single set of standards a reality.

Consequently the IASB warmly

welcomes the ASBJ’s proposal to accelerate our convergence programme.

The sooner we

can remove the differences between IFRSs and Japanese GAAP the sooner our joint
meetings can be devoted to discussing the development of new standards on many criticalaspects of financial reporting.

The IASB will be developing standards in these areas overthe next few years jointly with the American standard setter (the FASB).

The earlier theASBJ can become involved in the debate on these critical issues the greater the influence itwill have on the final standards.

2