Risk of Software Impairment
First written in FY2020. 1 of 5 entries say "Materialised", first in FY2021. Latest entry: FY2025.
The whole theme swung hardest in 2024: 21 of 49 companies on the "Worse" side.
5 other companies' latest entry also says "Other".
- FY2025Useful-Life Change Applied for the Full Fiscal YearAnnual report
「We had previously depreciated the software we own over a useful life of 3 years. Following the formulation of a medium-term management plan, we reconsidered the software's profitability based on past performance and future plans. As a result, beginning with the current consolidated fiscal year, we revised the useful life to 5 years and applied the change prospectively. As a result, depreciation expense for the consolidated fiscal year decreased by ¥24,603 thousand compared with the previous method, while operating income, ordinary income and profit before income taxes each increased by the same amount.」
The useful life of software was changed from 3 years to 5 years, reducing depreciation expense for FY2025 by ¥24,603 thousand. - FY2025-H1Software useful life revisedAnnual report
「We had previously depreciated the software we own over a useful life of 3 years. Following the formulation of a medium-term management plan, we reconsidered the software's profitability based on past performance and future plans. As a result, beginning with the current interim consolidated accounting period, we revised the useful life to 5 years and applied the change prospectively.」
Following a reconsideration of the software's profitability, its useful life was changed from 3 years to 5 years, reducing depreciation expense by ¥12,594 thousand. - FY2022RestatedAnnual report
「We intend to avoid impairment of this software by appropriately addressing client needs. However, if major changes in future plans or usage, software obsolescence or other factors substantially reduce its revenue-generating or cost-reduction benefits and impairment of the software becomes necessary, this may affect the business operations, business results and financial position of our group.」
Even after impairment occurred at rakumo Kintai in the previous fiscal year, the company continues to identify the risk of impairment resulting from software obsolescence and changes in plans, together with its response policy. - FY2021MaterialisedAnnual report
「Although revenue from rakumo Kintai increased during the consolidated fiscal year, actual results did not reach the initially projected earnings plan. Following a revision of the business plan, the undiscounted future cash flows of the business asset group fell below the carrying amount of property, plant and equipment during the consolidated fiscal year, and an impairment loss of ¥29,398 thousand was recorded as an extraordinary loss.」
The previously identified software impairment risk materialised at rakumo Kintai, and an impairment loss of ¥29,398 thousand was recorded. - FY2020First statedAnnual report
「We intend to avoid impairment of this software by appropriately addressing client needs. However, if major changes in future plans or usage, software obsolescence or other factors substantially reduce its revenue-generating or cost-reduction benefits and impairment of the software becomes necessary, this may affect the business operations, business results and financial position of our group.」
On the assumption that the software is capitalised, the company identifies the possibility of impairment due to changes in plans, obsolescence and other factors as a risk.