neroden
Model S Owner and Frustrated Tesla Fan
Having looked at a lot of balance sheets, I find Tesla's accounting methods remarkably transparent. (Try looking at any oil company, any bank, any railroad, General Electric, Berkshire Hathaway, or Amazon; everything important is obscured massively.)
That said, the 2018 (revenue) and 2019 (lease) changes to GAAP will help make Tesla's accounting substantially more comprehensible; GAAP required misleading nonsense previously. There should be a very large one-time balance sheet adjustment at the bottom this quarter, and there might be another one in Q1 2019.
The legacy SolarCity numbers are going to have to be completely recalculated and may swamp the changes to car leasing numbers, though I'm not sure how much of that goes through now (probably PPAs and loans) and how much in 2019 (probably leases). Large quantities of revenue will be brought forward, where it was to be booked in distant out-years under the previous rules. The key issue is the more complicated contracts where the payments varied depending on multiple things; they will get recognized earlier. Hunks of income will be shifted to "interest received", in addition.
The modified retrospective approach attaches a "catch-up" revenue (or negative revenue) to the revenue for the first quarter of the new rules. So we may see large revenues (or even negative revenues) booked for Q1 2018 just due to the accounting change.
Honestly, I'm waiting for Q2 numbers for the dust to settle. I don't think the Q1 numbers will be very readable.
That said, the 2018 (revenue) and 2019 (lease) changes to GAAP will help make Tesla's accounting substantially more comprehensible; GAAP required misleading nonsense previously. There should be a very large one-time balance sheet adjustment at the bottom this quarter, and there might be another one in Q1 2019.
The legacy SolarCity numbers are going to have to be completely recalculated and may swamp the changes to car leasing numbers, though I'm not sure how much of that goes through now (probably PPAs and loans) and how much in 2019 (probably leases). Large quantities of revenue will be brought forward, where it was to be booked in distant out-years under the previous rules. The key issue is the more complicated contracts where the payments varied depending on multiple things; they will get recognized earlier. Hunks of income will be shifted to "interest received", in addition.
The modified retrospective approach attaches a "catch-up" revenue (or negative revenue) to the revenue for the first quarter of the new rules. So we may see large revenues (or even negative revenues) booked for Q1 2018 just due to the accounting change.
Honestly, I'm waiting for Q2 numbers for the dust to settle. I don't think the Q1 numbers will be very readable.
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