Accounting change to lift Asahi's profit for 2014
TOKYO -- Asahi Group Holdings, one of Japan's largest beer brewers, will unify the way group companies book depreciation expenses from fiscal 2014, a move that will boost operating profit by roughly 3 billion yen ($28.9 million).
At present, Asahi uses the declining-balance method, in which expenses shrink in later years, for some domestic equipment, while overseas units use straight-line depreciation, or books equal amounts over the life of an asset. Starting in the year ending Dec. 31, the parent and subsidiaries will all adopt the latter method.
In the year ending Dec. 31, Asahi is spending 60.5 billion yen, 25% more on the year, on capital investment, including adding beverage production lines at its domestic operations.
Even so, through unifying accounting methods and other measures, the firm will apparently shave depreciation expenses by 6% to 45 billion yen. Asahi expects group operating profit to climb 5% to 123 billion yen.
While under International Financial Reporting Standards companies are not obligated to use straight-line depreciation, most foreign firms do. Many Japanese companies are adopting the method in preparation for switching to the global accounting standards.