Rakuten to incur JPY 28.4bn loss in Q2 2019 due to change in accounting method for Lyft shares

Maria Nikolova

The shares in Lyft that Rakuten holds have previously been measured at fair value through profit or loss.

Tokyo-based online services provider Rakuten Inc (TYO:4755) is 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).

In an announcement on its website, Rakuten explains that the shares of Lyft that Rakuten holds have previously been measured at fair value through profit or loss. However, it has been decided that the equity method will be applied from the second quarter of the fiscal year ending December 2019 because, among other considerations, Rakuten owns shares and, through its own appointed director, is actively involved with the board of directors, and can therefore exercise significant influence over Lyft.

Rakuten says it will record an unrealized loss of JPY 28.4 billion in the second quarter of the fiscal year ending December 2019 as a result of this change in accounting method.

Let’s recall that, in April this year, Rakuten said it expected to record a valuation gain on its investment in Lyft in the three months ended March 31, 2019.

Back then, Rakuten explained it is a shareholder of Lyft, which was listed on NASDAQ as a public company on March 29, 2019. In accordance with Lyft’s listing, Rakuten evaluated the shares of Lyft, and as a result, Rakuten forecast it would record a valuation gain of approximately 110 billion yen in the period from January 1, 2019 to March 31, 2019.

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