Under us gaap the accounting standard is more

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Under US GAAP, the accounting standard is more flexible than IFRS. Therefore, MC canavoid disclosing plenty of financial data. After 2013, MC need to follow IFRS to disclosemore open financial information. In contrast, MC has provided general financial data andgraphs about financial overview, financial highlight, financial performance comparison as asimple summary for investors. In the meantime, MC has provided a detailed financial sectionincluding consolidation financial statements, notes and independent auditor’s report.Moreover, MC has provided financial summary under IFRS standard and US GAAP. MCseems to be more likely to share their financial data to outsider as a reflection of less secrecyand moving toward transparency.10
Secondly, Japan moved to accounts at “fair value” in their financial report. In past decades,the corporate tax rate was extremely high comparing with other countries. The average taxrate is 42.45% from 1993 until 2017 (Trading Economic, 2017). When MC applied USGAAP, it became easier to manipulate their income via creative accounting. MC used todecrease their earning in order to prevent political cost such as corporate tax expense. Theunderstated in their income illustrates the tendency of conservatism.Nevertheless, moving toIFRS forces MC to present “fair value” in accounting. In the 2016 financial report of MC,they presented the financial summary under IFRS and US GAAP. Referring to appendix 1,revenue, gross profit, and other accounts have increased the value in IFRS. In the followingtable compared some accounts value in IFRS and US GAAP from financial report of MC.The value became higher after they followed IFRS. MC seems to be less conservatism viapreventing to decrease their accounting value due to the compulsory standard andrequirements of IFRS.Table 2: Comparing the accounting value under US GAAP and IFRS of MCRevenueGross profitTotal assetUS GAAP 20135,968,774.00¥1,029,657.00¥14,410,665.00¥IFRS 20136,009,887.00¥1,054,933.00¥15,064,738.00¥Differences in 201341,113.00¥25,276.00¥654,073.00¥US GAAP 20147,589,225.00¥1,160,141.00¥15,291,699.00¥IFRS 20147,635,168.00¥1,186,005.00¥15,901,125.00¥Difference in 201445,943.00¥25,864.00¥609,426.00¥(Sources:adapted from Mitsubishi Corporation Financial report, 2016)11
5. Assessment on Recent Pressure ResistanceMitsubishi has survived in 2011 by transferring from Japanese Zaibatsu to be a Keiretsu,which resulted in the improvement in the transparence in the financial statement. Mitsubishihas applied International Financial Report Standards (IFRS) gradually in some respects in therecent years to avoid secrecy and conservatism in the financial reports. Tsunogaya and Chandhave believed that under the conventional Japanese accounting model, Japanese corporationswould apply indirect method, for instance relational finance, to raise fund and capital marketsare somewhat liquid (2012, p. 123). As was noted in the financial statements of Mitsubishi of2016, the corporation also utilize direct method, for instance issuing commercial paper andcorporation bonds, in addition to indirect financing such as raising fund from foreign-owned

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Term
One
Professor
Parmod Chand
Tags
International Financial Reporting Standards

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