The Nikkei is reporting that the Japan Business Federation and the Japanese Institute of Certified Public Accountants will propose the use of the international rules at an FSA meeting later this month, where discussions will be held with academics and officials from the Accounting Standards Board of Japan, and the FSA making the final decision.
While Japanese GAAP has steadily closed the gap with international accounting standards, accounting costs will nevertheless temporarily increase. The new standards are expected to encourage M&A by doing away with goodwill amortization, which is currently written off over periods of as long as 20 years. Goodwill charges only need be taken if the firm's business performance deteriorates, requiring the acquirer to take an impairment charge. This would make earnings of the acquirer look better after an acquisition than currently under Japanese GAAP.
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