１.Accounting (Source: “Keiei Zaimu Magazine”)
The Accounting Standards Board of Japan (ASBJ) seems to have concluded that they will adopt non-amortization of goodwill to conform to the IFRS.
Non-amortization of goodwill is an important issue related to the core concept of the IFRS.
Under the existing Japanese standards, goodwill is amortized over a maximum period of 20 years in accordance with the Principle of Conservatism.
This treatment is a traditional accounting approach. On the other hand, the IFRS regard “Goodwill” as remaining portion of corporate value
after its allocation to each individual asset using DCF method, and require that goodwill should not be amortized as long as the corporate value is maintained.
This IFRS treatment is supported by the financial approach giving its importance to corporate value.
The following question arises:
“Why is goodwill amortized under the Japanese standards, but not under the IFRS?”
It should be explained as follows to avoid confusion at a practical level:
“They are based on a different approach, the former is accounting and the latter is finance.”
２.Taxation (Source: ” Zeimu Tsushin Magazine”)
Under the 2010 Tax Reform, wholly-owned subsidiaries with paid-in capital of JPY 100 millions
or less will not be eligible for the reduced corporate tax rate if their parent companies are large corporations with paid-in capital of JPY 500 millions or more.
Since the large corporations include foreign corporations, we should be careful about the application of corporate tax rate on their Japanese subsidiaries.
Moreover, the large corporations also include cooperatives.
３. This Week’s Words of Wisdom (Source: English words of wisdom to enrich life”)
“You can’t let praise or criticism get to you. It’s a weakness to get caught up in either one.”
(John Wooden, a famous US college basket ball coach)
Even if praise is not genuine, it is true that we are susceptible to it. However, we have to remember that such praises could impair our sound judgment.
On the other hand, we could get distracted easily by criticism and, that could diminish our advantages.
The bottom line is that we should not get carried away by praises and keep in mind that criticism contains some truth in it. Moderation is key, I guess.