A common transaction in a group reorganization is the contribution by a company of assets other than monetary assets in exchange for shares in another company. Such a transaction would typically occur in an incorporation transaction or perhaps in the process of consolidating subsidiaries under a single parent company. Read More
This article is an outline of the taxation of Japanese corporate reorganizations, focusing on mergers and looking at the key criteria that will determine how Ceasing KK in the merger will be taxed.
Please also see this article for diagrams with an outline of Japanese merger transactions and this article with an overview of the accounting treatment of Japanese enterprise combinations.
This article Read More
The flowchart in this article outlines the criteria that determine whether or not a Merger is qualified for Japanese tax purposes. Where a merger is qualified for Japanese tax purposes then, in principle, the Merger is not treated as a taxable event and gains or losses, including the recognition of goodwill, that would otherwise be crystallised in the Ceasing Company in the Merger are deferred. Read More
This post reviews principles behind allocating cost to intangible assets under Japanese purchase accounting for business combinations.
As part of Japan’s convergence with International Financial Reporting Standards (IFRS) Japanese merger accounting (持分プーリング in Japanese, best translated as “pooling of interests”) is no longer available from 1 April 2010. Also the Japanese Accounting Standards Board (‘JASB’) intends examining in Step 2 of its IFRS convergence process whether Japan’s current approach – amortisation of goodwill over a set period – should be brought closer to the IFRS approach (namely separately identifying intangible assets and goodwill and then periodically reviewing the value of such goodwill). The JASBs request for public comment on accounting for business combinations is here and the related paper here. Read More
This article includes a summary of the most recent changes to Japanese accounting standards relating to enterprise combinations which were proposed in 2008 as part of Japan’s IFRS convergence process and which came into force at for transactions from 1 April 2010 onwards (although earlier adoption was possible from 1 April 2009). Japanese accounting standards relating to business combinations including mergers and acquisitions, corporate splits and other corporate reorganisation transactions are also listed below. Read More