The Impact of IFRS 15 and IAS 38 on Financial Reporting in the Gaming Industry

This thesis examines Sony Group Corporation’s voluntary transition from U.S. GAAP to IFRS. Sony’s transition date was 1 April 2020, which marked the beginning of the first IFRS comparative period. Its first annual financial statements prepared under IFRS covered the fiscal year from 1 April 2021 to 31 March 2022. The preceding fiscal year, from 1 April 2020 to 31 March 2021, was originally reported under U.S. GAAP and was later restated under IFRS as comparative information. Using Sony’s filings with the U.S. Securities and Exchange Commission, this study examines whether the effects of the transition differed across accounting areas with different levels of prior convergence between IFRS and U.S. GAAP. It focuses on three areas: revenue recognition under IFRS 15 and ASC 606, which were developed jointly; identifiable intangible assets under IAS 38; and goodwill under IFRS 3 and IAS 36, including the IFRS 1 requirement to test goodwill for impairment at the transition date. For each area, the analysis compares the relevant standards, examines Sony’s accounting policies before and after the transition, and compares the amounts reported under U.S. GAAP and IFRS at 1 April 2020 and 31 March 2021. The results show different effects across the three areas. Total revenue for the comparative year differed by less than 0.01% between the two frameworks. However, this small net difference reflects several larger offsetting adjustments, with the largest adjustment arising from IFRS 9 rather than IFRS 15. The result is therefore consistent with the close alignment between IFRS 15 and ASC 606, but does not by itself demonstrate the effect of that convergence. The combined carrying amount of content assets and other intangible assets differed by less than 1% at both reporting dates. Goodwill showed a larger difference, being approximately 12% lower under IFRS at both dates. This difference was mainly related to a ¥96,817 million impairment identified through the IFRS 1 transition-date impairment test and recognized in opening retained earnings. Overall, Sony’s transition had different effects across accounting areas. The largest effect occurred in an area where the relevant IFRS and U.S. GAAP requirements were less closely aligned. As a single case study, Sony’s experience illustrates a possible relationship between prior convergence and the magnitude of transition effects, but it does not establish a general causal relationship. The analysis is structured around five research questions addressing, respectively: the effects of IFRS 15 adoption on revenue recognition timing and deferred revenue balances; the application of IAS 38 capitalisation criteria to game development expenditure; the accounting treatment of digital revenue streams including virtual goods, season passes, and subscription services; the quantitative financial statement effects of these policies over the study period; and the practical implications for financial analysts and business consultants operating in the gaming sector. The findings demonstrate that IFRS 15 adoption materially increased deferred revenue balances, altered the timing of revenue recognition for live service games and subscriptions, and introduced significant judgement-driven differences in performance obligation identification. The study contributes original evidence to an underexplored intersection of accounting standard research and digital platform economics, and offers practical guidance for financial analysts, investors, and business consultants engaged in the valuation, due diligence, and strategic assessment of gaming industry companies.

La presente tesi esamina la transizione volontaria della Sony Group Corporation dai principi contabili statunitensi (U.S. GAAP) agli IFRS. La data di transizione di Sony è stata il 1° aprile 2020, che ha segnato l’inizio del primo periodo comparativo secondo gli IFRS. Il primo bilancio annuale redatto secondo gli IFRS ha riguardato l’esercizio dal 1° aprile 2021 al 31 marzo 2022. L’esercizio precedente, dal 1° aprile 2020 al 31 marzo 2021, era stato originariamente redatto secondo i principi contabili statunitensi (U.S. GAAP) ed è stato successivamente riesposto secondo gli IFRS come informazioni comparative. Sulla base dei documenti depositati da Sony presso la Securities and Exchange Commission degli Stati Uniti, il presente studio esamina se gli effetti della transizione siano stati diversi a seconda delle aree contabili con diversi livelli di convergenza pregressa tra gli IFRS e i GAAP statunitensi. Lo studio si concentra su tre aree: la rilevazione dei ricavi ai sensi dell’IFRS 15 e dell’ASC 606, che sono stati sviluppati congiuntamente; le attività immateriali identificabili ai sensi IAS 38; e l’avviamento ai sensi dell’IFRS 3 e dello IAS 36, compreso il requisito dell’IFRS 1 di verificare la presenza di perdite di valore dell’avviamento alla data di transizione. Per ciascuna area, l’analisi mette a confronto i principi contabili pertinenti, esamina i criteri contabili di Sony prima e dopo la transizione e confronta gli importi riportati secondo gli U.S. GAAP e gli IFRS al 1° aprile 2020 e al 31 marzo 2021.