General Electric says it plans to provide restated results for 2016 and 2017 by April 13 to reflect a new accounting standard, according to a letter to investors. The updated accounting standard takes into account revenue from long-term contracts, which are being scrutinized by the U.S. Securities and Exchange Commission.
GE had said in February that it expected to take a $4.2B accounting charge as it switches to the new standard.
But GE management said the process “is taking more time than we originally expected” to finalize, according to the following letter to shareholders on Wednesday that was published by Street Insider.
From the company:
As previously disclosed, we will be reporting our first quarter 2018 earnings, scheduled for April 20th, under the new revenue recognition accounting standard (ASU No. 2014-09, Revenue from Contracts with Customers).
All public companies are required to adopt this standard. We chose to adopt it on a retrospective basis. This means we will be recasting our 2016 and 2017 financial statements to report them under the new standard. The new standard has no impact on our 2018 guidance.
The recasted financial information will also reflect the following changes:
- A new pension standard, ASU No. 2017-07, which required a change in the presentation of non-operating pension costs on the income statement.
- A new cash flows related standard, ASU No. 2016-18, which resulted in a reclassification of restricted cash balances.
- A new cash flows related standard, ASU No. 2016-15, which resulted in a reclassification of certain securitization-related cash inflows to be reclassified from operating activities to investing activities.
- A new income tax related standard, ASU No. 2016-16, which eliminates the deferral of the tax effects of intra-entity asset transfers other than inventory.
- Other changes to simplify our financial reporting and better align it with others in our industry.
This is an important transition process, and it is taking more time than we originally expected to finalize. We plan to provide recasted financial information by April 13th.
The company also said it would report its first-quarter earnings on April 20 under the new standard and that it would have no impact on its 2018 forecast.Tagged with Biggest News, GE