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Disclosure of Chintai-tow-fudosan (Investment Property)
[Please go to Section III for the clarification of the definition of 'chintai-tow-fudosan (hereinafter referred to as CTF)'.]
I.Introduction
*Based on information as of November 30, 2009
In the past, different countries used different accounting standards and practices. However, since around the 1960s, as companies began to expand their activities over the globe and became multi-nationalized, and as capital began to flow across the border, different accounting standards and practices became a hindrance to companies and capital. The need for cross-border financial reporting became an important issue. Thus, in 1973, the International Accounting Standards Committee (IASC) was established and the setting up of the International Accounting Standards (IAS) has commenced. In 2000, the International Organization of Securities Commissions (IOSCO) announced its support for IAS; in 2001, IASC was re-organized to become the International Accounting Standards Board (IASB); in 2002, the Financial Accounting Standards Board (FASB) and the IASB reached 'The Norwalk Agreement'. The international financial reporting standards (IFRS) have thus gradually established its importance and position as uniform standards.
In 2005, EU decided to apply IFRS across the board; companies not based in one of the EU countries but are raising funds in EU are also required to conform to IFRS. This prompted the move towards the convergence of the Generally Accepted Accounting Standards (GAAP) of Japan and IFRS.
The Japanese GAAP is considered to be on a par with IFRS under EU equivalence assessment. However, differences between the two sets of accounting standards were identified and the Committee of European Securities Regulators (CESR) requested the Accounting Standards Board of Japan (ASBJ) to remedy 26 issues for the convergence, one of which is International Accounting Standards 40, 'Investment Property'.
In order to achieve a convergence on this issue, ASBJ issued accounting standards and the application guidelines in November 2008, following which companies are required to disclose the market value of CTF effective from financial statements for the fiscal year ending March 31, 2010.
In regard to real estate valuation, the International Valuation Standards Council (IVSC) produced and published the International Valuation Standards (IVS), a real-estate equivalent of IFRS. IVSC, a member of IASC advisory group, produces standards for many types of assets, including plant and equipment, intangible assets and businesses, aiming to set standard valuation principles for property valuation.
As has been mentioned above, the convergence with and the adoption of IFRS is currently taking place in Japan. This will not only affect corporate real estate but also increase the importance of its utilization. We, at HIRO & REAS network, with our extensive network of specialists in Japan, would like to extend our fullest support to our clients for your adaptation to IFRS.
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