The Financial Accounting Standards Board (FASB) by a 7-0 vote agreed to effectively finalize new rules that will require public companies to break out “relevant” expense line items on the income statement by disclosing in the notes to the financial statements certain expenses such as purchases of inventory, employee compensation (including salaries, bonuses, share-based payments and medical and pension benefits), depreciation and intangible asset amortization.
Companies will have to put all required expense items into a table, along with some expenses they already disclose. Businesses will separately need to disclose selling expenses, which are expenses tied to distributing, marketing and selling products or services
The rule is effective for fiscal years beginning after Dec. 15, 2026, and interim periods within fiscal years beginning after Dec. 15, 2027. FASB said the effective dates provide lead time for companies to comply, but said companies can start reporting earlier if they wish.
FASB is aiming to formally issue the requirements later this year.
IRS Reports $1 Billion Past-Due Collected
As part of its stepped up enforcement under the Inflation Reduction Act (IRA), the IRS just reported that it has collected more than $1 billion in past-due taxes.
In its July 11 press release, IRS Commissioner Danny Werfel attributed the collections to the additional funding that the agency received under the 2022 Act, adding that the IRS “has focused IRA resources on expanded enforcement work to pursue complex partnerships, large corporations and high-income, high-wealth individuals who do not pay overdue tax bills.”
The 2022 Inflation Reduction Act initially called for an additional $80 billion in funding over a 10-year period for the IRS on top of its annual apportionment. That was reduced by $20 billion in a subsequent bipartisan agreement.
The Inflation Reduction Act, passed in 2022, included a provision to raise revenue through the imposition of a new 1% excise tax on stock repurchases by certain corporations. After over a year of wrangling for how that tax was to be reported and paid, the IRS and Treasury released its final regulations on July 19.
The 2022 stock repurchase tax applies to stock repurchases after December 31, 2022, and primarily impacts publicly traded domestic corporations that repurchase their stock or whose stock is acquired by certain affiliates.
For a detailed look at the new regs, and filing requirements for various entities, please see:
Financial Restatements filed with the SEC have declined by more than 50% over a 10-year period, according to a survey conducted by the Center for Audit Quality (CAQ).
CAQ, which conducted an analysis of 5,793 restatements from 2013-2022, said 858 restatements were filed in 2013, compared to 402 in 2022. It defined restatements as “corrections of errors in public company financial statements filed with the [SEC].”
With so much attention on Artificial Intelligence, it’s not surprising that venture capitalists globally are pouring money into AI companies, both startups and later stage. In the first half of 2024, that amounted to more than $35.5 billion.
In the US, AI firms captured VC attention as well, with several securing funding exceeding $1 billion in the first half of 2024.
Topping the list was Elon Musk’s xAI, which secured $6 billion in Series B funding. xAI is building an AI platform that, according to the company, will “accelerate human scientific discovery”. Investors included Sequoia, Valor Equity Partners and Fidelity, among others. xAI is valued at a whopping $24 billion.
New Jersey-based CoreWeave raised $1.1 billion in a Series C round, which included investors from Qualcomm Ventures, Nvidia and others. The company provides GPU infrastructure.
San Francisco-based startup ScaleAI secured $1 billion in a Series F round led by a group of investors that included Amazon. The startup provides data labeling services for training AI models.
For more information on US AI companies that raised more than $100-plus million in VC funding so far this year, please see:
Traditional US Initial Public Offerings are making a comeback, with 80 companies raising $16.31 billion by mid-July of this year. If momentum continues, 2024 is expected to far exceed the $18.2 billion that was raised by 101 companies for all of 2023.
According to industry tracker IPO Insider, while the median IPO size was approximately $75 million, three companies did manage to raise over $1 billion in the first half of 2024.
Tech companies represented 25% of the number of IPO deals, followed by Healthcare (21.25%), Manufacturing (12.50%), Consumer goods (11.25%), Consumer services (8.75%), Financials (7.5%), Transportation (5%), and Other (8.75%).
Though technology companies dominated the field with 20 IPOs, investors who poured money into those companies saw a median return of 4.2% at the IPO; far smaller than the 190.1% median returns that were enjoyed by those who invested in the more traditional Basic Materials sector.
To view a daily update on the IPO market, including information about IPO returns and underwriters who led the deals, please see:
As investors gained more confidence in traditional IPOs, their fever for Special Purpose Acquisition (SPAC) IPOs apparently has broken. Only 19 deals closed so far this year, raising just over $3 billion. That’s a far cry from 2021, when at height of the frenzy, traditional IPOs took a back seat and SPACs raised more than $162.5 billion in 613 deals.
In addition to the significant decline in number of SPAC deals since 2021, SPAC Insider is reporting that the average gross proceeds is lower as well. This average gross proceeds from the 2024 deals has been $160.6 million, compared to $265.1 million in 2021.
For a detailed look at the numbers, De-SPAC returns by industry, and much more, please see:
