ASBJ 13
Accounting Standard for Lease Transactions
Accounting Standard for Lease Transactions is part of the Japan GAAP framework.
Superseded Standard
This Statement's dual finance/operating lessee classification model is SUPERSEDED by ASBJ Statement No. 34, Leases (issued September 2024, effective April 1, 2027), which introduces a single on-balance-sheet lessee model aligned with IFRS 16.
Current Standard
ASBJ Statement No. 34 – Accounting Standard for Leases 1
Conceptual Framework Linkage
A dual-classification model, now moving toward a single on-balance-sheet approach
ASBJ Statement No. 13 HISTORICALLY established Japan's lessee accounting model – DISTINGUISHING "FINANCE LEASES" (recognised ON the Balance Sheet, reflecting the economics of essentially FINANCING an asset purchase) from "OPERATING LEASES" (kept OFF the Balance Sheet, with rental expense recognised on a STRAIGHT-LINE basis) – broadly SIMILAR in STRUCTURE to the OLD international standard IAS 17. This Statement has since been SUPERSEDED by ASBJ Statement No. 34, Leases, which moves TOWARD a single, largely ON-BALANCE-SHEET lessee model conceptually ALIGNED with IFRS 16.
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Scope – the Historical Dual Classification Model
All companies entering lease arrangements
This Statement HISTORICALLY applied to ALL companies entering LEASE arrangements as either lessee or lessor, requiring CLASSIFICATION of each lease as either a FINANCE lease or an OPERATING lease based on the SUBSTANCE of the arrangement.
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Finance Leases – Two Sub-Categories
Ownership-transfer vs non-ownership-transfer finance leases
Sub-categoryDepreciation basis
Ownership-transfer finance leaseDepreciated over the LEASED ASSET's OWN estimated useful life – treated much like an OUTRIGHT purchase
Non-ownership-transfer finance leaseDepreciated over the LEASE TERM itself, reflecting that ownership will NOT ultimately transfer to the lessee
This SUB-CLASSIFICATION within finance leases was a DISTINCTIVE, genuinely J-GAAP-SPECIFIC nuance not present in the equivalent old IAS 17 finance lease category, which used a SINGLE depreciation approach regardless of an ownership-transfer distinction.
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Operating Leases – Off-Balance-Sheet Treatment
Straight-line rental expense, no asset or liability recognised
Leases NOT meeting the finance lease criteria were classified as OPERATING leases – with NO asset or liability recognised on the lessee's Balance Sheet, and rental payments recognised as an EXPENSE on a STRAIGHT-LINE basis over the lease term – the OLD "off-balance-sheet" treatment now ELIMINATED (for the vast majority of leases) under the successor standard, ASBJ Statement No. 34.
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THE REFORM – ASBJ Statement No. 34's Single On-Balance-Sheet Model
Bringing substantially all leases onto the lessee's Balance Sheet
ASBJ Statement No. 34, issued in 2024, ELIMINATES the OLD finance/operating DUAL classification for LESSEES – requiring the recognition of a "RIGHT-OF-USE ASSET" and a corresponding LEASE LIABILITY for SUBSTANTIALLY ALL leases, broadly MIRRORING IFRS 16's headline reform internationally, though with SIMPLIFICATIONS appropriate to J-GAAP's own practice. This represents a GENUINELY MAJOR shift in Japanese lease accounting, eliminating the LONG-STANDING off-balance-sheet operating lease treatment this Statement (No. 13) had PREVIOUSLY provided.
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Worked Example – the Old Finance Lease Treatment
On-balance-sheet recognition under the historical model
Example: A non-ownership-transfer finance lease of manufacturing equipment
Under the OLD regime, a company enters a 5-year lease of manufacturing equipment classified as a NON-OWNERSHIP-TRANSFER finance lease, with a present value of lease payments of ¥50,000,000.
The company recognised a ¥50,000,000 LEASE ASSET and a corresponding ¥50,000,000 LEASE LIABILITY on the Balance Sheet, DEPRECIATING the asset over the 5-YEAR LEASE TERM (since ownership does not transfer) – broadly SIMILAR in effect to how the SAME lease would be treated under TODAY's ASBJ Statement No. 34.
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Worked Example – the Old Operating Lease Treatment
Off-balance-sheet treatment, now eliminated
Example: A short office space rental, under the old regime
Under the OLD regime, a company leases office space under an arrangement classified as an OPERATING lease, with annual rent of ¥12,000,000.
UNDER THE OLD STANDARD, NO asset or liability appeared on the Balance Sheet – the company simply recognised ¥12,000,000 of RENTAL EXPENSE each year, straight-line. UNDER TODAY's ASBJ Statement No. 34, the SAME lease would generally now require recognition of a right-of-use ASSET and a LEASE LIABILITY, REPRESENTING a MATERIAL change in Balance Sheet presentation for this type of arrangement.
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Current Treatment – ASBJ Statement No. 34
Today's authoritative leases framework
Companies TODAY apply ASBJ Statement No. 34, Leases, recognising right-of-use assets and lease liabilities for SUBSTANTIALLY ALL leases (subject to limited exceptions, e.g. short-term or low-value leases, broadly analogous to IFRS 16's own exceptions) – REPRESENTING the CURRENT, comprehensive successor to this Statement's historical dual-classification model.
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Disclosure Requirements (Current, Post-Transition)
What applies today instead
Right-of-use assets and lease liabilities recognised under ASBJ Statement No. 34Maturity analysis of lease liabilities and information about short-term/low-value lease exemptions elected
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Critical Judgments
Where judgement matters most (historically and today)
HISTORICAL JUDGEMENTS
Classifying a lease as finance or operating, and whether ownership transfer was substantively expected
CURRENT JUDGEMENTS
Determining the lease term, discount rate, and whether short-term/low-value exemptions apply under ASBJ Statement No. 34
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Relationship to IAS/IFRS – Then and Now
Comparison across the reform
FeatureOld J-GAAP (this Statement) / New (No. 34)IFRS
Historical modelDual finance/operating lessee classificationOLD IAS 17 – same dual classification structure
Current modelASBJ Statement No. 34 – single on-balance-sheet modelIFRS 16 – single on-balance-sheet model, converged in overall approach
Japan's lease accounting reform TRACKS the SAME broad direction IFRS itself took (IAS 17 → IFRS 16), though on its OWN separate timeline – for an EXTENDED period, J-GAAP's lease model REMAINED at the "old IAS 17" stage even AFTER IFRS moved on, mirroring a pattern seen elsewhere in this poster series (e.g. UK GAAP's FRS 102 leases).
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Statement Mapping
Where lease accounting now lands
EventStatement(s) affectedNotes
Lease recognitionBSGoverned entirely by the current ASBJ Statement No. 34
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Related Standards
Cross-reference map
StandardConnection
ASBJ Statement No. 34Successor, comprehensive standard – the current authoritative J-GAAP leases framework
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Quick-Reference Glossary
Ownership-transfer finance lease (legacy term)
A finance lease where ownership of the leased asset is expected to transfer to the lessee, depreciated over the asset's own useful life under the old regime.
Right-of-use asset
The asset recognised by a lessee under ASBJ Statement No. 34, representing its right to use a leased asset over the lease term.
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)