Nagamine & Mishima Accounting Office

Accounting practice since 1989

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Cost of Goods Sold

Cost of Goods Sold

Inventory management will be the focal point for cost of goods sold. Some of the key questions you will need to ask is,

1. Are inventory recognized at the right timing when goods are shipped from overseas?
2. Are goods returned being recognized as inventory at correct timing with sales cancelation?
3. Are recognition of sales and costs of goods in line at year end?

Significant changes in profitability from year to year in earnings after sales needs to be carefully monitored. Any hike up in costs to sales ratio must have logical explanation. This may trigger audits in transfer pricing as well if it involves intercompany transactions.

Since recognition differences in inventory count effects earning after sales, tax auditors in Japan takes a close look in inventory count methods. In case there is a difference in inventory count method between company accounting policy and tax code principle in Japan, there are 2 ways of dealing such situation.

Resolution 1: Consult with your tax accountant to see if there is a possibility of electing the inventory count method of your company by submitting a notification form.
Resolution 2: Work with your tax accountant to make adjustments for taxable income tax.

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People are Talking

  • “Our Group operates worldwide in the fashion and luxury goods sector and is active in the design, production and distribution of a wide range of products that includes prêt-a-porter, footwear and leather goods.

    We started our collaboration with Nagamine & Mishima Accounting Office since we decided to establish our subsidiary Aeffe Japan in November 2008. N&M supported us during the start up of this company in particular with the accounting, payroll, cash management and tax services and gave their total collaboration when Aeffe Japan built-up Its own financial department. We found a very high quality support and punctual answers to different one-shot questions that also helped us to understand, in an easy way, a really different way to operate.

    After the start up phase, we decided to confirm to N&M the tax and payroll services for Aeffe Japan and for Moschino Japan, our other Japanese subsidiary, and the daily relationship with them passed from the Italian HQ to the Japan subsidiaries in a very simple way.

    We are very satisfied to have chosen N&M.”

    Andrea Pagliarani, Group Financial Controller

    Aeffe Japan KK