Oct 23 2019, 10:35 AMOct 23 2019, 9:20 PMOctober 23 2019, 10:35 AMOctober 23 2019, 9:20 PM
Since WeWork is not acquiring the majority of SoftBank, the company will be an associate and not a subsidiary of the Japanese conglomerate. Had WeWork taken control of the co-workspace operator, Japanese accounting rules would’ve required it to consolidate the work into its financial statements, adding $22bn of debt and $47bn of lease obligations to the $137bn of liabilities already on its balance sheet. By elevating SoftBank from a passive investment to an associate, WeWork no longer needs to mark to market its holding every time SoftBank raises fresh cash. Instead WeWork only needs to include SoftBank's net assets on its balance sheet, and these are still positive, and it may be able to write off its operating losses against taxable income.