Financial reporting requirements for smes in China and Japan

發布時間:2020-06-02 23:07


This paper mainly compares the differences between the contents required by the financial reports of small business in China and Japan. First, look at the three most important financial statements, whether China or Japan, small businesses must also prepare balance sheets and income statements. In the issue of whether the cash flow statement must be compiled, the two countries' provisions are not identical. In China, the cash flow statement must be prepared, but in Japan, it needs to be prepared when it is needed. The measurement and control of cash flow is the target of small business financial accounting, cash flow statement can reflect the company's ability to pay and solvency within a certain period of time. Therefore, the establishment of a cash flow statement has also caused extensive discussions among Japanese scholars. Then, the following paper discusses the differences in some content of the financial report.

1 Impairment of Assets 

<标题> China cancels all the impairment of assets, which brings a lot of convenience for small business because of their small asset values. However, Japan stipulates that when the value of the monetary assets changes, the amount of asset impairment should be estimated according to the actual situation and the asset impairment provision shall be included. When determining the amount of the impairment charge, it is necessary to take into account the financial situation of the creditor, the cost of collecting fund, and the level of difficulty and so on. 

2 Inventory

China's financial reporting requires disclosure of the corresponding subjects by using the planned cost approach, such as material cost difference, material procurement. For the stocks invested by investors, no matter whether the value stipulated in the contract or the agreement is fair, it shall be reported according to the value stipulated in the agreement or the contract, which is in line with the principle of cost-effectiveness. China regulates that all assets need not be accrued for impairment. Therefore, there is no need to report the inventory falling price reserves, reducing the difference with the tax law so as to facilitate the operation. In addition, China's financial reporting only needs to report non-operating income and non-operating expenses for profit and loss of inventories.

<标题> Compared with China, the inventory cost reported by Japan does not disclose the cost of borrowing costs incurred in the process of self-producing inventory becoming selling inventory. Japan, on the other hand, requires an impairment test on the inventory at the end of each period. When book value is higher than net realizable value, it is required to measure according to net realizable value. The inventory loss is reported in the inventory impairment, which is reported in the sales margin at the end of the term.

3 Amortization of Intangible Assets

Both China and Japan have agreed that the fixed assets can be depreciated by using the straight-line method and the accelerated method, but the intangible assets can only be depreciated by using the straight-line method. For intangible assets with uncertain service life, China requires at least 10 years of amortization, while Japan does not need to amortize it.

<标题> For the content of the financial report, there are many differences between China and Japan. Based on taking into account the state of the country, it is important to ensure the health development of small business.