Japan Should Adopt The International Financial Reporting Standards Essay

Japan Should Adopt The International Financial Reporting Standards Essay

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This report examines the benefits and drawbacks of whether Japan should adopt the International Financial Reporting Standards (IFRS) over its current standards (GAAP). Improvements in information’s quality, long-term cost saving and other motivating factors that IFRS will bring, have been reflected in the benefits aspect. Though this standard undertook numerous benefits for the financial statement permitted by, there are various drawbacks that country must be overcome. These obstacles mostly relate to conversion costs and political issues.
In determining the appropriate decisions, the option to adopt IFRS are suggested due to the benefits outweighing challenges that basically based on long-term perspective as well as rights for Japan on the international level.
The expected welfares by applying International Financial Reporting Standards (IFRS) of Japan are extremely appealing. The use a set of quality accounting principles allow Japan expand their incorporation of market internationally. Additional, this standard greatly enhances the comparability, transparency of financial information as well as lower the preparation costs (Tarca 2012). When IFRS is applied thoroughly and consistently, the participants may get advanced materials and appeal more potential investors (Brown 2011).

Quigley (2007) believed that accounting harmonization is the fundamental component of the globalization of capital markets. In fact, the geography of major global finance center is changing into Asia area with over 100 leading banks (Rottier & Veron 2010). Japan needs to monitor their role in the international regulation of financial statement to maintain their influence.

Recently, more than 120 countries discovered the improvement for their accounting...

... middle of paper ...

...lower the capital costs for both its preparers and users. Furthermore, the country’s global market will be well expressed and clearly deliver to the stakeholder, mainly investors and renders.

Nearby, there are a number of drawbacks such as a substantial amount of resources; time and costs are also being considered. However, there is only a small adjustment in the beginning of the process, so Japan would not feel extremely challenging to bear.

In conclusion, assessing both the benefits and limitations of implementing IRFS, it is suggested that Japan should officially adopt IFRS standards in replacing their current standards (GAAP). As the majority of the constraints is minor and short run, while the benefits are maintained in the long run. Largely, adoption of IFRS would be an expressively favorable for both Japan’s internal and external expansion on a global scale.

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