New Accounting Standards for Mergers and Consolidations (Summary)

Major Practical Impact

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February 26, 2009

  • Kazuhiro Yoshii

Summary

◆On 26 December, 2008, the Accounting Standards Board of Japan (ASBJ) published the following new accounting standards and application guidance.


◆The new standards and application guidance include elimination of the pooling-of-interest method. They also contain revisions likely to have a by no means insignificant influence on accounting practice for business combinations and consolidations, etc., including the charging of intangible assets and recognition of in-process R&D as assets at the time of the combination, and the revaluation of current price at the point of gaining control in a step acquisition.


◆Furthermore, to bring the methods used for stating profits and losses into convergence with IFRSs(International Financial Reporting Standards) and US accounting standards, net income before deduction of minority interests will be presented [as a line item] above net income for the period.


◆The new standards and Application Guidance will be applied to business combinations, etc. from 1 April, 2010 (Early application is a possibility).

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