My Business Dream

i have a dream that i can have my own business. Japanese corporate income tax laws and regulations have a

significant effect on income measurement and financial

reporting by limiting the amounts of certain types of tax

deductions. Examples of these deductions include allowances

for bad debts and non-performing loans, depreciation of fixed

assets, and expenses for employee pensions and severance

indemnities. The Corporate Income Tax Law's primary

purpose is to obtain tax revenues for the government, so

companies often are not allowed to record tax deductions

even though a decline in the value of an asset or an increase

in a liability has occurred from an economic standpoint.

The Corporate Income Tax Law generally requires expenses

to be shown in a company's CC financial statements if the

company wants to record expense deductions for the purpose

of calculating taxable income. This requirement often leads a

company to choose an accounting practice or alternative that

lowers taxable income rather than one that more accurately

reflects economic reality (Nobes 1998, 250). The marginal

tax rate of about 50 percent for most Japanese companies

provides a strong incentive to adopt accounting practices that

result in the lowest possible tax payments.

If accounting standards under the CC or SEL do not address a

specific accounting issue, then companies use tax guidelines

to prepare financial statements. Except for a few small

differences, such as entertainment expenses not deductible for

tax purposes, a company's reported income under the CC orguidelines to enhance the disclosure of business risk

information in security reports along with governance-related

information such as internal control systems as well as

improved MD&A disclosure. Guidelines have particularly

advised to disclose more future risk information as it is more

decision useful and for any kind of risk reporting practices

they have recommended to follow US practice. But, the