Changes in Revenue and Loyalty-Point Accounting Following Adoption of the Accounting Standard for Revenue Recognition

「As a result, in the consolidated income statement, revenue decreased by ¥10.308 million and cost of sales decreased by ¥1.049 million. The impact on operating profit, ordinary profit and profit before income taxes was immaterial.」

「The application of the revenue recognition standard and other relevant standards follows the transitional treatment prescribed in the proviso to Paragraph 84 of the standard. The cumulative effect of applying the new accounting policy retrospectively before the beginning of the first quarter of the current fiscal year was added to or deducted from retained earnings at the beginning of the first quarter, and the new accounting policy was applied from that opening balance. As a result, the impact on profit or loss for the nine-month period of the current fiscal year was immaterial.」

「The Group applied the Accounting Standard for Revenue Recognition (ASBJ Statement No. 29, 31 March 2020) and other relevant standards from the beginning of the first quarter of the current 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 is transferred to the customer. Previously, for points awarded in connection with product sales under the points program operated by a subsidiary, the Group recorded the amount expected to be used in the future as a provision for points and recorded the provision expense as selling, general and administrative expenses. The Group has changed its method by identifying the awarded points as a performance obligation and allocating the transaction price based on the standalone selling price calculated after considering expected future expirations and other factors.」