A full set of financial statements in Japan are:
- balance sheet,
- income statement,
- cash flow statement,
- statement of changes in net assets, and
- the related schedules.
Japanese Companies are required to present two sets of financial statements: consolidated statements; and parent-only, separate financial statements.
International accounting standards do not require presentation of parent-only financial statements. Types of consolidated financial statements required by the international standards are not materially different from those required by Japanese GAAP.
For income statements, differences may be identified on presentation of extraordinary items and accounting changes. Extraordinary gains and losses contain generally non-recurring items and prior-period adjustments. Although the definition of non-recurring items by Japanese GAAP may be literally concurred with what are reported as extraordinary items under the international accounting standards, it includes gains and losses on sales of long-term investments in properties, equipments, real estates, and other-than-trading securities.
In Japan, income taxes are presented in a format of subtracting them from pretax net income. Extraordinary items are presented above the pretax income, and, therefore, are presented as a pretax amount, between the ordinary income and the pretax net income.
Changes in accounting methods are generally prohibited under Japanese GAAP except when such changes are justified by supportable reasons, such as because those changes are resulted from changes in laws and accounting standards or because those changes would bring more fair representation. However, it is generally said that entities are likely to change their accounting policies more frequently in Japan than entities that comply with international standards. In addition, Japanese GAAP does require disclosure about effects of accounting changes but does not specify how accounting changes should be accounted for and how they should be presented in income statements. In practice, for example, changes in depreciation method for a fixed asset are treated prospectively; that is, any gains or losses on the adjustment are not recognized currently but deferred to be recognized over the remaining useful years through depreciation process.
Changes in estimates are accounted for prospectively under the IASs. Japanese GAAP generally requires prior-period adjustments should be presented currently as an extraordinary items in income statements, but does not specify what kind of changes in estimates must be treated as prior-period adjustments. In practice, any adjustment of changes in estimates of useful lives or salvage values of long-lived assets is recognized as extraordinary gains or losses during the period of adjustments.
As of July 2007, the ASBJ exposed Issues Paper on Accounting Changes. Retroactive restatements are now under deliberation.