Issued March 24, 2011 (No. 19)

Contents

1. New ASBJ Pronouncements (released between December 1, 2010 andJanuary 31, 2011)
2. Overview of ASBJ Meetings (214th Meeting – 217th Meeting)
3. ASBJ’s Comments on the Documents Issued by the IASB and the FASB
(December 1, 2010 – January 31, 2011)
4. IFRS Foundation Trustees Meeting Held in Tokyo (Announcement of
Establishment of Asia-Oceania Liaison Office in Tokyo)
5. The 10th Regular Meeting with the FASB
6. The AOSSG’s Activities
7. Vice Chairman Atsushi Kato of ASBJ and Chairman Noriaki Shimazaki ofInternational Affairs Committee of IFRS Council Attend ‘International
Conference on Accountancy Profession: Catalyst to Sustained Economic
Growth’8. The Supplementary China-Japan-Korea Meeting held in Beijing
9. Professor Stephen A. Zeff of Rice University visited Japan
10. ASBJ Holds its Open Seminars “Shaping the course of IFRS”
11. ASBJ/FASF Holds Meeting in Fukuoka and Sapporo to Exchange Views
12. The 12th Standards Advisory Council Meeting
13. Project Progress (as of January 31, 2011)

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1. New ASBJ Pronouncements (released between December 1, 2010 andJanuary 31, 2011)(1) [ED] Release of Exposure Drafts of Proposed Amendments to Accounting Standard for Quarterly
Financial Reporting and related Standard and Implementation Guidance (December 22, 2010)(The exposure draft is open for comment until January 25, 2011)(2) [DP] Release of Discussion Paper on Accounting for Leases (December 27, 2010)(The discussion paper is open for comment until March 9, 2011)(3) [DP] Release of Discussion Paper on Revenue from Contracts with Customers (January 20,
2011)(The discussion paper is open for comment until March 28, 2011)[Legend]
DP: Issue Paper, Discussion Paper
ED: Exposure Draft
Final: Statement/Guidance etc. (final version)

2. Overview of ASBJ Meetings (214th Meeting – 217th Meeting)(1) 214th Meeting (held on December 2, 2010)a. Discussion on the amendments to Accounting Standard for Quarterly Financial Statements
b. Progress of the Lease Accounting Technical Committeec. Progress of the Technical Committee for SPEsd. Progress of the Technical Committee for Revenue Recognitione. Progress of the Technical Committee for Financial Instruments (Financial Liabilities)
a. The Board discussed the text of the exposure draft, in advance of the vote on the release at the next
meeting. The main focuses of discussion were which non-cash items should be disclosed in the casewhere omission of the statements of cash flows for the first and third quarter is permitted, and what
note disclosures could be reduced.
b. The Board discussed the text of the discussion paper, in advance of the vote on the release at thenext meeting. The discussion paper would include questions regarding the four major issues which
would be of significance in developing Japanese standards, including whether lessees should apply
a single accounting model (the right-of-use model) for all lease transactions, instead of the existingtreatment of classifying leases either as finance leases or operating leases.
c. The Board discussed how to address the comments received on the exposure draft (continued fromthe discussions at the last meeting).
d. The Board discussed the text of the forthcoming discussion paper. There has been a suggestion thatpg. 2
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the discussion paper should explicitly describe the difference from the current treatment in a moreorganized and understandable manner because the subject is difficult. The draft contains the outlineof the model proposed by the IASB and the FASB in the text, as well as the flow chart to describe
the steps applied to transactions.
e. In light of the IASB’s finalization of its requirements for financial liabilities in October 2010, theBoard began its own discussion taking account of convergence with IFRS 9, including whether tocreate a new category of financial liabilities held for trading and whether to introduce fair value
options.

(2) 215th Meeting (held on December 16, 2010)a. Progress of the Technical Committee for SPEs (stakeholder hearing)b. Release of Exposure Drafts of Proposed Amendments to Accounting Standard for Quarterly
Financial Reporting and related Standard and Implementation Guidancec. Release of Discussion Paper on Accounting for Leases
d. Project Plan Updatee. Progress of the Technical Committee for Revenue Recognition
a. A hearing was held in order to gather inputs on the proposed amendments from a preparer, a user
and an auditor as witnesses.
The preparer witness strongly disagreed with the proposals in the exposure draft because hebelieves their disadvantages would overweigh the advantages. The auditor witness expressedawareness of the problem in the current practice departing from the original purposes, and noted thecases of companies for which unconsolidated SPEs are significant relatively to the total assets andtotal debts.
b. The Board voted to approve the release of exposure draft on significant simplification of quarterly
financial statements. The proposals in the exposure draft include (1) permitting omission of thestatements of cash flows for the first and third quarter, (2) requiring the quarterly income statementon the cumulative year-to-date basis, in principle, and (3) simplifying notes disclosures.
c. The Board voted to approve the release of discussion paper on leases. The discussion paper is basedon the ‘right-of-use model,’ under which an entity recognizes an asset representing its right to use
the leased asset and a liability representing its obligation to make lease payments.
d. The Board updated its project plan indicating the timelines for developing standards.
e. The Board discussed the text of the discussion paper, in advance of the vote on the release at thenext meeting.

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(3) 216th Meeting (held on January 12, 2011)
a. Release of Discussion Paper on Revenue from Contracts with Customers
b. Progress of the Technical Committee for SPEsc. Progress of the Technical Committee for Financial Instruments (Financial Liabilities)
d. Progress of the Technical Committee for Financial Instruments (Fair Value Measurement andDisclosure)e. Discussion on the IASB Request for Views “Effective Dates and Transition Methods”
a. The Board voted to approve the release of discussion paper on revenue recognition. Under the
discussion paper, the revenue would be recognized on the basis of the units of performanceobligations contained in the contract. In principle, measurement would be determined on the basisof transaction prices. When the amount of consideration varies with factors such as discounts andincentives, the probability-weighted amount of consideration would be used as the transaction price.
However, this issue is still to be considered in future deliberations.
b. Following the hearing at the last meeting, the Board discussed the text of the amendments toaccounting standards for consolidations of the SPEs.
c. The Board discussed the issues related to the treatment and disclosure for compound financial
instruments.
d. The Board discussed the treatment of fair values contained in other standards, such as the use of theaverage price over one month before the closing date for available-for-sale securities and the use of
the average rate over a certain period before or after the closing date in Accounting Standards for
Foreign Currency Transactions.
e. The Board discussed its comments on the IASB’s Request for Views on Effective Dates andTransition Methods. In developing many IFRSs, the IASB asks for views on whether the new IFRS
should be applied on the single date approach (in which all of the new IFRSs would become
effective at the same date), or the sequential approach (in which new IFRS would become effectiveat different dates over years). The Board discussed the advantages and disadvantages of therespective approaches.

(4) 217th Meeting (held on January 21, 2011)a. Discussion on Intangible Assets
b. Progress of the Technical Committee for Business Combinations
c. Progress of the Retirement Benefits Accounting Technical Committee
d. Progress of the Technical Committee for Financial Instruments (Financial Liabilities)
e. Progress of the Technical Committee for Financial Instruments (Hedge Accounting)f. Discussion on Accounting Standard for Subsequent Events
g. Discussion on the IASB Request for Views “Effective Dates and Transition Methods”
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a. The Board decided to defer its deliberation on capitalization of development costs, since it is underdeliberation in the Panel on Non-consolidated Financial Statements. The Board discussed what todisclose, how to treat licenses, when to start amortizing in-process R&D acquired individually,and frequency of impairment tests for intangible assets that has not been in use
b. The Board resumed its discussion on Step 2 of the Business Combination project. The Board
confirmed the progress in each issue and further issues necessary to be considered in the future.
c. The Board resumed the discussion toward finalizing Step 1 of the project. The Board discussed thedetermination of discount rate and the treatments in non-consolidated financial statements that does
not present comprehensive income.
d. The Board discussed the bifurcation of embedded derivative that are separately managed.
e. The Board discussed its comments on IASB’s Exposure Draft on Hedge Accounting.
f. The Board discussed how to define subsequent events in light of the reporting under the Companies
Act and the Financial Instruments and Exchange Act. In addition, the Board discussed the treatment
under the Financial Instruments and Exchange Act, the adjusting subsequent events that occurred
after that date prescribed in the definition under the Companies Act.
g. The Board discussed its comments on IASB’s Request for Views on Effective Dates and Transition
Methods. The Board supported the sequential approach, under which new requirements easier toapply should become effective earlier, based on the view that new requirements would improvefinancial reporting.

3. ASBJ’s Comments on the Documents Issued by the IASB and the FASB
(December 1, 2010 – January 31, 2011)(1) ASBJ submitted its Comments on the IASB Exposure Draft "Leases" (December 15, 2010)(2) ASBJ submitted its Comments on the IASB Request for Views “Effective Dates and Transition
Methods” (January 31, 2011)

4. IFRS Foundation Trustees Meeting Held in Tokyo (Announcement of
Establishment of Asia-Oceania Liaison Office in Tokyo)
On February 9 and 10, 2011, the Trustees Meeting of the IFRS Foundation was held at Hotel Okura
in Tokyo. At this meeting, the Trustees formally agreed to establish an office in Tokyo for enhanced
liaison activities in the Asia-Oceania region. The office would make it smoother for the region toconvey their views to the IASB and obtain information from the IASB. The Accounting Standards
Board of Japan (ASBJ) and the Financial Accounting Standards Foundation (FASF) will fully
cooperate with constituents toward the smooth establishment and operation of the liaison office.
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Meanwhile, on February 10, 2011, the FASF hosted a dinner party at Hotel Okura. Besides IFRSFoundation Trustees, top officials from the Financial Services Agency of Japan, IFRS-related
Japanese constituents and others attended the party, including the Guests of Honor, IASB Chairman
Sir David Tweedie, IFRS Trustee Vice-Chair Tsuguoki Fujinuma, Minister Shozaburo Jimi for
Financial Services, and Senior Vice Minister Shozo Azuma.

5. The 10th Regular Meeting with the FASB
Representatives of the Accounting Standards Board of Japan (ASBJ) and the Financial AccountingStandards Board (FASB) met on February 7 and 8, 2011, in Norwalk, Connecticut. This meeting was
the tenth in a series of discussions between the ASBJ and the FASB designed to enhance dialogue
between the two Boards in their shared pursuit of global convergence of accounting standards. The
FASB representatives included FASB Chairman Leslie F. Seidman, who took up her position as thechairman in December 2010.
At this meeting, taking account of the situations around the use of IFRS in Japan and the US, the
ASBJ and the FASB updated each other with the recent developments in their respective
convergence projects with the IASB. Furthermore, the ASBJ and the FASB exchanged views on thefollowing projects:Financial instruments



Revenue recognitionMeasurement of liabilities (as a cross-cutting issue)LeasesRepresentatives of the ASBJ and the FASB agreed that their ongoing discussions are useful inpromoting mutual understanding that will contribute to subsequent deliberations at each Board andto the future development of high-quality accounting standards on the significant items to be
improved with the IASB. The ASBJ and the FASB agreed that they would continue to exchange
views on issues they are faced and current concerns.
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6. The AOSSG’s Activities
The Asian-Oceanian Standard Setters Group (AOSSG), which is currently leaded by Chairman Ikuo
Nishikawa (ASBJ Chairman) in co-operations with Vice-chairman Kevin Stevenson (Chairman of
the Australian Accounting Standards Board), is engaged in various activities.
< Submissions from the AOSSG to the IASB and the IFRS Foundation in response to exposure
drafts and other consultation documents>Comments on IASB’s request for views on Effective Date and Transition Method (January 31,
2011)



Comments on IFRS Interpretations Committee Review (The IFRS Foundation Questionnaire)(January 31, 2011)

Comments on IASB Exposure Draft Insurance Contracts (November 30, 2010)

Comments on IASB Staff Draft Fair Value Measurement (December 13, 2010)

Comments on IASB’s Project Consolidated Financial Statements (December 14, 2010)

Comments on IASB Exposure Draft Leases (December 14, 2010)

Comments on IASB Staff Draft Financial Statement Presentation (January 5, 2011)

7. Vice Chairman Atsushi Kato of ASBJ and Chairman Noriaki Shimazaki ofInternational Affairs Committee of IFRS Council Attend ‘International
Conference on Accountancy Profession: Catalyst to Sustained Economic
Growth’‘International Conference on Accountancy Profession: Catalyst to Sustained Economic Growth,’
hosted by the Institute of Chartered Accountants of India (ICAI), was held on January 5-6, 2011 in
New Delhi, India. Vice Chairman Atsushi Kato of ASBJ and Chairman Noriaki Shimazaki ofInternational Affairs Committee of the IFRS Council attended the conference.
The overall theme of the conference was what role the charted accountants should play in the light of
economic growth in India. The topics also covered convergence between Indian GAAP and IFRS as
well as the international activities by Indian accountants. The sessions included presentations byguest speakers, and panel discussions to share their views.
A number of guest speakers across the world were invited, including Mr. Ian Macintosh,
Vice-chair-designate of the IASB, and Mr. Ian Ball, Chief Executive, International Federation of
Accountants (IFAC),
Japanese representatives presented the following topics:


Noriaki Shimazaki, Chairman of International Affairs Committee, the IFRS Council: ‘Towards
Global Accounting Standard: Enhanced Relationship between Japan and India’
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

Tomoyuki Furusawa, Director of Corporate Accounting and Disclosure Division, Financial
Services Agency: ‘Implementation of IFRSs: Japanese Perspectives’

Atsushi Kato, Vice Chairman, ASBJ: ‘Creation and Development of AOSSG’

Indian constituents warmly expressed their appreciations for Japanese representatives’ visit to India
and their presentations.

8. The Supplementary China-Japan-Korea Meeting held in Beijing
On January 25, 2011, the supplementary meeting took place among the leaders of accounting
standards setters of China, Japan and Republic of Korea in Beijing. The ASBJ was represented by
Chairman Ikuo Nishikawa and Vice-chairman Takehiro Arai. This meeting was held because of Ms.
Yang Min’s appointment as Director-General of Accounting Regulatory Department, the Ministry of
Finance of China (Chinese accounting standard setter) in December 2010, succeeding to Mr. Liu
Yuting. The topics discussed included the function of the Three Countries Meeting in the future.

9. Professor Stephen A. Zeff of Rice University visited Japan
Professor Stephen A. Zeff, a renowned professor of accounting at Rice University in Huston, Texas,
visited Japan from January 19, 2011. His research area includes the historical development ofstandard-setting, such as US GAAP and IFRS. He has served as members of the institutes ofaccountants in various countries. Recognized his contribution, he was inducted as the 70th memberof the Accounting Hall of Fame in the United States in 2002. He has also been awarded in othercountries.
Professor Zeff and Professor Kees Camfferman, from Vrije University Amsterdam, the Netherlands,
at the request of the IFRS Foundation, are currently carrying out a research project to write a book,with the working title of ‘A History of the First Ten Years of the International Accounting Standards
Board, 2001-2010.’ In writing the book, they pay attention to selected jurisdictions that have been ofparticular significance to the IASB, including Japan. The purpose of their visit to Japan is to help
them research and understand the activities and development with respect to IFRS in Japan during
the period.
While Professor Zeff and Professor Camfferman stayed in Japan, they primarily located at the FASF
office and conducted interviews with major stakeholders for two weeks starting on January 24, 2011,
with 29 interviewees, including policymakers, preparers, users, auditors, and standard-setters. The
topics covered major developments relating to IFRS during the period, including the EU equivalentassessment between 2004 and 2008, the Tokyo Agreement in 2007, and the Interim Report by theBusiness Accounting Council in 2009, as well as technical issues or concerns specific to Japanarising from the interaction with the IASB.
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Professor Zeff and Professor Camfferman had undertaken a similar project before and co-written abook titled “Financial Reporting and Global Capital Markets: A History of the International
Accounting Standards Committee, 1973-2000”, published in 2007, at the request of the IFRSFoundation. As with the last publication, they intend to write a book that can serve as a reference forpractitioners, standard setters, regulators and academics. They plan further interviews with over 300
stakeholders in Europe, Americas and Asia. Following those interviews, the new book is expected tobe published around 2013.

10. ASBJ Holds its Open Seminars “Shaping the course of IFRS”
On January 24, 2011, the ASBJ and FASF held its 9th open seminar titled “Developments of IFRS
and its Adoption in Japan: Shaping the course of IFRS” at Yomiuri Hall in Tokyo. Guest speakers
were Professor Stephen A. Zeff of Rice University and IASB Board Member Tatsumi Yamada.
At the beginning of the three-hour seminar, ASBJ Chairman Ikuo Nishikawa introduced Professor
Zeff and then explained the ASBJ Project Plan. With the title of “What is Meant by a Jurisdiction’s‘Adoption’ of IFRS?,” Professor Zeff discussed the challenges in adopting IFRS, citing experiencesof implementing IFRS in various jurisdictions. He also explained the importance and difficulties of
the actions by regulators and other constituents in each jurisdiction to address enhanced
standardization and transparency in their decision-making process on how to adopt the international
standards, in the light of improving comparability of financial statements.

IASB Board Member Tatsumi Yamada updated the progress and the plans of the IASB’s projects,
based on the IASB Work Plan (updated in December 2010). He discussed key issues on
Consolidation, Revenue Recognition, Leases and Financial Instruments (hedge accounting). Finalstandard on Consolidation is to be issued shortly and other three are major projects to be finalized by
the end of June 2011.

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11. ASBJ/FASF Holds Meeting in Fukuoka and Sapporo to Exchange Views
The ASBJ and FASF hold a series of meetings for exchange of views to enhance communication
with FASF member companies and accounting professionals who locate in the areas distant from
Tokyo.
Those meetings aim for direct communications with constituents, including hearing their requests aswell as providing them with the latest information, which might be difficult to fully understand fromonly the ASBJ website, newspapers and magazines. Such information includes the IASB’s latest
development and its background and the details and prospects of ASBJ’s standard developments. We
consider such activities meaningful in enhancing the understanding of the ASBJ’s role in developing
Japanese accounting standards and in supporting the preparation for implementation of IFRSs.
The latest meetings (exchange of views/seminar) took place in two locations: in Fukuoka on January
28, 2011, and in Sapporo on February 2, 2011. The meetings were attended by Kyushu Economic
Federation and Hokkaido Economic Federation, respectively, as well as accounting professionals.
FASF Managing Director Hideo Takahashi opened the meetings, expressing his gratitude forcontinuous supports to the FASF. Then, ASBJ Vice-chairman Takehiro Arai discussed (1) standards
developments by the IASB, (2) ASBJ Project Plan, (3) ASBJ’s recently issued documents (Proposed
Amendments to Accounting Standard for Quarterly Financial Reporting), (4) ASBJ’s international
actives and (5) other topics (deliberations by Council on Accounting of Unlisted Companies).
Participants asked questions about the future trend in standard developing and the exposure draft onquarterly financial reporting.
We believe these meetings also enhanced a clear understanding of the ASBJ’s roles and functions,which include not only development of Japanese standards but also delivery of views in Japan to the
IASB.
The ASBJ and FASF will continue these initiatives.

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12. The 12th Standards Advisory Council Meeting
The 12th Standards Advisory Council Meeting was held on February 3, 2011. The Meeting beganwith a report on the ASBJ’s recent activities, followed by an exchange of views regarding the
progress in the IASB’s projects status and the progress in the Panel on Non-consolidated Financial
Statements. Then, explanations are given about international activities, including the plans for 2011.
Furthermore, the current development and future arrangement on the 2010 survey results werereported. In addition, there were exchanges of views on how the ASBJ should deliver its opinion
regarding the Companies Act and the tax laws, with the advance application to consolidated
accounts in mind, and how the ASBJ should support IFRS interpretations and other practical issues.

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13. Project Progress (as of January 31, 2011)
2010
Q4

2011
Q1

2011
Q2

2011
Q3

2011
Q4

Items related to the remaining differences between existing Japanese GAAP and IFRSs
Business Combinations (Step2)ED
Final
Intangibles
ED
Final
Items related to projects addressed in the MoU between the IASB and the FASB
1 Scope of Consolidations
ED
2 Financial Statement Presentation- Phase B- Discontinued Operations
ED
3 Revenue Recognition
DPED
4 Liabilities and Equity Distinctions
5 Financial Instruments
ED- Classification and Measurement of
Financial Assets- Classification and Measurement of
Financial Liabilities- Impairment

DP2

ED
ED
ED

- Hedging
6 Fair Value Measurement
Disclosure
7 Post-employment Benefits

Final

and

Final

- Step 1- Step 2
8 Leases
9 Derecognition

DP
DP

ED
ED

DP

ED

Items related to the IASB projects other than those addressed in the MoU between the
IASB and the FASB
Provisions
Emission Trading Schemes
Insurance Contracts
Items other than those addressed by the IASB and the FASB
Special Purpose Entities
Final
Quarterly Financial Statements
ED
Final
Subsequent EventsED
Final[Legend]DP
Discussion Paper
DP2 Advanced Discussion Paper (It is a document presenting preliminary views in the form near toa standard before the development of exposure drafts.)
ED
Exposure Draft
Final Accounting Standard/Guidance etc.
Italicized legends indicate finished events.

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“ASBJ Newsletter” (No. 19)
Issued on March 24, 2011
Editor: Shousaku Shimomura
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 theviews expressed herein.
© Copyright, ASBJ/FASF All Rights Reserved
Website: https://www.asb.or.jp/asb/index_e.jsp
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Accounting Standards Board of Japan / Financial Accounting Standards Foundation
Fukoku Seimei Building 20F, 2-2, Uchisaiwaicho 2-chome, Chiyoda-ku, Tokyo, Japan (Zip Code:
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