An “indefinitely delayed” financial accounting standard (known as FAS 150) would have been detrimental to closely held contracting companies by requiring them to account for mandatorily redeemable shares on their income statement as a liability.
This standard, proposed by the Financial Accounting Standards Board (FASB), would wipe out much of the net worth of private companies, and make it extremely difficult for them to obtain bonding and insurance on projects, according to a release from the Associated General Contractors of America.
Most non-public construction-related companies have buy/sell agreements, and FAS 150 originally required companies to classify mandatorily redeemable shares as a liability on their balance sheets, in many cases wiping out the net worth of these closely held businesses, making it hard to demonstrate collateral to lenders, insurance companies and bonding agents. Now delayed, many in the contracting business are watching to see if the FASB will advance in the future.Latest from Construction & Demolition Recycling
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