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　(Head Office: Chiyoda-ku, Tokyo; CEO: Osamu Hata; hereinafter referred to as "WAP") announced today that the fixed asset management systems "HUE Asset" and "HUE Classic Assets Management" provided by WAP will support the new lease accounting standard, which was released in an exposure draft on May 2, 2023, and will be available in April 2026. The new lease accounting standard will be released on May 2, 2023, and may be required to be applied from fiscal years beginning April 2026. The new lease accounting standard will significantly change the accounting method for lease contracts. In particular, real estate contracts, which were previously not subject to the new lease accounting standard, will be required to be recorded on the balance sheet (BS), which is expected to have a significant impact.
　Some Japanese companies, mainly major companies, have adopted International Financial Reporting Standards (IFRS), and HUE Asset has already been adapted and made a standard function to enable accounting treatment in accordance with IFRS 16, which is the same as the new lease accounting standard. HUE Asset is already compatible with IFRS 16, which is the same as the new lease accounting standard, and has been made into a standard functionality. (*)
*Some development schedules may change when differences are announced between this draft and accounting standards to be released in the future, or when tax requirements are announced.

1. Impact of the New Lease Accounting Standard on Companies

Under the new lease accounting standard, lease contracts that have been accounted for off-balance sheet ( Under the new lease accounting standard, lease contracts (operating leases) that were previously accounted for off-balance sheet will, in principle, be required to be accounted for on-balance sheet. Since this system has already been implemented in IFRS and U.S. GAAP, and will be implemented in the course of convergence with foreign accounting systems, it will be difficult for companies to avoid its application at their own discretion.

　A wide range of contracts will be subject to the on-balance sheet system, but real estate lease contracts in particular are expected to have a large impact on retailers that lease stores and companies that have a large number of leased company housing. Furthermore, it is anticipated that the accounting department will also need to manage and account for contracts that were previously managed only by the general affairs and real estate management departments, which will necessitate changes in workflow.

Since the new lease accounting standards may become mandatory for all Japanese companies as early as April 2026 or later in the fiscal year, there are concerns about compliance based on preparations such as system modifications

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2. HUE Asset's support for the new lease accounting standards: Support for real estate management as well as accounting processing

Based on our extensive experience with IFRS 16, HUE Asset not only supports the accounting procedures required by the new lease accounting standard, but also provides a solution that is linked to the real estate management function to reduce the cost of dealing with real estate lease contracts, which are highly affected by the new lease accounting standard.

　HUE Asset's lease asset management function, which already supports accounting treatment in line with IFRS 16, includes re-estimation and management of "lease periods to be recognized for accounting purposes" as standard functions. HUE Asset shortens the development period because it expands functions that already have a rich track record, mainly with major Japanese companies, so that they can be used under the new lease accounting standards as well.

　HUE Asset also retains the leased property management function. The leased real estate management function allows for practical management of real estate in accordance with Japanese business practices, such as security deposits and key money.

Since the leased property management function and the real estate management function are linked, daily practical real estate management by the general affairs department and the real estate management department can automatically perform lease accounting processing.

3. Future Development of HUE AssetWorks Applications will provide users with the ability to respond to legal and system revisions within standard maintenance fees

. Works Applications has adopted the product concept of "free version upgrades" that provide users with functions that respond to changes in laws and systems within the standard maintenance fee. We will continue to provide products that change our customers' "work" and generate surprise, excitement, and inspiration by continuing to provide high-quality business functions that can be used regardless of industry or business category, such as fixed asset inventory using RFID, as well as legal and system revisions such as this one.

[HUE Asset, a fixed asset management system for major companies]