| 12. |
Provisions |
Changes in provisions for the years ended December 31, 2016 and 2017 are as follows:
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(In millions of yen) |
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| Restoration obligations for operating lease properties |
Promotional virtual credits reserve |
Other | Total | |||||||||||||
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At January 1, 2016 |
1,213 | 290 | 279 | 1,782 | ||||||||||||
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Arising during the year |
618 | 490 | 198 | 1,306 | ||||||||||||
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Utilized |
(339 | ) | (161 | ) | (43 | ) | (543 | ) | ||||||||
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Reversal |
(237 | ) | (110 | ) | (92 | ) | (439 | ) | ||||||||
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Unwinding of discount and changes in the discount rate |
1 | — | — | 1 | ||||||||||||
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Exchange differences |
(19 | ) | — | (1 | ) | (20 | ) | |||||||||
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Other |
(3 | ) | — | — | (3 | ) | ||||||||||
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At December 31, 2016 |
1,234 | 509 | 341 | 2,084 | ||||||||||||
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Arising during the year |
1,708 | 2,945 | 337 | 4,990 | ||||||||||||
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Utilized |
(25 | ) | (2,686 | ) | (211 | ) | (2,922 | ) | ||||||||
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Reversal |
(16 | ) | (162 | ) | (55 | ) | (233 | ) | ||||||||
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Unwinding of discount and changes in the discount rate |
0 | — | — | 0 | ||||||||||||
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Increase due to business combinations |
85 | — | 2 | 87 | ||||||||||||
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Exchange differences |
44 | 1 | 0 | 45 | ||||||||||||
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Other |
0 | — | — | 0 | ||||||||||||
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At December 31, 2017 |
3,030 | 607 | 414 | 4,051 | ||||||||||||
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Restoration obligations for operating lease properties
The Group records provisions for restoration obligations related to its operating lease properties as the Group is required to restore these properties upon termination of the operating leases to the state specified in the rental agreements. The reversal in 2016 mainly consisted of a change of 212 million yen in the estimated restoration obligations as the obligation related to the relocation of the Company’s head office was finalized.
Promotional virtual credits
For promotional and marketing purposes, LINE Points and virtual credits are given to end users free of charge. The Group records a provision for the licensing expense payable to the third-party platform partners upon redemption of free promotional virtual credits for virtual items by end users in the future. The reversal is mainly related to the expiration of certain LINE Points and virtual credits that were given to end users free of charge.
Other
Other mainly consisted of a provision for the losses expected to be incurred in relation to the outsourcing contracts for cloud AI platform “Clova” and the rental agreement as a result of the foreclosure of LINE FRIENDS STORE.