ASBJ 20
Accounting Standard for Disclosures about Fair Value of Investment and Rental Property
Accounting Standard for Disclosures about Fair Value of Investment and Rental Property is part of the Japan GAAP framework.
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Conceptual Framework Linkage
Fair value as supplementary information, not a Balance Sheet measurement basis
ASBJ Statement No. 20 addresses HOW companies should DISCLOSE information about the FAIR VALUE of INVESTMENT and RENTAL property – property held for RENTAL INCOME or CAPITAL APPRECIATION, rather than for OWNER-OCCUPIED business use. CRITICALLY, this Statement is aDISCLOSURE-ONLYstandard – it does NOT change how such property is MEASURED on the face of the Balance Sheet, which remains at COST under Japan's general fixed asset framework.
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Scope – Investment and Rental Property
Property held for rental income or capital appreciation
This Statement applies to property held for the purpose of EARNING RENTAL income or CAPITAL APPRECIATION (rather than for use in the entity's OWN business operations, production, or administration) – commonly referred to as "investment property" or "rental property" (賃貸等不動産).
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Balance Sheet Measurement – Cost Less Depreciation, Always
No fair value remeasurement option exists under J-GAAP
Under J-GAAP's GENERAL fixed asset framework, investment and rental property is measured at COST, LESS accumulated depreciation and any IMPAIRMENT – EXACTLY the same measurement basis applied to ORDINARY, owner-occupied tangible fixed assets. There is NO ELECTION or OPTION under J-GAAP to instead measure such property at FAIR VALUE on the face of the Balance Sheet, REGARDLESS of how significantly fair value may have diverged from the property's carrying cost.
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THE KEY DIVERGENCE – No Fair Value Recognition Option, Unlike IAS 40
A "disclose but don't recognise" approach, distinct from IFRS's genuine measurement choice
INTERNATIONALLY, IAS 40 (Investment Property) offers reporting entities a GENUINE ACCOUNTING POLICY CHOICE: measure investment property EITHER at COST (with depreciation, similar to J-GAAP), OR at FAIR VALUE, with CHANGES in fair value recognised DIRECTLY through PROFIT OR LOSS each period – a SUBSTANTIVE measurement OPTION with REAL Balance Sheet and Income Statement consequences. J-GAAP providesNO SUCH OPTION– cost-based measurement is MANDATORY for all investment/rental property, and FAIR VALUE information is provided ONLY as SUPPLEMENTARY NOTE DISCLOSURE (Section 5), with NO effect whatsoever on the RECOGNISED Balance Sheet carrying amount or the Statement of Income. This is a genuinely NOTABLE, well-recognised divergence from IAS 40's fair value model.
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What This Statement Actually Requires – Note Disclosure of Fair Value
Fair value information provided alongside, not instead of, the cost-based figures
For MATERIAL holdings of investment/rental property, companies must DISCLOSE (in the notes) the FAIR VALUE of such property AS AT the reporting date – ALONGSIDE, but NOT replacing, the COST-based carrying amount shown on the face of the Balance Sheet – giving readers ADDITIONAL insight into the property's CURRENT economic value WITHOUT altering the PRIMARY, cost-based financial statement figures themselves.
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Determining Fair Value for Disclosure Purposes
Generally based on appraisal value or a reasonably estimated market price
Fair value for DISCLOSURE purposes is generally determined based on a REAL ESTATE APPRAISAL (鑑定評価) or another REASONABLY ESTIMATED market price – reflecting a genuine, CURRENT market-based value estimate, even though this figure NEVER flows into the RECOGNISED Balance Sheet carrying amount itself.
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Worked Example – Cost-Based Balance Sheet Measurement With Fair Value Disclosure
Two figures, only one of which appears on the Balance Sheet
Example: A rental office building
A company holds a rental office building at a COST of ¥800,000,000, LESS accumulated depreciation of ¥150,000,000 (carrying amount: ¥650,000,000). An independent appraisal estimates the property's CURRENT fair value at ¥1,100,000,000.
The BALANCE SHEET continues to show the property at its¥650,000,000 COST-BASED carrying amount– UNCHANGED by the appraisal. SEPARATELY, in the NOTES, the company discloses the property's¥1,100,000,000 FAIR VALUE– purely SUPPLEMENTARY information, with NO effect on the recognised Balance Sheet figure or the Statement of Income.
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Worked Example – a Significant Fair Value Gap
A large divergence, still with no Balance Sheet consequence
Example: Property appreciation over a long holding period
A company has held a piece of land for rental purposes for 30 years, originally acquired for ¥200,000,000 (land is NOT depreciated under J-GAAP). Current fair value, given significant appreciation, is estimated at ¥900,000,000.
The Balance Sheet CONTINUES to show the land at its ORIGINAL¥200,000,000 COST– EVEN THOUGH its fair value has risen to ¥900,000,000 – with ONLY the ¥900,000,000 figure disclosed SEPARATELY in the notes. UNLIKE an entity electing the IAS 40 fair value model internationally, NO ¥700,000,000 unrealised gain is EVER recognised through profit or loss under J-GAAP, however LARGE the divergence becomes.
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Disclosure Requirements
What ASBJ Statement No. 20 requires
Carrying amount and fair value of investment/rental property, and the basis for determining fair valueMovement in carrying amount during the periodRental income and related profit/loss from investment/rental property
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Whether property qualifies as investment/rental property versus owner-occupied useWhether the fair value disclosure is material enough to require separate presentation
SIGNIFICANT ESTIMATES
Fair value determination, generally based on independent appraisal
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Relationship to IAS/IFRS and US GAAP
Comparison across all three major frameworks
FeatureJ-GAAP (ASBJ Statement No. 20)IFRS (IAS 40) / US GAAP
Fair value Balance Sheet optionNO – cost-based measurement is mandatoryIFRS: YES – a genuine fair value model option. US GAAP: NO equivalent fair value option, generally cost-based like J-GAAP
Fair value note disclosureREQUIRED for material holdingsIFRS: required if the cost model is elected. US GAAP: not a general requirement, though real estate entities may provide supplemental metrics (e.g. FFO – see the companion ASC 974 poster)
On this SPECIFIC point, J-GAAP and US GAAP are genuinely MORE ALIGNED with EACH OTHER (both mandating cost-based measurement) than either is with IFRS's fair value OPTION under IAS 40 – a notable case where the "convergence with IFRS" pattern seen elsewhere in J-GAAP does NOT hold, and Japan instead sits CLOSER to the US GAAP position.
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Statement Mapping
Where every investment/rental property event lands
EventStatement(s) affectedNotes
Cost-based carrying amountBSCost less depreciation and impairment
Fair value disclosureNotes onlyNo effect on recognised Balance Sheet or Statement of Income figures
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Related Standards
Cross-reference map
StandardConnection
ASBJ Statement No. 10Supplies the general cost-based measurement framework applied to investment/rental property
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Quick-Reference Glossary
Investment/rental property (賃貸等不動産)
Property held for rental income or capital appreciation, measured at cost on the Balance Sheet with fair value disclosed only in the notes.
Real estate appraisal (鑑定評価)
An independent professional valuation commonly used to determine the fair value disclosed for investment/rental property under this Statement.
Financial statement key (Japan GAAP terminology)
BSBalance Sheet (貸借対照表)P&LStatement of Income / Profit and Loss Statement (損益計算書)Net Assets純資産の部SCNAStatement of Changes in Net Assets (株主資本等変動計算書)SCFStatement of Cash Flows (キャッシュ・フロー計算書)