ASBJ 11
Accounting Standard for Related Party Disclosures
Accounting Standard for Related Party Disclosures is part of the Japan GAAP framework.
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Conceptual Framework Linkage
Transparency for transactions that may not reflect arm's-length terms
ASBJ Statement No. 11 requires disclosure of TRANSACTIONS and outstanding BALANCES with RELATED PARTIES – parties who may be able to INFLUENCE, or be INFLUENCED by, the reporting entity in ways that could affect the TERMS of a transaction. Because such relationships CAN result in transactions on terms DIFFERENT from what unrelated parties would negotiate, TRANSPARENT disclosure allows readers to assess the entity's financial position and performance with FULL knowledge of these relationships.
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Scope
All companies with related party transactions or relationships
This Statement applies to ALL companies with RELATED PARTY relationships or transactions, requiring disclosure REGARDLESS of whether a price was actually charged for the transaction.
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Who Counts as a Related Party
Parent, subsidiaries, affiliates, key individuals, and entities they control
Related party typeExamples
Group entitiesParent company, subsidiaries, fellow subsidiaries, affiliates (equity-method investees)
IndividualsDirectors, auditors (company auditors), executive officers, and their close family members
Controlled entitiesCompanies substantially controlled by directors/officers or their close family members
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What Must Be Disclosed
Nature, terms, and amounts of transactions and balances
For each MATERIAL related party relationship or transaction, disclosure includes: the NATURE of the relationship; a DESCRIPTION of the transaction(s); the TRANSACTION amount; the ACCOUNTING policy/pricing method applied; OUTSTANDING balances at the reporting date and their terms; and any provision for doubtful accounts related to those balances.
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Quantitative Materiality Thresholds – a J-GAAP-Specific Feature
More precisely specified thresholds than IFRS's general materiality concept
A DISTINCTIVE feature of J-GAAP's implementation guidance is the use of MORE PRECISELY SPECIFIED quantitative thresholds for determining WHICH related party transactions require disclosure – for example, thresholds expressed as a PERCENTAGE of net assets or a SPECIFIC yen amount for particular transaction types (e.g. loans, guarantees) – providing PREPARERS with more CONCRETE, less subjectively-judged guidance than IFRS's more GENERALLY stated, principles-based "materiality" concept under IAS 24.
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Worked Example – Identifying a Related Party Transaction
A loan between a company and its affiliate
Example: An intercompany loan to an equity-method affiliate
A company lends ¥300,000,000 to an affiliate accounted for under the equity method, at an interest rate below the affiliate's normal market borrowing rate.
This is a RELATED PARTY TRANSACTION requiring disclosure – the AFFILIATE relationship, the ¥300,000,000 loan amount, the BELOW-MARKET interest rate charged, and the outstanding BALANCE at the reporting date must ALL be disclosed, since the terms may not reflect what an UNRELATED lender would have offered.
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Worked Example – Applying a Materiality Threshold
Determining whether a transaction crosses the disclosure threshold
Example: A small routine purchase from a director-controlled company
A company purchases office supplies worth ¥800,000 during the year from a small company controlled by one of its directors. The applicable quantitative threshold for this transaction type is ¥10,000,000.
Since the ¥800,000 transaction FALLS BELOW the specified ¥10,000,000 threshold, it does NOT require separate disclosure under this Statement's guidance – illustrating how the MORE PRECISE, quantitative threshold approach gives preparers CLEARER practical guidance than a purely qualitative materiality judgement would.
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Disclosure Requirements
What ASBJ Statement No. 11 requires
Nature of the related party relationshipDescription, amount, and pricing basis of transactionsOutstanding balances, terms, and any related doubtful account provisions
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Critical Judgments
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Identifying all parties that meet the related party definition, including indirect control/influence relationships
SIGNIFICANT ESTIMATES
Generally minimal – this Statement is primarily a disclosure standard rather than a measurement standard
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Relationship to IAS/IFRS
Comparison – J-GAAP vs IAS 24
FeatureJ-GAAP (ASBJ Statement No. 11)IFRS (IAS 24)
Related party definitionBroadly similar scope (group entities, key individuals, controlled entities)Similar scope – converged
Materiality approachMore precisely specified quantitative thresholdsGeneral, principles-based materiality judgement
The OVERALL disclosure objective and related party scope are CONVERGED with IAS 24 – the practical difference lies mainly in J-GAAP's preference for MORE CONCRETE, quantitative disclosure thresholds.
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Statement Mapping
Where every related party disclosure lands
EventStatement(s) affectedNotes
Related party transaction/balanceNotes onlyDisclosed regardless of the underlying transaction's own statement classification
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Related Standards
Cross-reference map
StandardConnection
ASBJ Statement No. 22Consolidated Financial Statements – supplies the subsidiary/affiliate scope used to identify related parties
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Quick-Reference Glossary
Related party
A party able to influence, or be influenced by, the reporting entity in ways that could affect transaction terms, including group entities, key individuals, and entities they control.
Quantitative materiality threshold
A specific, precisely stated numerical threshold (e.g. a percentage of net assets or a fixed yen amount) determining which related party transactions require disclosure.
Financial statement key (Japan GAAP terminology)
BS Balance Sheet (貸借対照表) P&L Statement of Income / Profit and Loss Statement (損益計算書) Net Assets 純資産の部 SCNA Statement of Changes in Net Assets (株主資本等変動計算書) SCF Statement of Cash Flows (キャッシュ・フロー計算書)