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1. Accounting (a case of impact on IFRS application)

The Sosei Group which will voluntarily apply to IFRS from March 2014 has published their trial calculation governed by IFRS about their consolidated performance forecast in FY2014. The current net profit is 821 million yen by IFRS standards whereas it is in the red by 1,000 million yen according to J-GAAP, turning to surplus from deficit.

This is due to the differences in the accounting treatments of goodwill and research & development cost. In other words, 1,588 million yen of the amortization expense is not included since goodwill is not amortized by IFRS while it is amortized by the straight-line method in ten years under J-GAAP. Additionally, research & development cost is fully expensed under J-GAAP guidelines whereas research cost is expensed but some development cost which meets some requirements shall be recorded as intangible asset in IFRS. Therefore, 258 million yen of research & development cost is not added up.(Source: “Keiei Zaimu Magazine” No.3152)

2. Taxation (TH taxation and TV conference)

As an exemption under tax haven taxation (TH taxation), TH taxation is inapplicable in case that the specified foreign subsidiary company, etc. of a domestic corporation manages, controls and runs its business at the head office, etc. In concrete terms, the following situations will be comprehensively considered: 1). Meetings of shareholders and board of directors. 2). Execution of duties by directors. 3). Preparation and storage of accounting books. 4). Other conditions. (The Act on Special Measures Concerning Taxation, Basic Interpretive Regulation)

Moreover, regarding the matter of whether Condition 1 is satisfied when holding a meeting by television conference system, National Tax Agency stated that it is met if a chairperson attends the meetings of shareholders and the board of directors and the meetings are held at the head office, etc. even when some directors participate in a TV conference system.(Source: “Zeimu Tsushin Magazine” No.3301)

3. Labor Management(Drawing up rules of employment)

An employer who employs 10 or more workers on an ongoing basis must draw up rules of employment and submit them to the relevant government agency (head of Labor Standards Inspection Office) upon completion or revision.

A company’s rules of employment are the employer’s commitments to the employees. With the rise in awareness of workers’ rights, the number of individual labor disputes is increasing these days and employers are required more than ever before to appropriately manage labor in order to avoid these disputes. Such management requires rules, which must be clearly stipulated by rules of employment. If a labor dispute goes into litigation, the key point is how the matter is spelled out in the company’s rules of employment. Therefore, we recommend that employers draw up (and revise as needed) rules of employment in accordance with the actual circumstances of the company. (Article89, Chapter9, Labor Standard Act)

4. This Week’s Words of Wisdom(Source: 100 words in the world)

“We make a living by what we get, but we make a life by what we give.”(Winston Churchill)

I suppose that for one to be a contributing member of society means considering your responsibilities in your circumstances.

The referring page is Nagamine & Mishima JC Accounting K.K.

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