G-ONE SYSTEM Rule Book (Principle) 01/Jun./2007 Secret

Content Structure of Inter-company Transaction Rules Principle of Recognition － Recording timing of Sales and Purchase ー when different policy for posting is taken ー AR recognition － AP recognition Principle of Billing/Payment － How to settle the amount for Billing/Payment Principle of Data Application

Standardizations of Inter-company Transaction Rules Structure of Inter-company Transaction Rules 1 Receivable Recognition Payable Recognition Voucher Operations Schedule of Payment/ Collection De- recognition Billing/ Payment Recognition Billing/ Payment Data Application Recon- ciliation Transaction Details Official Financial Data Principles Rules of Business Operations

1. Principle of Recognition (1)AP side must record purchase at the same timing of AR side’s posting sales which is determined by INCOTERMS (at the time of delivery). Hence, the buyer recognizes goods in transit at first, then reclassifies the account into “goods” after the acceptance inspection. Goods which remain undelivered on the financial closing date are regarded as “goods in transit”. (2) All the transactions for the current month should be recorded by the third business day of the following month. (3) Basically for inter-company transactions, accounts payables recognized in the current month should be settled by the end of next month. (4) De-recognition of AR should be processed in accordance with the remittance date (processed within the same month). 2 Standardizations of Inter-company Transaction Rules

Sup.1:Recording timing of Sales and Purchase 3 A.Timing to record Sales 1)At the time when delivery of goods or performance of service has been completed. 2)On the export/import transactions, the point of delivery should be determined in accordance with the trade terms (INCOTERMS) B.Timing to record Purchase ・ As is the case with the sales, the recognition date will be the timing when goods are delivered. ( B/L date in case of “Loading terms contract” such as FOB/CIF/CFR ) INCOTERMS: There are 2 kinds of contract for the trade terms. One is the “Loading port terms” which defines the risk transfer place as loading port, and the other is the “Destination terms” which defines the place as destination. In case of “Loading port terms” is applied, the date of shipment will be the sales recognition date, and the case of “Destination terms”, it will be the date when goods are delivered at the destination place. For example, under the contract of FOB,CFR and CIF, the shipment date will be the sales recognition date. If it defines that the B/L date as the shipment date, the sales date can be defined as B/L date objectively. In case of “Destination terms” is applied, sales date will be the delivery date to buyer at the destination place. Please note that the “Delivery” and “transfer ownership” are the different meaning. Incoterms (trade terms) doesn’t concern with the “transfer ownership”.

Sup.1:Recognition point of Sales and Purchase 4 C.When different policy for posting is taken in your company 1)Adjust the sales recognition policy to comply with G-ONE principle 2)By the time the adjustment has been completed in accordance with your current policy for posting. 1)Adjust the purchase recognition policy to comply with G-ONE principle 2)By the time adjustment has been completed, record the purchase on G- ONE in accordance with your current policy for posting. ( but the entry on G-ONE should be done occasionally when they receive an invoice on G- ONE. )

(AR recognition) (1) Notification regarding the recognition of AR/AR-Other will be automatically sent to trading partner via G-One system until the next day of recognition. ( In case of no data link between G-One system and local system established, input the recognized AR/AR- Other on G-One system ) (2) Notifications are sent out per the unit of Matching key such as invoice number or debit note number. (3) Evidence data can be attached to a invoice/debit note on G-ONE. (4) In case of data alignment established, it is necessary to reclassify the chart of account of the company in accordance with G-ONE account code in advance. (5) Duplication of invoice No., debit note No. is not basically permitted except for revising original bill. ( When a invoice is split up for partial shipment, the invoice number should be branch off. ) 5 Standardizations of Inter-company Transaction Rules

(1) By approving the info of AP recognition which is automatically converted from AR recognition info recorded by the trade partner on G-ONE, AP info will be registered in G-ONE System. (2)In case of no data alignment between local accounting system and G-ONE established, process the posting on your local accounting system as per the Journal Entry info available from G-ONE prior to the approval of AP data on G-ONE system. (3) In case of data alignment between local accounting system and G-ONE established,AP Info approved on G-ONE will be automatically sent to the local accounting system simultaneously. In case of automatic data alignment without approval of AP info on G-ONE established, the data will be sent directly to the accounting system through G-ONE and also AP info will be automatically recorded on G-ONE at the same time. ( AP recognition) 6 Standardizations of Inter-company Transaction Rules

2. Principle of Billing/Payment (1) Issue an invoice for every shipment or order. Do not issue Debit Note combined with more than one Sales Invoice. All the operation,from Recognition to Payment, should be processed with this unit. (2) Notification to require the trade partner to recognize AP will be automatically sent out from G-ONE to the partner when billing was processed on the system. (3) AP side should approve the AP data on G-ONE soon after receiving notification sent out from trade partner. 7 Standardizations of Inter-company Transaction Rules

8 (1)Billing~Payment should be made in accordance with the balance on G-ONE system (2) Confirm the actual amount for remittance in the list of “Confirmation of payment” and “Schedule of payment/Collection” provided from G-ONE on the following day of payment closing date ( Statement of Account(SA) would not be applied for this purpose. ) (3)The settlement amounts on “Confirmation of payment” and “Schedule of payment/Collection” are calculated as per the balances in G-ONE as of the payment closing date. (4) “Schedule of payment/Collection” and “Confirmation of payment” are prepared based on the information of Invoices/debit notes and the due date approved by AP side. （ 5 ） If there is any disagreement regarding the amounts,consult with your trade partner for clarification. The AR side will process the additional approval of AP data or adjust the Schedule of Payment date from G-ONE system. （ 6 ） The final “Confirmation of payment” will be output from G-ONE on the following day of the payment closing date.AP side should process remittance based on the list. Billing/Payment (How to settle the amount for remittance)

3.Principle of Data Application 9 － Balances of accounts receivables/payables recorded in local accounting system should be applied for the statutory financial closing. -Each company should guarantee the consistency between the balances in their accounting system and G-ONE -If there is no function to record the transaction details in foreign currency (transaction currency) in local accounting system, those details on G-ONE System could be the official data.(In this case, data alignment between the systems would not be possible) -Approve Sales Invoice and Debit note which are printed out from G-One system as official evidence on inter-company transaction. (Customs invoice is conducted as usual) Standardizations of Inter-company Transaction Rules