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Twitter Stashes Another $27 Million in Debt Off-Balance Sheet
Social media platform’s off-balance sheet liabilities now top a half billion dollars.
October 28, 2021
Ninety days ago we detailed Twitter’s (TWTR) use of an accounting loophole that allows the company to exclude more than $500 million in operating leases from its balance sheet. In its latest 10-Q, Twitter revealed it’s adding to the “not yet commenced” operating leases it keeps off-balance sheet.

The $576.9 million in “not yet commenced” leases is up $27.6 million from $549.3 million last quarter. Excluding “not yet commenced” leases from the balance sheet is an accounting loophole Twitter and others are using to hide billions of dollars of liabilities from investors.

Under the loophole, companies can omit leases from the balance sheet that haven’t started as well as corporate offices under construction or build-to-suit arrangements. It’s seemingly inconsistent with FASB’s guidance on the topic which states if a lease is legally binding— as Accenture acknowledges— Topic 842 (ASU 2016-02) makes clear it must be accounted for on the balance sheet:

“A lessee should recognize in the statement of financial position a liability to make lease payments (the lease liability)...”
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