HMRC internal manual

Bank Levy Manual

BKLM374200 - Chargeable equity and liabilities: relevant foreign banks: attribution of chargeable equity and liabilities to a branch: calculation of branch liabilities: GAAP differences: Japanese GAAP

It is understood that the main differences between IAS and Japanese GAAP were due to have been removed by June 2011.

However, some differences from IAS may still remain. Among the differences which may require adjustment if significant are:

Amortised cost accounting

Under Japanese GAAP interest can on occasions be calculated on a straightline basis, whereas under IAS the effective interest rate must be used. There may also be differences in treatment of debt issue costs and the period over which they are expensed. Where these give rise to significant differences adjustment will be required.

Financial guarantee contracts

Under Japanese GAAP no amounts are recognised until it becomes probable that amounts will be paid out, whereas under IAS such contracts are recognised initially at their fair value. Where significant levels of financial guarantee contracts have not been recognised on balance sheet, adjustment will be required.

Liability derecognition

Derecognition under Japanese GAAP is possible through in-substance defeasance arrangements, whereas under IAS this would not give rise to derecognition. Where significant amounts of such liabilities have been derecognised, adjustments may be required.

Fair value option

This is one area where differences exist, but where it is unlikely adjustment would be required. There is no fair value option under Japanese GAAP, which means a lower level of liabilities will be carried at fair value than might be the case under IAS. However, as this is an option under IAS and not required treatment, it is unlikely that any adjustment would be required for any differences that may arise.