Changes in revenue-recognition methods following adoption of the revenue-recognition accounting standard

「As a result, compared with before the application of the Revenue Recognition Standard and other standards, sales for the current consolidated fiscal year decreased by ¥65 million, cost of sales decreased by ¥33 million, selling, general and administrative expenses decreased by ¥11 million, and operating income, ordinary income and profit before income taxes decreased by ¥20 million each.」

「As a result, for the nine months ended the third quarter, sales decreased by ¥96 million, cost of sales decreased by ¥75 million, selling, general and administrative expenses decreased by ¥2 million, and operating income, ordinary income and profit before income taxes decreased by ¥18 million each. In addition, the opening balance of retained earnings decreased by ¥11 million.」

「As a result, for the six months ended the second quarter, sales decreased by ¥66 million, cost of sales decreased by ¥48 million, selling, general and administrative expenses decreased by ¥1 million, and operating income, ordinary income and profit before income taxes decreased by ¥15 million each. In addition, the opening balance of retained earnings decreased by ¥11 million.」

「We applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, 31 March 2020; hereinafter, the “Revenue Recognition Standard”) and other standards from the beginning of the first quarter of the current consolidated fiscal year. Revenue is recognized at the amount expected to be received in exchange for the promised goods or services when control of those goods or services transfers to the customer. As a result of examining the identification of performance obligations and the timing of their satisfaction under the Revenue Recognition Standard and other standards, we determined that, for certain products in the measuring instruments business for which our group has an obligation to conduct commissioning under contracts with customers, the customer obtains control of the product and our group satisfies its performance obligation when commissioning of the product is completed. Accordingly, whereas previously revenue was recognized for the product component at shipment and for the service component upon completion of commissioning, we now recognize revenue for the product and service components together upon completion of commissioning. In addition, consideration paid to customers, such as sales commissions, was previously treated as selling, general and administrative expenses, but has been changed to a method of deducting it from the transaction price.」