“The restatement pertains to the accounting treatment for public and private placement warrants that were outstanding at the time of the business combination with DiamondPeak Holdings Corp.” in October 2020, Lordstown said in a news release. Simply Good’s restatement came three days after electric pickup truck maker Lordstown Motors said it would restate its statements for the year ended Dec. 31, 2020 for similar reasons. Seeking Alpha said the SEC’s move had taken the wind out of the SPAC boom that started last year when a record 248 SPACs went public. Other SPACs that have restated their results include Social Capital Hedosophia Holdings, Northern Genesis Acquisition Corp., QuantumScape, Virgin Galactic, and DraftKings.
Consistent with the SEC guidance, the company now intends to restate financial statements “such that the warrants are accounted for as liabilities and marked-to-market each reporting period.” On Friday, snack maker Simply Good Foods became the latest SPAC to announce a restatement, saying it had been accounting for warrants as equity under a fixed accounting model.
As a result, Simply Good said, it expects to recognize an incremental liability on its balance sheet of $110 million to $130 million for the quarter ended Feb. 27, 2021. According to Seeking Alpha, the SEC “threw the SPAC market into turmoil” by indicating that “in some cases, special purpose acquisition companies should account for the warrants as liabilities rather than as equity in the SPAC. That could require many SPACs to restate previous financial statements, and also make accounting much more complicated and expensive going forward.”
Source www.cfo.com Guidance, Lordstown Motors, Simply Good Foods, SPAC, special purpose acquisition companies, U.S. Securities and Exchange Commission, warrants
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