058 System of allowance for bad debts will be abolished
2011 Tax Reform has been ratified by the Japanese cabinet,
and abolition of allowance for bad debts will be planned.
Currently, allowances for monetary receivables both for
each case and in bulk are included in the taxable expenses.
However, according to the tax reform, neither of them will
be recognized as tax-deductible expenses except for banks,
insurance companies, and small and medium enterprises.
Therefore, gap between corporate accounting and tax
accounting will become larger in terms of tax effect accounting.
Consequently, more temporary differences are found in the
accounting book.
