Abstract The article presents a discussion on the process of accounting for goodwill and intangibles assets that is being used in Japan. Corporate financial accounting and reporting in Japan must follow the legal requirements of the Commercial Code and the Securities Law. Goodwill may be shown in the section "Intangible fixed assets." Other intangibles are classified into either "Intangible fixed assets," "Investments and others," or "Deferred charges," depending on the nature of the items. Many intangibles are legal rights, granted by government offices based on relevant laws, which enable the owner to use production processes, designs, trade names and so on exclusively for a certain period of years. Capitalized intangibles should be amortized using the straight-line method which assumes a zero salvage value. Under the accrual basis of accounting, an attempt is made to match expenses with associated revenues in order to provide a better measure of periodic operating performance. Business combinations can be divided into two types for an explanation of accounting treatment in Japan. The accounting standard for the single legal entity type of business combination is in the Commercial Code. There is no specific valuation rule for assets and liabilities carried forward, except for the general rule that the assets cannot be evaluated as being higher than their fair value.
Hisalcatsu Sakurai (Sun,) studied this question.