Changes in depreciation and amortization and asset retirement obligation estimates due to the extension of the business-use fixed-term land lease agreement
First written in FY2018-Q2. . Latest entry: FY2019-Q3.
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- FY2019-Q3Cumulative update to the estimate impact from the extension of the land lease agreement in Tomiya, Miyagi PrefectureAnnual report
「For land in Tomiya, Miyagi Prefecture, the Company had entered into a business-use fixed-term land lease agreement in April 2003 for a term of 20 years for use in its bathing facilities business. In June 2018, it entered into an agreement to establish a business-use fixed-term land lease right and changed the contract expiration date from the original March 2023 to March 2033. / The expected period until payment was also extended for the asset retirement obligation recorded as the obligation to restore the property to its original condition under the business-use fixed-term land lease agreement, reducing the asset retirement obligation balance by ¥10.190 million. As a result, compared with the previous method, operating income and ordinary income for the cumulative third-quarter period of the current consolidated fiscal year increased by ¥4.771 million, and profit before income taxes increased by ¥11.176 million.」
The reduction in the asset retirement obligation and the impact on profit from the extension of the land lease agreement in Tomiya, Miyagi Prefecture have been updated to the cumulative third-quarter amounts. - FY2019-Q2Update to the estimate impact from the extension of the land lease agreement in Tomiya, Miyagi PrefectureAnnual report
「For land in Tomiya, Miyagi Prefecture, the Company had entered into a business-use fixed-term land lease agreement in April 2003 for a term of 20 years for use in its bathing facilities business. In June 2018, it entered into an agreement to establish a business-use fixed-term land lease right and changed the contract expiration date from the original March 2023 to March 2033. As a result, the useful lives were revised to the amended lease term and changed prospectively. In addition, the expected period until payment was extended for the asset retirement obligation recorded as the obligation to restore the property to its original condition under the business-use fixed-term land lease agreement, reducing the asset retirement obligation balance by ¥10.190 million. As a result, compared with the previous method, operating income and ordinary income for the cumulative second-quarter period of the current consolidated fiscal year increased by ¥3.182 million, and profit before income taxes increased by ¥9.587 million.」
The lease term for land used for bathing facilities in Tomiya, Miyagi Prefecture was extended from March 2023 to March 2033, reducing the asset retirement obligation balance by ¥10.190 million and increasing profit before income taxes for the quarter by ¥9.587 million. - FY2019-Q1Change in estimates due to the extension of the land lease agreement in Tomiya, Miyagi PrefectureAnnual report
「For land in Tomiya, Miyagi Prefecture, the Company had entered into a business-use fixed-term land lease agreement in April 2003 for a term of 20 years for use in its bathing facilities business. In June 2018, it entered into an agreement to establish a business-use fixed-term land lease right and changed the contract expiration date from the original March 2023 to March 2033.」
Following the Niigata City case, the lease expiration date was extended for the land used for bathing facilities in Tomiya, Miyagi Prefecture, and the useful-life and asset retirement obligation estimates were changed. The asset retirement obligation balance was reduced by ¥10.190 million, and profit before income taxes for the quarter increased by ¥7.996 million. - FY2018Full-year update to the estimate impact from the extension of the land lease agreementAnnual report
「The expected period until payment was also extended for the asset retirement obligation recorded as the obligation to restore the property to its original condition under the business-use fixed-term land lease agreement, reducing the asset retirement obligation balance by ¥21.845 million. In addition, after re-estimating future removal costs in connection with the change in the contract term, the asset retirement obligation balance was reduced by ¥0.909 million. As a result, compared with the previous method, operating income and ordinary income for the current consolidated fiscal year increased by ¥22.208 million, and profit before income taxes increased by ¥36.385 million.」
The reductions in the asset retirement obligation associated with the extension of the land lease agreement were updated from the quarterly disclosure to ¥21.845 million and ¥0.909 million for the full year, and the impact on profit was also disclosed on a full-year basis. - FY2018-Q3Additional disclosure of the impact of asset retirement obligation estimatesAnnual report
「The expected period until payment was also extended for the asset retirement obligation recorded as the obligation to restore the property to its original condition under the business-use fixed-term land lease agreement, reducing the asset retirement obligation balance by ¥10.291 million. In addition, after re-estimating future removal costs in connection with the change in the contract term, the asset retirement obligation balance was increased by ¥4.101 million. As a result, compared with the previous method, operating income, ordinary income and profit before income taxes for the cumulative third-quarter period of the current consolidated fiscal year each increased by ¥7.382 million.」
In connection with the extension of the land lease agreement, the Company disclosed a ¥10.291 million reduction in the asset retirement obligation due to the extension of the payment timing and a ¥4.101 million increase due to the re-estimation of removal costs, updating the impact on profit from ¥2.627 million to ¥7.382 million. - FY2018-Q2First statedAnnual report
「For land in Chuo Ward, Niigata City, the Company entered into a business-use fixed-term land lease agreement in October 2000 for a term of 20 years for use in its bathing facilities business, and depreciated the buildings and other assets over the lease term. In September 2017, it entered into an agreement to establish a business-use fixed-term land lease right and changed the contract expiration date from the original October 2020 to October 2030. As a result, the useful lives were revised to the amended lease term and changed prospectively. In addition, after re-estimating future removal costs in connection with the change in the contract term, the asset retirement obligation balance was increased by ¥4.101 million. As a result, compared with the previous method, operating income, ordinary income and profit before income taxes for the cumulative second-quarter period of the current consolidated fiscal year each increased by ¥2.627 million.」
The lease expiration date for land used for bathing facilities in Chuo Ward, Niigata City was extended from October 2020 to October 2030. As a result of changing the useful-life and asset retirement obligation estimates, each profit figure for the cumulative period of the current quarter increased by ¥2.627 million.