On May 2, 2023, the Accounting Standards Board of Japan (ASBJ) released an exposure draft of "Draft Accounting Standard for Leases" and "Draft Guidance on Accounting Standard for Leases" (the "Exposure Draft"). This seminar video provides an overview of the new lease accounting standard exposure draft and preparation for its application in three parts for those who are just starting to gather information and for those who are newly joining the study team.
In addition, an introductory video from Works Applications on "HUE Asset," a fixed asset system compliant with the new lease accounting standard, will be provided. We hope this presentation will be of help to those who are in charge of seeking appropriate responses and preparations for this system.
Avantia Audit Corporation
- Part 1: "Identification of a Lease"
In this exposure draft, a lease is defined as "a contract or part of a contract that transfers the right to use an underlying asset in exchange for consideration over a specified period of time". In accordance with this definition of a lease, the parties to the contract would determine at the time the contract is entered into whether or not the contract contains a lease.
Therefore, the determination of whether a lease includes a lease or not is a very important point because it directly relates to the determination of whether rights acquired through a lease transaction should be on-balance sheet or not. - Second, "Lease Term."
The Exposure Draft provides that the lease term should reflect not only the non-cancelable term as it has in the past, but also the term subject to a lease extension or termination option.
The determination of the lease term by the lessee is a very important point because it directly affects the amount of assets and liabilities that the lessee recognizes on its balance sheet. - Part 3: "Accounting Treatment."
The third session will explain the specific accounting treatment after the application of this exposure draft, the simplified treatment stipulated in this exposure draft, and the transitional measures and other important points at the time of application of this exposure draft.
■Works Applications, Inc.
- The "key points" of the system support in the new lease accounting standard
~What are the characteristics of companies that need system support and those that can get by with Excel? ～
- This session will explain the requirements for systems under the new lease accounting standards, including asset recognition, depreciation calculation, and impairment, and the functions necessary to enable accounting departments to efficiently handle the increasing number of tasks.
In the latter half of the presentation, we will introduce our system "HUE Asset" which is already compliant with the new lease accounting standards.