The following describes Japanese accounting before the Big Bang:
The preparation of consolidated financial statements is based on the Securities and Exchange Law. Individual-company accounts are the basis for the consolidated statements, and normally the same principles are used at both levels. Subsidiaries are consolidated if a parent directly or indirectly owns more than 50 percent of the shares. (However, Japanese regulations have materiality tests that can lead to the exclusion of significant subsidiaries in consolidation.) The purchase method of accounting for business combinations is normally used for business combinations. Goodwill is measured on the basis of the book value of the net assets acquired, not the fair market value as is common in most other countries. Goodwill is amortized over five years. The equity method is used in consolidated statements for investments in nonconsolidated subsidiaries and 20 percent- to 50 percent-owned affiliated companies, but the cost method is used in individual company statements. The equity method is also used to account for joint ventures; proportional consolidation is not allowed. Under the foreign currency translation standard, assets and liabilities of foreign subsidiaries are translated at the current (year-end) exchange rate, revenues and expenses at either the year-end or average rate, and translation adjustments are carried as an asset or liability on the balance sheet. Accounting measurements based on historical cost are pervasive. Inventory may be valued at cost or the lower of cost or market; cost is most often used. However, in the event of a significant and permanent decline in value, inventory must be written down to market. FIFO, LIFO, and average are all acceptable cost-flow methods, with average the most popular. Fixed assets are valued at cost and depreciated in accordance with the tax laws. Research and development costs may be capitalized if they relate to new products or techniques, the exploitation of resources, or the development of markets. When capitalized, research and development is amortized over five years. Finance leases, those transferring the risks and rewards of ownership to the lessee, are capitalized, while lease payments on operating leases are charged to income when incurred. Deferred taxes are not provided for (or needed) in individual company accounts. They are permitted in consolidated financial statements, but normally not provided there, either. Contingent losses are provided for when they are probable and can be reasonably estimated. Tax regulations limit the deductibility of employee retirement and severance benefits to 40 percent of the amount and so are normally only accrued up to this amount. Pension costs are expensed as paid, and unfunded obligations are not accrued. Legal reserves are required: Each year a company must allocate an amount equal to at least 10 percent of cash dividends and bonuses paid to directors and statutory auditors until the legal reserve reaches 25 percent of capital stock.

Required:
Identify the major changes that have occurred in Japanese accounting since the Big Bang.