For the two financial reporting standards identified use Excel to create an applicable supporting schedule that provides an example of the adjustments that would need to be made to your foreign companys financial statements for it to comply with U.S. GAAP.

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Accounting profession in Japan including professional conduct rules:

In Japan, there is the relatively low social status of accounting professionals. Unlike in the US, tax laws heavily influence the financial reporting in Japan. Japanese companies do not accept the concept of independent auditor because of local cultural reasons. The ministry of finance plays a major role in developing financial reporting standards in Japan.

Accounting Standard:

Accounting standard is set using the big bang approach. In 2001, like FASB, the accounting standards Board of Japan (ASBJ) was formed. In early 2005, the ASBJ and IASB agreed to launch a joint project to reduce differences between Japanese GAAP and IFRSs.

Financial reporting standards that differ from those of US GAAP:

There are no specific rules in some areas covered by US GAAP, such as impairment of assets, discontinuing operations and segment reporting.

Normally any company is not mandatorily required to disclose information publically on the pressure from their providers of finance. On the other hand, the Japanese companies are unwilling to provide the information on their own.

Further are some inconsistency between Japanese GAAP and US GAAP.

Example - Japan: Inventories can be valued at cost

US: Inventories are valued at lower of cost or net realizable value.

National characteristics unique to the country that influence Accounting:

The economy of Japan is primarily dominated by few conglomerates known as "Keiretsu".

Outside equity finance is no more the main source of finance. Bank credit and cross - corporate ownership is the main source of finance in Japan.

The stock exchange is government regulated through the ministry of finance and not self-regulated.