Rakuten to incur JPY 25bn loss in Q3 2020 due to change in accounting method for Lyft
Rakuten’s announcement is made after Hiroshi Mikitani, Chairman and CEO resigned as a director of Lyft, Inc.
Tokyo-based online services provider Rakuten Inc (TYO:4755) forecasts it would incur a loss of approximately JPY 25 billion in the third quarter of the fiscal year ending December 2020 because of a change in accounting method regarding Lyft shares.
Rakuten notes that, on August 31, 2020, Hiroshi Mikitani, Chairman and CEO resigned as a director of Lyft, Inc. Mikitani has served as a director of Lyft since Rakuten invested in Lyft in 2015. He decided to resign in order to devote his time to the management of the company under the uncertain environment of COVID-19.
Lyft shares held by Rakuten had previously been accounted for using the equity method. However, with this change, the shares will be measured at fair value through profit or loss from the third quarter of the fiscal year ending December 2020.
This is not the first time that the change in the accounting method used by Rakuten for Lyft shares leads to losses. Last year, for instance, Rakuten said it was about to record a loss of JPY 28.4 billion in the second quarter of its fiscal year 2019 as a result of a change in the accounting method applying to shares in LYFT Inc (NASDAQ:LYFT).