Today's accounting for going concern is primarily based on the periodical allocation of acquisition cost. In this system, the periodic income may vary depending on the method of allocating cost. But, the choice of any method is intrinsically neutral as to income distribution to interested parties for all the allocation periods so long as there is no significant changes in constitution of the interested parties or in the coefficient of financial contracts applying profit/loss as a variable. In contrast with this, accounting for business reorganizations such as corporate merger or separation, restructuration, nationalization or privatization, not only marks the new accountability for the proterty concerned but often determines in a dramatic way the manner in which the company's cumulative profit/loss at the reorganizations is distributed among the interested parties. For instance, if the purchase method is applied to corporate merger, unrealized appreciation or depreciation as well as retained earnings of merged company are liquidated at the merger. But, if the pooling of interests method is applied, those appreciation or depreciation are carried over to merging company. Such different distributive result from the alternative accounting methods for corporate reorganizations is due to the fact that reorganization is usually accompanied with recapitalization, and in that event, there is frequently a major change in pro-rata ownership of various kind of equity. In the recent years, we have seen privatization of major public corporations in Japan such as The Nippon Telegraph and Telephone Public Corporation (the former NTT) which became The Nippon Telegraph and Telephone Corporation (the present NTT or the new NTT). In this paper, then, the author attemts to consider the issue regarding treatment of the customers' contribution for construction (CCC) at the time of the privatization of the former NTT in order to demonstrate how the accounting policy for privatization could determine the income/burden distribution among the interested parties through its effects on the amount of the proceeds from the public sale of the new NTT shares and the rate making at the new NTT. In addition, the author proposes to demonstrate how income/burden distribution would change if the deferred revenue approach which the author advocates or the cost reduction method had been consistently adopted for the CCC.
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