Issued March 15, 2010 (No. 13)

Contents
1. Development of the ASBJ Standards etc. (released between
December 5, 2009 and February 1, 20102.

Overviewof

ASBJ

Meetings(191stMeeting–

194th

Meeting)
3. Visit to Japan by Ian Mackintosh, Chairman of the U.K.
Accounting Standards Board (ASB)
4. Toward the Establishment of an "Council on Accountingof Unlisted Companies" (provisional title)
5. Project Progress (As of February 28, 2010)6.

Announcement of the FASF Seminar on the “Guide to
the Preparation of Securities Reports” (for the Fiscal YearEnding March 31, 2010)

7. Noticepg. 1
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1. Development of the ASBJ Standards etc. (released between December 5,2009 and February 1, 2010
(1) [DP] Release of Discussion Paper on Intangible Assets (December 18, 2009)(The comment deadline was February 18, 2010)(2) [ED] Release of Exposure Drafts of Accounting Standard for the Presentation of Comprehensive
Income (Exposure Draft of ASBJ Statement No. 35) and amendment to related Accounting Standards(December 25, 2009)(The comment deadline was February 1, 2010)(3) [Other] Invitation to Comment on the Expiry of the Period of Applicability of Practical
Issue Task Force No. 26 (Tentative Solution on Reclassification of Debt Securities)(February 1, 2010)(The comment deadline was March 1, 2010)[Legend]
DP: Issue Paper, Discussion Paper
ED: Exposure Draft
Final: Statement/Guidance, etc. (final version)

2. Overview of ASBJ Meetings (191st Meeting – 194th Meeting)(1) 191st Meeting (held on December 10, 2009)a. ASBJ Discussion Paper “Discussion Paper on Intangible Assets (Draft)” [Resolution for public
release]b. Progress of Studies Conducted by Technical Committee for Financial Statement Presentationc. Progress of Studies Conducted by Technical Committee for Business Combinations
d. Progress of Studies Conducted by Technical Committee for Financial Instruments
a. The Board approved to release the Discussion Paper on Intangible Assets.
In the past, while there were some requirements for intangible assets, Japan had no comprehensive
accounting standard covering intangible assets as a whole. With this in mind, a Discussion Paper on
Intangible Assets was compiled.
Currently, development costs are recognized as an expense when incurred in a similar manner tothat of the U.S. GAAP. However, the Discussion Paper puts forward the idea that, from the point ofview of convergence, development costs should be capitalized as assets, provided that these costs
conform to the definition of intangible assets and recognition criteria are met. Furthermore,regarding the issue of measurement, the Discussion Paper proposes that, where it is deemed that theuseful life of an intangible asset is indefinite, such an asset should not be amortized. However,
several Board Members expressed concern that enterprises’ preferences might affect thedetermination as to whether or not an intangible asset should be amortized.
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b. The Board undertook final discussion of the draft text of the Exposure Draft on Presentation ofComprehensive Income, prior to the decision to be made at the next Board meeting as to whether the
Exposure Draft should be released.
c. While several staff proposals have been put forward regarding the treatment of minority interest inconsolidated financial statements, it was tentatively agreed that minority interest should be treated asa capital transaction. The Board decided that further discussion would be undertaken in the future
based on this proposal.
d. With the expiry of the period of applicability of Practical Issue Task Force No. 26 (Tentative
Solution on Reclassification of Debt Securities) (PITF No.26), which is a part of the response to thefinancial crisis of 2008, approaching in March, the Board discussed whether or not the PITF No. 26
should continue, and how notes on reclassification of debt securities in financial statements shouldbe treated.
(2) 192nd Meeting (held on December 21, 2009)
a. Exposure Drafts of Accounting Standard for the Presentation of Comprehensive Income” andamendments of related Accounting Statements [Resolution for public release]b. Progress of Studies Conducted by Technical Committee for Financial Instrumentsc. Progress of Studies Conducted by Retirement Benefits Accounting Technical Committee
d. Progress of Studies Conducted by Technical Committee for Retrospective Applicationa. The Board approved to release the Exposure Draft of Accounting Standard for the Presentation ofComprehensive Income.
Regarding the presentation of comprehensive income, the Exposure Draft permits the option ofusing either two-statement presentation or single-statement presentation.
The Standard, if finalized, would be effective the year-end financial statements for fiscal years
beginning on or after April 1, 2010; earlier application would be permitted.
b. The Board discussed the handling of PITF No. 26. The Board tentatively agreed that implementationof the PITF would not continue, and that continued disclosure of reclassification would not be
required.
c. As regards the attribution of retirement benefits, the Board tentative agreed that both service periodbasis and benefits formula basis is permitted, rather than permitting only methods conforming to thebenefits formula.
d. In response to the release of the ASBJ No. 24 “Accounting Standard for Accounting Changes andError Corrections”, the Board discussed the revision of related accounting standards.
(3) 193rd Meeting (held on January 15, 2010)a. Discussion on Practical Issues Task Force No. 26.
b. Progress of Studies Conducted by Technical Committee for Business Combinations
c. Progress of Studies Conducted by Technical Committee for Provisions (analysis of comments)

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d. Progress of Studies Conducted by Technical Committee for Revenue Recognition (analysis ofcomments)
a. The Board discussed the draft text of a request for comments on the Practical Issues Task Force No.
26.
b. The Board discussed the amortization of goodwill. The Board identified and clarified the issues tobe discussed in the process of developing the exposure draft in terms of a question whether
amortization should be required. They included constituents’ views on the question of whether
goodwill should be amortized, discussion from the point of view of convergence, the relationshipwith other standards, such as the allocation of acquisition cost of business combinations to intangible
assets on and impairment of goodwill, views on advanced review of accounting standards forconsolidated financial statements, etc.
c. The staff presented a report on the analysis of the comments received on the Discussion Paper on
Provisions. The comments included many concerns regarding the elimination of probability
recognition criterion and regarding the expected value approach.
d. The staff presented a report on the analysis of the comments received on the Discussion Paper on
Revenue Recognition.
Since the joint IASB/FASB exposure draft on this subject is expected to be released in the second
quarter of 2010, the Board decided not to discuss further until the IASB/FASB exposure draft isreleased.
(4) 194th Meeting (held on January 28, 2010)
a. Resolution regarding the invitation to comment with respect to the expiration of the period of
applicability of Practical Issues Task Force No. 26 (Tentative Solution on Reclassification of
Debt Securities)
b. Progress of Studies Conducted by Technical Committee for Retrospective Applicationc. Progress of Studies Conducted by Retirement Benefits Accounting Technical Committee
d. Progress of Studies Conducted by Technical Committee for Financial Instruments (Discussion ofStandard Revision)e. Progress of Studies Conducted by Technical Committee for Earnings Per Share (EPS)a. The Board approved to release the invitation to comment with respect to the expiration of the periodof applicability of Practical Issues Task Force No. 26 (PITF No. 26). The Board resolved as follows:(1) The period of applicability of PITF No. 26 should not be extended. (2) As the PITF will not be
extended, notes on disclosure of reclassification would not be required in future accounting periods.
b. The Board discussed revision of the Accounting Standard for Quarterly Financial Statements toaccompany the release of the ASBJ Statement No. 24 “Accounting Standard for Accounting Changes
and Error Corrections”.
c. The Board discussed the draft text of the revisions to the Accounting Standard for Retirement
Benefits.
The main changes with respect to the existing Standard which the Board discussed included: (1)pg. 4
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Immediate recognition of unrecognized items on the balance sheet. (2) Calculation for attribution
methods.
Regarding immediate recognition of unrecognized items on the balance sheet, items that in thepast were treated as unrecognized items on the balance sheet should be recognized as liabilities. In
this situation, as, rather than recognizing the whole of the unrecognized portion to net income, after
applying tax effects the items are recognized as negative items of

net assets (the items aresubsequently recycled), therefore, the impact on the income statement remains unchanged.
d. The Board reviewed the overall direction of future discussion on matters relating to the revision of
the current accounting standards for financial instruments.
Of the accounting standards that relate to financial instruments, regarding Classification andMeasurement, the IASB has already released a final standard in the form of IFRS 9. The staff
proposed that a “Summary of the Current State of Discussion” outlining the direction at the interim
step of discussion on the issue of Classification and Measurement should be released in the fourth
quarter of 2010. However, some of the Board members expressed their views on this proposal as
urged caution, noting that the endorsement of IFRS 9 in Europe has not been started, and that thediscussion on Classification and Measurement in the U.S. is proceeding along lines different fromthose specified by IFRS 9.
e. The Board discussed the direction which discussions by the Technical Committee for Earnings Per
Share (EPS) should take in the future.
Discussion of EPS in Japan has been halted, in line with the current state of discussion in the
IASB. However, the Board decided that discussion should commence regarding existing differenceswith those IFRSs that will not be affected by the IASB’s future discussion in this area, and regarding
those items with respect to which constituents have expressed a desire for discussion.

3. Visit to Japan by Ian Mackintosh, Chairman of the U.K. Accounting Standards
Board (ASB)
In January 2010, Mr. Ian Mackintosh, Chairman of the U.K. Accounting Standards Board (ASB)
and of the National Standard-Setters (NSS), visited Japan, accompanied by Mr. David Loweth, the
ASB’s Technical Director.
On January 18, ASB representative exchanged views with the ASBJ representatives regarding
international trends in accounting standards and the projects being undertaken by the IASB, etc. On
January 19, a roundtable meeting was held at the Hotel Okura Tokyo at which Mr. Mackintosh
discussed the current status of IFRS adoption in the U.K. with Japanese constituents. At this meeting,which began early in the morning, around 30 constituents from different sectors who are involved
with accounting exchanged views with Mr. Mackintosh.
Prior to the exchange of views, Mr. Mackintosh, the ASB Chairman, and Mr. Loweth, the ASB’s
Technical Director, gave a presentation on “U.K. Experience of Adoption of IFRS” during which
they presented the results obtained in surveys of IFRS adoption in the U.K. and other parts of Europe,pg. 5
Copyright© ASBJ/FASF All Rights Reserved.

and discussed the lessons learnt from UK adoption.
IFRS adoption became mandatory for the
consolidated

financialstatementsofpubliccompanies in the U.K. in 2005. Surveys that havebeen conducted since then indicate that many
constituents in the Europe feel that IFRS adoption
has improved the quality of consolidated financial
statements, but also that there are concerns
regarding the burden imposed by the enormous
number of disclosure requirements. The presentation by Mr. Mackintosh and Mr. Loweth noted thatthe latter is becoming a major issue in the U.K. They pointed out some of the lessons that could belearned from the experience of IFRS adoption in the U.K., including the need for comprehensiveplanning and preparation, and the fact that the effects of IFRS adoption will be wider thanaccounting, including implications on various aspects of business administration.
The presentation also described the Policy Proposal: The Future of U.K. GAAP, which was
published by the ASB in August 2009. The ASB envisaged a three-tier accounting regime, in which
IFRS would apply to publicly accountable entities, IFRS for SMEs would apply to non-publicly
accountable entities (excluding small entities, and the Financial Reporting Standard for Smaller
Entities (FRSEE) (a financial reporting standard formulated by the ASB) would apply to small
entities. The presentation also discussed the current situation regarding the establishment ofaccounting standards for non-listed companies.
The presentation was followed by a Q&A session; there was a lively, wide-ranging exchange ofviews regarding the differences between the current financial reporting system in the U.K. and thetiered system proposed by the ASB, the future role of accounting standards setting bodies, etc.

4. Toward the Establishment of an "Council on Accounting of Unlisted
Companies" (provisional title)
On January 22, 2010, the IFRS Council (chaired by FASF President Toshitaka Hagiwara) releaseda proposal for the establishment of an "Council on Accounting of Unlisted Companies" (provisional
title) at which constituents could meet to discuss how to address accounting standards for unlistedcompanies in light of the trend towards the internationalization of the Japan GAAP. (The council wasestablished on March 4, 2010.)

pg. 6
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5. Project Progress (As of February 28, 2010)
2009

2009

2010

2010

2010

2010

Q3

Q4

Q1

Q2

Q3

Q4

2011

Items related to the remaining differences between existing Japanese GAAP and IFRSs
Business Combinations(Step 2)
DP
ED
Final
Financial Statement Presentation
DP
ED
Final
Intangibles
DP
ED
Final
Retrospective Restatement
Final
Items related to projects addressed in the MoU between the IASB and the FASB
1. Scope of Consolidations
ED
Final
2. Financial Statement Presentation – phase B
DP
Comment
DPED
3. Revenue Recognition
DP
Comment
DPED
4. Liabilities and equity distinction
Comment
5. Financial Instruments- Reclassification
ED
Final- Classification and measurement
Comment
ED
Final- Impairment
Comment
ED
Final- Hedging
Comment
EDFinal
6. Fair Value Measurement and Disclosure
7. Post-employment Benefits- Step 1- Step 2

DP
Comment

ED

Final

ED

Final
Comment
EDDP
8. Lease
Comment
Comment
ED
ED
9. Derecognition
Comment
DP
Final
Items related to the IASB projects other than those addressed in the MoU between the IASB and the FASB
Earnings per Share*
ED
Final
Provisions
DP
ED
Final
Insurance contracts
Comment*: Temporary halt (restart depending on IASB’s situation)[Legend]
WG

Launch of Working GroupTC

Launch of Technical Committee

RR

Research Report

Comment

Comment on the DP or ED of IASB to be preparedDP

Discussion PaperED

Exposure Draft

Final

Standards/Guidance (Final Version)

Italicized legends indicate finished events.

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6. Announcement of the FASF Seminar on the “Guide to the Preparation of
Securities Reports” (for the Fiscal Year Ending March 31, 2010)
FASF will be holding its regular seminar on the “Guide to the Preparation of Securities Reports”
again this year, on the dates listed below.
This seminar (for the Fiscal Year Ending March 31, 2010) will include an explanation of points
regarding the presentation of financial statements prior to the regular shareholders meeting (inaccordance with the revised Cabinet Order on disclosure of December 2009, etc.), and regarding thenotes that are required in cases where an entity has issued moving strike convertible bonds, or has
adopted an employee share-ownership plan. We will also explain points to note when preparing
consolidated financial statements in accordance with designated IFRSs. In addition, we will explain
points on notes on financial instrument, securities and derivative transaction , and notes on
disclosures about fair value of investment and rental property applicable from March 2010 onwards.
For more detailed information about the seminar, or to apply to attend the seminar, visit
http://www.asb.or.jp/ (website scheduled to be online by mid-March 2010).
We look forward to seeking you at the seminar.

City

Date

Venue

Osaka

April 2 (Fri.) 13:30 – 15:30

Grand Cube Osaka

Tokyo (1st session)

April 5 (Mon.) 13:30 – 15:30

Yomiuri Hall

NagoyaApril 5 (Mon.) 13:30 – 15:30

Nagoya Congress CenterTokyo (2nd session)

April 6 (Tues.) 13:30 – 15:30

Yomiuri Hall

Tokyo (3rd session)

April 7 (Wed.) 13:30 – 15:30

Yomiuri Hall

SapporoApril 9 (Fri.) 10:30 – 12:30

JR Tower Hotel Nikko Sapporo

Fukuoka

April 9 (Fri.) 10:30 – 12:30

Nishitetsu Grand Hotel

Kanazawa

April 12 (Mon.) 10:30 – 12:30

ANA Crown Plaza Hotel Kanazawa

Hiroshima

April 12 (Mon.) 10:30 – 12:30

Hotel Granvia Hiroshima

Sendai

April 13 (Tues.) 10:30 – 12:30

Hotel Metropolitan Sendai

Takamatsu

April 13 (Tues.) 10:30 – 12:30

ANA Hotel Clement Takamatsu

Note: The first and second sessions in Tokyo are open to FASF members only.

pg. 8
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7. Notice(1) New Publications
Periodical – Accounting Standards and Disclosure Quarterly No. 28 (to be published on March 15,
2010)[Main Contents]Feature Article: “Two New Accounting Standards that Enhance Comparability over time andUnderstandability of Financial Statements”
Discussion Meeting

Explanation of the “Accounting Standard for Accounting Changes and Error Correctionsand Guidance with Respect to the Accounting Standard for Accounting Changes and Error
Corrections, and the Exposure Draft of Accounting Standard for Presentation ofComprehensive Income”

Special Feature: The Visit to Japan by Mr. Ian Mackintosh, Chairman of the U.K.’s ASB
“A Discussion between Mr. Ian Mackintosh, Chairman of the ASB, and Mr. Ikuo
Nishikawa, Chairman of the ASBJ”, etc.

Accounting Square: “2010 will be the Beginning of the New Era of IFRS,” Kazutoshi Inano of
the Securities Analysis Association of Japan

CFO Letter: “Cultivation of CFOs as Managerial Talent,” Junichi Matsumoto, Executive Vice
President and CFO, Mitsui & Co., Ltd.

Chairman’s Voice: “Looking Back on the Last Three Years,” Ikuo Nishikawa, ASBJ Chairman
Click here to buy this publication (Japanese only)“ASBJ Newsletter” (No. 13)

Issued on March 15, 2010
Editor: Akiyoshi Maruyama

The views expressed in ASBJ Newsletter are not necessarily those of the ASBJ or the FASF. The Authors and Publishers
accept no responsibility for any loss or damage resulting from reliance on the views expressed herein.
© Copyright, ASBJ/FASF All Rights Reserved
Website: https://www.asb.or.jp/asb/index_e.jsp
E-mail: publicity@asb.or.jp
Accounting Standards Board of Japan / Financial Accounting Standards Foundation
Fukoku Seimei Building 20F, 2-2, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo, Japan (Zip Code: 100-0011)

pg. 9
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