Japan embraces new fair value rule

Listed Japanese companies will begin using the new international fair-value
accounting rule this week.

Come Wednesday, Japan will allow use of IFRS 9, the international fair value
rule reworked in haste following the global financial crisis,
Financial Times reports.

The fair value principle forced companies to value assets at their market
price and was blamed for amplifying the crisis as the value of financial
instruments fell in illiquid markets, following the crisis.

The new standard works on a mixed measurement model which will allow
controversial loan books to be valued at amortized cost, removing a key element
of volatility.

Japan joins Australia and New Zealand, which have also absorbed the new rule
into their accounting code.

Japanese adoption will place further pressure on Europe, which has so far
failed to indicate whether it will absorb the standard.

Further reading:
in support of ‘fair value’ accounting

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