Accounting for Lease

Similar to IFRS and US-GAAP, under J-GAAP an entity treats leases as either a finance lease(capital lease) or operating lease. A finance lease is recorded as both an asset and liability on the balance sheet. An operating lease records no asset or liability on the balance sheet, instead, the amount payment is expensed as incurred.

	IFRS	Japanese GAAP	US GAAP
Lease classification for lessee	The classification of a lease depends on the substance of the transaction rather than specific numeric criteria.	Beginning on or after April 1, 2008, a finance lease which does not transfer ownership of property to the lessee is also required to be on-balance.	Similar to J-GAAP.The classification of a lease depends on the certain numeric criteria.

		The classification of such a finance lease depends on the certain numeric criteria. An entity may treat a finance lease as operating lease provided that it meets one of the following criteria. ‐The total amount of lease payment is 3 million yen or less. ‐The lease term is one year or less.