Writing off every fixed asset without a downturn, and expensing development costs in full (2022)

Making the accounting policy follow the plan

Nothing written down was underperforming. Just as CFO Sumito Togo took care to say that it did not stem from the results of any individual business, Sitevisit and Mikatus were both proceeding as expected. Feed a three-year plan to accelerate investment and deepen the losses straight into the future cash flows of an impairment test, and value in use turns negative while the recoverable amount goes to zero. The $70.2M (¥9bn) was not a confession of failure but the result of running a declared medium-term strategy through the impairment accounting standard.

That policy was not then carried through as a matter of principle. Immediate expensing lasted two years; capitalisation resumed in November 2024, at a rate above the pre-impairment level. Hold no assets while in deficit, hold them once profit is in sight. The swing shows an accounting policy behaving as a variable that follows the business plan. Nor did one write-down settle the matter: the bottom-line loss in fact widened, to $87.5M (¥12bn) in the year to June 2023. Aligning how investment and profit appear came at a price.