A different approaches to consolidated financial statements and separate financial statements were very controversial. However, it might be understood that the consolidated financial statements prepared in accordance with Japanese GAAP should be comparable with those prepared in accordance with IFRS, whereas the separate financial statements should be prepared for domestic regulations.
Comprehensive incomes is defined as net changes during a period in shareholders equity arising from non-owner transactions. ASBJ Statement 25 requires an entity to present its comprehensive income in addition to net income. Net income is a traditionally determined bottom line number, which is not changed regardless of this Statement.
Differences between comprehensive income and net income should be displayed as "other comprehensive income (OCI)." The components of OCI include:
- Changes in fair value of available-for-sale securities.
- Changes in deferred gains and losses on hedging instruments.
- Changes in foreign currency translation adjustments.
- Changes in accumulated actuarial differences on post-retirement benefits.
Any reclassification from accumulated other comprehensive income to net income should be included in other comprehensive income during the period when the reclassification occurs. Each components are generally displayed as a net amount, i.e., the reclassification adjustments would likely not to be displayed as a separate line item.
This Statement allows two alternative formats: the two statements format and the single statement format.
As amended in September 2013, this Statement requires displays of net income and comprehensive income as follows:
In the two statements format, the statement of income should present the net income during the period, which is followed by the net income attributable to non-controlling interest, and present the net income attributable to the parent's shareholders. In the statement of comprehensive income, the net income should be followed by the other comprehensive income, displaying the comprehensive income.
In the single statement format, the statement of net income and comprehensive income should present the net income during the period, which is followed by the other comprehensive income, and display the comprehensive income as well. The net income attributable to non-controlling interest and the net income attributable to the parent's shareholders should be attached to the total number of net income. The comprehensive income attributable to non-controlling interest and the comprehensive income attributable to the parent's shareholders should be attached to the total number of comprehensive income.
Traditionally, Japanese GAAP defined the net income as that attributable only to the parent's shareholders. However, the IASB defines the profit and the comprehensive income as those attributable both to the parent's shareholders and the non-controlling interest. The September 2013 amendment allows an entity to display the net income in a way of being compatible with IFRS. This practice will be applied first to March 2016 financial reporting.