ACCOUNTING STANDARD

FOR

PREPARATION OF QUARTERLY AND SEMIANNUAL FINANCIAL STATEMENTS

Accounting Standard for Preparation of Quarterly and Semiannual Financial

Statements

CONTENTS

§1.	Purpose

§2.	Definitions

§3.	Semiannual Financial Statements and Supplementary Schedules

§4.	Preparation of Semiannual Financial Statements

§5.	Presentation of Semiannual Financial Statements

§6.	Valuation of Investment Securities

§7.   ＿Deletedａ

§8.	Seasonality of Business Activities

§9.	Income Tax Expense

§10.	Semiannual Earnings Per Share

§11.	Contingencies

§12.  ＿Deletedａ

§13.	Notes on Inventories

§14.	Special Provisions for Note Disclosures

§15.	Events after Semiannual Balance Sheet Date

§16.	Preparation of Quarterly Financial Statements

Addenda

Enacted on April 1, 1998

Amended on June 23, 1999

§1. Purpose

The purpose of this Standard is to prescribe the preparation and presentation of quarterly and semiannual financial statements in accordance with Article 186-3 of the Securities and Exchange Act.

§2. Definitions

The terms used in this Standard are defined as follows:

1.	Quarterly Period refers to a period of three or nine months from the beginning date of the fiscal year;

2.	Semiannual Period refers to a period of six months from the beginning date of the fiscal year;

3.	Fiscal Year refers to the fiscal period defined in the Articles of Incorporation.

§3. Semiannual Financial Statements and Supplementary Schedules

(1) The semiannual financial statements consist of a semiannual balance sheet and a semiannual income statement.

(2) The semiannual financial statements of the immediately preceding fiscal year should be presented for comparative purposes.

(3) A schedule of cost of goods manufactured (in the case of construction industry, a schedule of construction cost) for the semiannual period, should be prepared as a supplementary schedule.

(4) In principle, the semiannual financial statements should be prepared in the report form, which may be in either standard or condensed format. The semiannual balance sheet, however, may be prepared in the account format.

(5) The consolidated semiannual financial statements are not attached to the semiannual financial statements.

§4. Preparation of Semiannual Financial Statements

(1) Assets and liabilities should be measured as of the semiannual balance sheet date.

(2) For the matters not specifically covered herein, the provisions of the Financial Accounting Standards for Business Enterprises (hereinafter referred to as the "FAS") should be applied to the preparation of semiannual financial statements. However, retained earnings should be presented as an unappropriated amount (after deducting interim dividends, if any).

§5. Presentation of Semiannual Financial Statements

(1) Adjustments necessary to prepare the semiannual financial statements are not required to be maintained in accounting books but may be made by use of a work sheet.

(2) Each of the following accounts may be presented in the aggregate. However, for the accounts with a significant change as compared with the corresponding semiannual period of the preceding year, they should be presented in detail.

1.	Inventories;

2.	Tangible assets (Land should be presented in a parenthetical disclosure) and accumulated depreciation;

3.	Intangible assets; and

4.	Selling and administrative expenses.

§6. Valuation of Investment Securities

(1) For investments in equity securities to which the equity method of accounting applies, if the investee has not prepared its semiannual financial statements, their values may be measured using the investee's most recent financial statements (including quarterly and semiannual financial statements). In this case, a description of such measurement should be presented in a note to the semiannual financial statements.

(2) Even in the case that investments in equity securities are measured pursuant to paragraph (1), any events or transactions that may result in a significant decrease in the net assets of the investee company should be appropriately recognized in the investor company's semiannual financial statements. The investor company should recognize gains or losses on valuation under the equity method.

§7.＿Deletedａ

§8. Seasonality of Business Activities

(1) If there is significant seasonality regarding sales, a note disclosure on the seasonality and related financial characteristics should be made so that users of semiannual financial statements are not misled with respect to the expectation of the company's annual performance.

(2) The related financial characteristics prescribed in paragraph (1) include the amounts of sales, cost of sales, gross margin, operating income, ordinary income, net income, etc. for the corresponding semiannual period of the preceding year and their respective proportions to the total amounts for the preceding year, and details of changes in inventories.

§9. Income Tax Expense

(1) Income tax expense should be the income taxes and surtaxes to be paid for the semiannual period, adjusted for the change in deferred income taxes.

(2) The difference between the income tax expense and the amount calculated as of the end of the semiannual period pursuant to the Corporate Income Tax Act (hereinafter referred to as "income tax to be paid") should be accounted for as a deferred income tax debit (or credit), and should be offset against the deferred income tax credit (or debit) recorded in the preceding year.

(3) The income tax to be paid, mentioned in paragraph (2), refers to 6/12 of the tax amount calculated for 12/6 of the taxable income for the semiannual period.

§10. Semiannual Earnings Per Share

The semiannual earnings per share should be presented parenthetically below the semiannual net income, and the calculation method and earnings per share for the preceding fiscal year should be disclosed in a note to the semiannual financial statements.

§11. Contingencies

In case contingencies exist at the end of the semiannual period, their estimated effects on the net assets should be appropriately recognized in the semiannual financial statements or disclosed in the accompanying notes, depending on the likelihood of the settlement in the future.

§12.＿Deletedａ

§13. Notes on Inventories

For inventories, the following should be disclosed in notes to the semiannual financial statements:

1.	Descriptions of major inventories;

2.	A description of whether or not the physical inspection of inventories has been conducted;

3.	Details of calculation if the retail inventory method has been used; and

4.	In the case of the LIFO method used, a description of whether or not the beginning inventory was included in the cost of goods sold, and if so, a detailed description of such inclusion.

§14. Special Provisions for Note Disclosures

(1) The requirement of note disclosure provided in Article 87 subparagraph 12 of FAS does not apply to the semiannual financial statements.

(2) In the case that interim dividends were declared before the date of preparation of the semiannual financial statements, details of the interim dividends should be disclosed in a note.

§15. Events after Semiannual Balance Sheet Date

Events occurring after the semiannual balance sheet date should be appropriately recognized in the semiannual financial statements if they significantly affect the semiannual financial statements, and details of the events should be disclosed in the accompanying notes.

§16. Preparation of Quarterly Financial Statements

The quarterly financial statements should be prepared in accordance with Article 3 to Article 15. In this case, the "semiannual period" is regarded as the "quarterly period."

Addenda

(April 1, 1998)

§1. Effective Date

This Standard shall be effective on April 1, 1998.

§2. Interim Measures Regarding Repealing of Previous Standard

(1) The previous Accounting Standard for Preparation of Semiannual Financial Statements established by the Securities and Exchange Commission (hereinafter referred to as the "previous Standard") is superseded by this Standard from the effective date of this Standard.

(2) For the accounting treatment made pursuant to the previous Standard before the effective date of this Standard, it is regarded as having being made pursuant to this Standard.

§3. Application to Deferred Income Taxes

The provision of Article 9 shall be effective for the semiannual period of the fiscal year beginning on or after April 1, 1998.

§4. Relations to Other Standards

When reference to the previous Standard is made in any other accounting standards as of the effective date of this Standard, that reference is regarded as the reference to this Standard.

Addenda

(June 23, 1999)

§1. Effective Date

This Standard shall be effective on June 24, 1999.

§2. Special Applicability

This Standard should be applied to preparation of the semiannual financial statements of the fiscal year beginning on or after January 1, 1999.