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Article 12
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The account structure of the income statement and the contents thereof are as follows:
- Revenues and expenses shall be classified by nature, with separate disclosure being made of the primary sources of operating revenues and primary operating expenses.
- Except with respect to the following, revenues and expenses shall not be offset against each other:
- Where assets and liabilities are allowed to be mutually offset under Statement of Financial Accounting Standards No. 27, the relevant revenues and expenses.
- Revenues and expenses related to hedging transactions.
- Gains and losses arising from the following shall be presented in net amount:
- Transactions in bills and securities and relevant period-end valuations.
- Gain/loss on long-term equity investments.
- Period-end valuations of foreign currency transactions and foreign currency assets and liabilities.
- Operating revenues:
- "Interest revenue" means interest revenue arising from financing/lending, investing in bonds, and various deposits.
- "Service charge revenue" means revenue arising from executing various procedures for others.
- "Gains from trading bills and securities" means grains from trading various securities, dividends, and gains on market price recovery as a result of lower-of-cost-or-market valuation within the range of originally estimated unrealized loss on market price decline.
- Gains on long-term equity investments shall be calculated and presented in accordance with Statement of Financial Accounting Standards No. 5.
- "Foreign exchange gains" means gains on foreign currency assets or liabilities actually exchanged and valuated as a result of change in exchange rate and premium amortization with respect to forward foreign exchange transactions, except that effects of exchange rate changes in relation to forward exchange contracts executed by the Bank to hedge net foreign investment risk shall be recorded as an adjustment to shareholders' equity.
- "Other operating revenues" means other operating revenues not falling within the above categories.
- Operating expenses:
- "Interest expenses" means various interest expenses incurred as a result of deposit-taking and otherwise from borrowing of funds.
- "Income distribution" means benefits payable to beneficiaries.
- "Service charge expenses" means expenses arising from entrusting others with the execution of various procedures.
- "Losses on trading bills and securities" means losses arising from trading various bills and securities and unrealized losses on market price decline as a result of valuation.
- Losses on long-term equity investments shall be calculated and presented in accordance with Statement of Financial Accounting Standards No. 5.
- "Foreign exchange losses" means losses on foreign currency assets or liabilities actually exchanged and valuated as a result of change in exchange rate and discount amortization with respect to forward foreign exchange transactions, except that effects of exchange rate changes in relation to forward exchange contracts executed by the Bank to hedge net foreign investment risk shall be recorded as an adjustment to shareholders' equity.
- "Various provisions" means various provisions set aside by the Bank for allowance for bad debts, reserve for guarantee obligations, securities trading loss reserve, and default loss reserve.
- "Operating expenses" means all expenses necessary for the operation of the Bank. Such expenses shall be separately recorded in detail according to actual needs. They are mainly classified as business expenses and administrative expenses.
- "Other operating revenues" means other operating revenues not falling within the above categories.
- "Non-operating revenues, gains, expenses, and losses" means revenues, gains, expenses, and losses occurring in the current period as a result of non-operating activities, such as gain/loss on disposal of fixed assets.
- "Income (loss) from continuing operations" means the net result of the preceding three subparagraphs and shall be separately shown as income (loss) before tax, income tax expenses (benefits), and net income (loss).
- "Income (loss) from discontinued operations" means income or loss arising in the current period from disposal or planned disposal of a significant business segment, including operating income (loss) before discontinued operations and gain (loss) on disposal. Gain (loss) on disposal shall be measured on the date on which the decision for the deposal is made. Should there be a loss on such deposal, it shall be recognized promptly; should there be a gain, it shall not be recognized until realization.
- "Extraordinary gains and losses" means income items that are distinguished by their unusual nature and by the infrequency of their occurrence. Such items shall be presented separately and shall not be amortized on a yearly basis.
- "Cumulative effect of a change in accounting principle" shall be presented separately after extraordinary gains and losses.
- "Current net income" (or "current net loss") means earnings (or losses) for the current accounting period, which are the aggregate amount of the preceding four subparagraphs.
- "Earnings per share" shall be calculated and presented in accordance with Statement of Financial Accounting Standards No. 24.
- "Income tax" shall be amortized and presented in a manner consistent with the provisions of Statement of Financial Accounting Standards No. 22.
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