(f) Accounting for pension plans
Under U.S. GAAP, the net actuarial gain (loss) is amortized using a corridor test.
Under Japanese GAAP, the net actuarial gain (loss) is fully amortized over a certain term within the average remaining service
period of employees.
(g) Sale of the parents ownership interest in subsidiaries
Under U.S. GAAP, in a transaction that results in the loss of control, the gain or loss recognized in income includes the
realized gain or loss related to the portion of ownership interest sold and the gain or loss on the remeasurement to fair value of the interest retained.
Under Japanese GAAP, in a transaction that results in the loss of control, only the realized gain or loss related to the
portion of ownership interest sold is recognized in income and the gain or loss on the remeasurement to fair value of the interest retained is not recognized.
(h) Consolidated statements of cash flows
Classification in the statements of cash flows under U.S. GAAP differs from Japanese GAAP. As significant differences, purchase
of lease equipment and principal payments received under direct financing leases, proceeds from sales of operating lease assets, installment loans made to customers and principal collected on installment loans (excluding issues and collections of
loans held for sale) are included in Cash Flows from Investing Activities under U.S. GAAP while they are classified as Cash Flows from Operating Activities under Japanese GAAP.
In addition, under U.S. GAAP, restricted cash is required to be added to the balance of cash and cash equivalents.
(i) Transfer of financial assets
Under U.S. GAAP, an entity is required to perform analysis to determine whether or not to consolidate special-purpose entities
(SPEs) for securitization under the VIEs consolidation rules. As a result of the analysis, if it is determined that the enterprise transferred financial assets in a securitization transaction to an SPE that needs to be
consolidated, the transaction is not accounted for as a sale but accounted for as a secured borrowing.
In addition, if
the transferor transfers a portion of financial assets, the transaction is not accounted for as a sale but accounted for as a secured borrowing unless each interest held by the transferor and transferee meets the definition of a participating
interest and the transfer of a portion of financial assets meets criteria for derecognition of transferred financial assets.
Under Japanese GAAP, an SPE that meets certain conditions may be considered not to be a subsidiary of the transferor.
Therefore, if an enterprise transfers financial assets to this type of SPE in a securitization transaction, the transferee SPE is not required to be consolidated, and the enterprise accounts for the transaction as a sale and recognizes a gain or
loss on the sale into earnings when control over the transferred assets is surrendered.
In addition, if the transferor
transfers a portion of financial assets, the enterprise accounts for the transaction as a sale and recognizes a gain or loss on the sale into earnings when the transfer of a portion of financial assets meets criteria for derecognition of transferred
financial assets.
(j) Investment in securities
Under U.S. GAAP, unrealized gains and losses from all of equity securities are generally recognized in income.
Under Japanese GAAP, such unrealized gains and losses from equity securities other than trading are recorded in accumulated
other comprehensive income (loss), net of applicable income taxes.
(k) Fair value option
Under U.S. GAAP, an entity is permitted to carry certain eligible financial assets and liabilities at fair value and to
recognize changes in that items fair value in earnings through the election of the fair value option. The portion of the total change in the fair value of the liability that results from a change in the instrument-specific credit risk is to be
recognized in other comprehensive income (loss).
Under Japanese GAAP, there is no accounting standard for fair value
option.
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