Accounts and accounting should be at the heart of business management. However, you should not simply follow the conventional wisdom that states, “Accounting is always done this way.” Gaining understanding of what is going on, based on the fundamental principle of what is right, is extremely important. For example, even if the government decides something, you should always try to acquire a full understanding and allow yourself to be convinced, or not, based on the essence of what is right.

Let us consider a case in keeping with fundamental rules and principles in the field of accounting. This example concerns the useful lifetime of a fixed asset for depreciation purposes.

In depreciation, the number of years over which a machine, a fixed asset, should function normally is set as the “useful lifetime.” The cost of the machine is materialized, or “depreciated,” over that number of years. In common accounting practice, the machine is depreciated in accordance with the statutory useful number of years set by the government. However, with machinery and facilities used for manufacturing ceramics, the actual useful lifetime may be only five or six years, whereas the statutory requirements dictate they should be depreciated over 12 years. Now, the statutory useful lifetime, or number of years, is set according to tax law, which emphasizes fair taxation. This sometimes leads to a distortion of fundamental principles stating that depreciation expense should be charged to accounts only over the period for which the asset functions normally. I do not follow the statutory useful number of years in this case. Instead, I follow the principle of depreciating the asset over the actual period during which it functions normally, even if it means paying additional tax through the taxable depreciation method.

In management, you must look for the essence of matters in accordance with fundamental rules and principles. I call this “Adherence to fundamental rules and principles.” It is part of my nature to thoroughly examine the essence of things. I think this is why I was able to work a little more effectively than other people in research and engineering. When learning about accounting, I was constantly asking “Why?”, just as I did in research and development.

Kyocera Management Studies Course at Kagoshima University, Faculty of Engineering (December 11, 2002 & July 7, 2003) Summary