| Accounting Policies, by Policy (Policies) | 12 Months Ended |
| Dec. 31, 2020 |
| Accounting Policies [Abstract] | |
| Principles of Consolidation and Basis of Presentation | ( a) Principles of Consolidation and
Basis of Presentation The consolidated financial
statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The consolidated
financial statements also include the accounts of Great American Global Partners, LLC which is controlled by the Company as a
result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence
over the funding of operations. All intercompany accounts and transactions have been eliminated upon consolidation. The accounting guidance
requires an enterprise to perform an analysis to determine whether the enterprise’s variable interest or interests give
it a controlling financial interest in a variable interest entity; to require ongoing reassessments of whether an enterprise is
the primary beneficiary of a Variable Interest Entity (“VIE”); to eliminate the solely quantitative approach previously
required for determining the primary beneficiary of a VIE; to add an additional reconsideration event for determining whether
an entity is a VIE when any changes in facts and circumstances occur such that holders of the equity investment at risk, as a
group, lose the power from voting rights or similar rights of those investments to direct the activities of the entity that most
significantly impact the entity’s economic performance; and to require enhanced disclosures that will provide users of financial
statements with more transparent information about an enterprise’s involvement in a VIE. |
| Use of Estimates | (b) Use of Estimates The preparation of the
consolidated financial statements in accordance with accounting principles generally accepted in the United States of America
(“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities
at the date of the consolidated financial statements and reported amounts of revenue and expense during the reporting period.
Estimates are used when accounting for certain items such as valuation of securities, allowance for doubtful accounts, the fair
value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share
based arrangements and accounting for income tax valuation allowances, recovery of contract assets and sales returns and allowances.
Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under
the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. |
| Direct Cost of Services | (c) Revenue Recognition On January 1, 2018,
the Company adopted Accounting Standards Codification (“ASC”) 606 – Revenue from Contracts with Customers
Revenues are recognized
when control of the promised goods or performance obligations for services is transferred to the Company’s customers, in
an amount that reflects the consideration the Company expects to be entitled to in exchange for the goods or services. Revenues from contracts
with customers in the Capital Markets segment, Auction and Liquidation segment, Financial Consulting segment, Principal Investments
– United Online and magicJack segment and Brands segment are primarily comprised of the following: Capital Markets
segment Fees from wealth and
asset management services consist primarily of investment management fees that are recognized over the period the performance
obligation for the services are provided. Investment management fees are primarily comprised of fees for investment management
services and are generally based on the dollar amount of the assets being managed. Revenues from sales
and trading are recognized when the performance obligation is satisfied and include commissions resulting from equity securities
transactions executed as agent or principal and are recorded on a trade date basis and fees paid for equity research. Revenues from
other sources in the Capital Markets segment is primarily comprised of (i) interest income from loans receivable and
securities lending activities, (ii) related net trading gains and losses from market making activities, the commitment of
capital to facilitate customer orders and fair value adjustments on loans, (iii) trading activities from the Company’s
principal investments in equity and other securities for the Company’s account, and (iv) other income. Interest income from
securities lending activities consists of interest income from equity and fixed income securities that are borrowed from one party
and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing,
borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure
to fluctuations in the market value or securities borrowed and securities loaned. Other revenues include
(i) net trading gains and losses from market making activities in the Company’s fixed income group, (ii) carried interest
from the Company’s asset management recognized as earnings from financial assets within the scope of ASC 323 - Investments
- Equity Method and Joint Ventures Revenue from Contracts with Customers Investments - Equity Method and Joint Ventures Auction and Liquidation
segment Revenues earned from
Auction and Liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction
or liquidation are recognized over time when the performance obligation is satisfied. The Company generally uses the cost-to-cost
measure of progress for the Company’s contracts because it best depicts the transfer of services to the customer which occurs
as the Company incurs costs on its contracts. Under the cost-to-cost measure of progress, the extent of progress towards completion
is measured based on the ratio of costs incurred to date to the total estimated costs at completion of the performance obligation.
Revenues, including estimated fees or profits, are recorded proportionally as costs are incurred. Costs to fulfill the contract
include labor and other direct costs incurred by the company related to the contract. Due to the nature of the guarantees and
performance obligations under these contracts, the estimation of revenue that is ultimately earned is complex and subject to many
variables and requires significant judgment. It is common for these contracts to contain provisions that can either increase or
decrease the transaction price upon completion of the Company’s performance obligations under the contract. Estimated amounts
are included in the transaction price at the most likely amount it is probable that a significant reversal of revenue will not
occur. The Company estimates of variable consideration and determination of whether or not to include estimated amounts in the
transaction price are based on an assessment of the Company’s anticipated performance under the contract taking into consideration
all historical, current and forecasted information that is reasonably available to the Company. Costs that directly relate to
the contract and expected to be recoverable are capitalized as an asset and included in advances against customer contracts in
the accompanying consolidated balance sheets. These costs are amortized as the services are transferred to the customer over the
contract period, which generally does not exceed six months, and the expense is recognized as a component of direct cost of services.
If, during the auction or liquidation sale, the Company determines that the total costs to be incurred on a performance obligation
under a contract exceeds the total estimated revenues to be earned, a provision for the entire loss on the performance obligation
is recognized in the period the loss is determined. If the Company determines
that the variable consideration used in the initial determination of the transaction price for the contract is such that the total
recoveries from the auction or liquidation will not exceed the guaranteed recovery values or advances made in accordance with
the contract, the transaction price will be reduced and a loss or negative revenue could result from the performance obligation.
A provision for the entire loss as negative revenue on the performance obligation is recognized in the period the loss is determined. Financial Consulting
segment Principal Investments
– United Online and magicJack segment Service revenues from
fees charged to United Online pay accounts are recognized in the period in which fees are fixed or determinable and the related
services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit
card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period. Advance payments
from pay accounts are recorded in the consolidated balance sheets as deferred revenue. In circumstances where payment is not received
in advance, revenues are only recognized if collectability is probable. Revenues from sales
of the magicJack devices and access rights represent revenues recognized from sales of the magicJack devices to retailers, wholesalers,
or direct to customers, net of returns, over the period associated with the access right period. Revenues for the device and initial
access right were accounted for as a combined unit of accounting and recognized ratably over the service term. The transaction
price for magicJack devices is allocated between equipment and service based on stand-alone selling prices. Revenues allocated
to equipment are recognized upon delivery (when control transfers to the customer), and service revenue is recognized ratably
over the service term. The Company estimates the return of direct sales as part of the transaction price using a six month rolling
average of historical returns. Revenues for hardware and shipping are recognized at the time of delivery and revenues for services
are recognized ratably over the service term. The Company recognizes revenue for hardware based on delivery terms to the retailer
and revenue for service is deferred for the delay period and recognized ratably over the remaining access right period. Revenues from access
rights renewals and mobile apps represents revenues from customers purchasing rights to access the Company’s servers beyond
the access right period included in a magicJack device or magicJack service. The extended access right ranges from one to five
years. These fees charged to customers are initially deferred and recognized as revenue ratably over the extended access right
period. Revenues from access rights granted to users of the magicJack Apps are recognized ratably over the access right period. Revenues from the
sale of other magicJack related products are revenues recognized from the sale of other items related to the magicJack devices
and access right renewals the Company offers its customers, including porting fees charged to customers to port their existing
phone number to a magicJack device or services, fees charged for customer to select a custom, vanity or Canadian phone number
and fees charged to customers to change their existing number. These revenues are recognized at the time of sale. Prepaid minutes revenues
are primarily from the usage and expiration of international prepaid minutes, net of chargebacks. Revenues from prepaid minutes
are recognized as minutes are used. Revenues from access
and wholesale charges are generated from access fees charged to other telecommunication carriers or providers for Interexchange
Carriers (“IXC”) calls terminated to the Company’s end-users, and other fees charged to telecommunication carriers
or providers for origination of calls to their 800-numbers. These revenues are recorded based on rates set forth in the respective
state and federal tariffs or negotiated contract rates, less provisions for billing adjustments. Revenues from access and wholesale
charges are recognized as calls are terminated to the network. UCaaS revenues are
recurring monthly service revenue from sales of its hosted services. Customers are billed monthly in advance for these recurring
services and in arrears for one time service charges and other certain usage charges. UCaaS revenues also includes non-recurring
revenue from the sale of hardware and network equipment. Revenues for recurring monthly service are recorded in the period the
services are provided over the term of the respective customer agreements and revenue from the sale of hardware and network equipment
is recognized in the period that the equipment is delivered and put into service. Advertising revenues
consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing
the partner’s Internet search services and amounts generated from display advertisements. The Company recognizes such advertising
revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance
criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such
as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met
and whether the fees are fixed or determinable based on a reconciliation of the performance criteria and the payment terms associated
with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance
data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data
is available. Brands segment
Payments received
as consideration for the grant of a license are recorded as deferred revenue at the time payment is received and recognized ratably
as revenue over the term of the license agreement. Advanced royalty payments are recorded as deferred revenue at the time payment
is received and recognized as revenue when earned. Revenue is not recognized unless collectability is probable. |
| Direct Cost of Services | (d) Direct Cost
of Services Direct cost of services
relates to service and fee revenues. Direct costs of services include participation in profits under collaborative arrangements
in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct
expenses related to Auction and Liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation
segment. Direct cost of services in the Principal Investments - United Online and magicJack segment include cost of telecommunications
and data center costs, personnel and overhead-related costs associated with operating the Company’s networks, servers and
data centers, sales commissions associated with multi-year service plans, depreciation of network computers and equipment, amortization
expense, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to
customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an
allocation of the Company’s overhead costs. |
| Interest Expense - Securities Lending Activities and Loan Participations Sold | (e) Interest Expense - Securities Lending
Activities and Loan Participations Sold Interest expense from
securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest
expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company
and totaled $40,490, $30,739 and $23,039 for the years ended December 31, 2020, 2019 and 2018, respectively. Loan participations
sold as of December 31, 2020 and 2019 totaled $17,316 and $12,478, respectively. Interest expense from loan participations
sold totaled $1,961 and $1,405 for the years ended December 31, 2020 and 2019, respectively. |
| Concentration of Risk | (f) Concentration
of Risk Revenues in the Capital
Markets, Financial Consulting, Principal Investments - United Online and magicJack and Brands segments are currently primarily
generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States,
Australia, Canada and Europe. The Company’s
activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured
creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company
seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s
exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate
the exposure to losses on any one specific liquidations services contract, the Company sometimes conducts operations with third
parties through collaborative arrangements. The Company maintains
cash in various federally insured banking institutions. The account balances at each institution periodically exceed the Federal
Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration of credit
risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The
Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed
to parties in accordance with the collaborative arrangements. |
| Advertising Expenses | (g)
Advertising Expenses The Company expenses
advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $3,013, $1,903
and $2,727 for the years ended December 31, 2020, 2019 and 2018, respectively. Advertising expense is included as a component
of selling, general and administrative expenses in the accompanying consolidated statements of income. |
| Share-Based Compensation | (h)
Share-Based Compensation The Company’s
share-based payment awards principally consist of grants of restricted stock, restricted stock units and costs associated with
the Company’s employee stock purchase plan. In accordance with the applicable accounting guidance, share-based payment awards
are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant
of membership interests at fair value on the date of grant and recognizes compensation expense in the consolidated statements
of income over the requisite service or performance period the award is expected to vest. In June 2018, the Company
adopted the 2018 Employee Stock Purchase Plan (“Purchase Plan”) which allows eligible employees to purchase common
stock through payroll deductions at a price that is 85% of the market value of the common stock on the last day of the offering
period. In accordance with the provisions of ASC 718, Compensation - Stock Compensation |
| Income Taxes | (i) Income Taxes The Company
recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in
the consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the
difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect
for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and
credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for
such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such
deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an
ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and
other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on
such assets would be reduced. The Company recognizes
tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination
by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s
measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized
tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. |
| Cash and Cash Equivalents | (j)
Cash and Cash Equivalents The Company considers
all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
| Restricted Cash | (k)
Restricted Cash As of December 31,
2020, restricted cash included $764 of cash collateral for foreign exchange contracts and $471 of collateral related to one of
the Company’s telecommunication suppliers. As of December 31, 2019, restricted cash balance is $471 related to one of the
Company’s telecommunication suppliers. |
| Securities Borrowed and Securities Loaned | (l)
Securities Borrowed and Securities Loaned Securities borrowed
and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate
the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities
loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities
borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities
borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional
collateral obtained, or excess collateral recalled, when deemed appropriate. The Company accounts
for securities lending transactions in accordance with ASC “Topic 210: Balance Sheet,” which requires companies to
report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and
these items are presented on a gross basis in the consolidated balance sheets. |
| Due from/to Brokers, Dealers, and Clearing Organizations | (m)
Due from/to Brokers, Dealers, and Clearing Organizations The Company clears
all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable
from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing
deposits and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts
payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities
loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities
owned by the Company and held on deposit at the clearing broker. |
| Accounts Receivable | (n)
Accounts Receivable Accounts receivable
represents amounts due from the Company’s Auction and Liquidation, Financial Consulting, Capital Markets, Principal Investments
- United Online and magicJack and Brands customers. The Company maintains an allowance for doubtful accounts for estimated losses
inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes the expected loss model.
Management also considers historical losses adjusted for current market conditions and the customers’ financial condition
and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all
means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance
sheet credit exposure related to its customers. The Company’s bad debt expense and changes in the allowance for doubtful
accounts for the years ended December 31, 2020 and 2019 are included in Note 6. |
| Leases | (o)
Leases The Company determines
if an arrangement is, or contains, a lease at the inception date. Operating leases are included in right-of-use assets, with the
related liabilities included in operating lease liabilities in the consolidated balance sheet. Operating lease
assets represent our right to use an underlying asset for the lease term and lease liabilities represent our obligation to
make lease payments arising from the lease. Operating lease assets and liabilities are recognized at the lease commencement
date based on the estimated present value of lease payments over the lease term. We use our estimated incremental borrowing
rate in determining the present value of lease payments. Variable components of the lease payments such as fair market value
adjustments, utilities, and maintenance costs are expensed as incurred and not included in determining the present value. Our
lease terms include options to extend or terminate the lease when it is reasonably certain that we will exercise that option.
Lease expense is recognized on a straight-line basis over the lease term. We have lease agreements with lease and non-lease
components which are accounted for as a single lease component. See Note 9 for additional information on leases. |
| Property and Equipment | (p)
Property and Equipment Property
and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated
useful lives of the assets. Property and equipment held under finance leases are amortized on a straight-line basis over the shorter
of the lease term or estimated useful life of the asset. Depreciation and amortization expense on property and equipment was $3,632,
$5,202 and $4,674 for the years ended December 31, 2020, 2019 and 2018, respectively. |
| Loans Receivable | (q)
Loans Receivable The
Company adopted the new credit loss standard effective January 1, 2020. Pursuant to ASU 2016-13 and its amendment ASU 2019-05,
the Company elected the irrevocable fair value option for all outstanding loans receivable that were previously measured at amortized
cost. Under the fair value option, loans receivable are measured at each reporting period based upon their exit value in an orderly
transaction and unrealized gains or losses from changes in fair value are recorded in the consolidated statements of income. These
loans are no longer subject to evaluation for impairment through an allowance for loan loss as such losses will be captured through
fair value changes. The impact of adopting ASC 326 was immaterial to the consolidated financial statements. Loans
receivable, at fair value totaled $390,689 and $43,338 at December 31, 2020 and 2019, respectively. The loans have various maturities
through December 2024. As of December 31, 2020, and 2019, the historical cost of loans receivable accounted for under the
fair value option was $405,064 and $32,578, respectively, which included principal balances of $416,401 and $32,691 and unamortized
costs, origination fees, premiums and discounts, totaling $11,337 and $113, respectively. During the year ended December 31, 2020,
the Company recorded unrealized losses of $22,033 on the loans receivable, at fair value, which is included in trading income
(losses) and fair value adjustments on loans on the consolidated statement of income. Prior
to the adoption of the new credit loss standard effective January 1, 2020, at December 31, 2019 loans receivable, at historical
cost totaled $225,848. Loans receivable, at cost were reported at their outstanding principal balances of $232,118 net of $6,270
of unearned income, and loan origination costs which includes unamortized deferred fees and costs on originated loans, and for
purchased loans, net of any unamortized premiums or discounts. The
Company may periodically provide limited guarantees to third parties for loans that are made to investment banking and lending
customers. At December 31, 2020, the Company has provided limited guarantees with respect to the Franchise Group, Inc. (collectively
with all of its affiliates, “FRG”) as further described in Note 21 and Babcock & Wilcox Enterprises, Inc. (“B&W”)
as further described in Note 17(c). In accordance with the new credit loss standard, the Company evaluates the need to record
an allowance for credit losses for these loan guarantees since they have off-balance sheet credit exposures. At December
31, 2020, the Company has not recorded any provision for credit losses on the FRG and B&W guarantees since the underlying
guaranteed loans are senior to most of the outstanding debt of FRG and B&W and the Company believes that there is sufficient
collateral to protect the Company from any credit loss exposure. The maximum amount of credit exposure related to these
limited guarantees is approximately $195,000. Interest
income on loans receivable is recognized based on the stated interest rate of the loan on the unpaid principal balance plus the
amortization of any costs, origination fees, premiums and discounts and is included in interest income - loans and securities
lending on the consolidated statement of income. Loan origination fees and certain direct origination costs are deferred and recognized
as adjustments to interest income over the lives of the related loans. Unearned income, discounts and premiums are amortized to
interest income using a level yield methodology. |
| Securities and Other Investments Owned and Securities Sold Not Yet Purchased | (r)
Securities and Other Investments Owned and Securities Sold Not Yet Purchased Securities
owned consist of equity securities including, common and preferred stocks, warrants, and options; corporate bonds; other fixed
income securities including, government and agency bonds; loans receivable valued at fair value; and investments in partnerships.
Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted
price and thereby create a liability to purchase the security in the market at prevailing prices. Changes in the value of these
securities are reflected currently in the results of operations. As
of December 31, 2020 and 2019, the Company’s securities and other investments owned and securities sold not yet purchased
at fair value consisted of the following securities:
December 31, December 31,
2020 2019
Securities and other investments owned:
Equity securities $ 697,288 $ 353,162
Corporate bonds 3,195 19,020
Other fixed income securities 1,913 8,414
Partnership interests and other 74,923 27,617
$ 777,319 $ 408,213
Securities sold not yet purchased:
Equity securities $ 4,575 $ 5,360
Corporate bonds 4,288 33,436
Other fixed income securities 1,242 3,024
$ 10,105 $ 41,820 |
| Goodwill and Other Intangible assets | (s) Goodwill and Other
Intangible Assets The Company accounts
for goodwill and intangible assets in accordance with the accounting guidance which requires that goodwill and other intangibles
with indefinite lives be tested for impairment annually or on an interim basis if events or circumstances indicate that the fair
value of an asset has decreased below its carrying value. Goodwill includes
the excess of the purchase price over the fair value of net assets acquired in business combinations and the acquisition of noncontrolling
interests. ASC 350 requires that goodwill be tested for impairment at the reporting unit level (operating segment or one level
below an operating segment). Application of the goodwill impairment test requires judgment, including the identification of reporting
units, assigning assets and liabilities to reporting units, assigning goodwill to reporting units, and determining the fair value.
The Company operates five reporting units, which are the same as its reporting segments described in Note 22. Significant judgment
is required to estimate the fair value of reporting units which includes estimating future cash flows, determining appropriate
discount rates and other assumptions. Changes in these estimates and assumptions could materially affect the determination of
fair value and/or goodwill impairment. When testing goodwill
for impairment, in accordance with ASU 2017-04, Intangibles-Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment, the Company made a qualitative assessment of the impact of the COVID-19 outbreak on goodwill and other intangible
assets. Based on the Company’s qualitative assessments during 2020, the Company concluded that a positive assertion can
be made from the qualitative assessment that it is more likely than not that the fair value of the reporting units exceeded their
carrying values and no impairments were identified. The Company reviews
the carrying value of its amortizable intangibles and other long-lived assets for impairment at least annually or whenever events
or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of long-lived
assets is measured by comparing the carrying amount of the asset or asset group to the undiscounted cash flows that the asset
or asset group is expected to generate. If the undiscounted cash flows of such assets are less than the carrying amount, the impairment
to be recognized is measured by the amount by which the carrying amount of the asset or asset group, if any, exceeds its fair
market value. During the year ended December 31, 2020, the Company determined that the COVID-19 outbreak was a triggering event
for testing the indefinite-lived tradenames in the Brands segment during the first quarter and again in the second quarter and
determined that the indefinite-lived tradenames in the Brands segment were impaired. As a result, the Company recognized impairment
charges of $12,500, during the year ended December 31 2020, which are included as an impairment of tradenames in the Company’s
consolidated statement of income. During the year ended December 31, 2019, the Company recognized no impairment of intangibles. |
| Fair Value Measurements | (t) Fair Value Measurements The Company’s
assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers
factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer
a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that
the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the
absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted
prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets.
Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the
asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets,
quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are
observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market
activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure
fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within
which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant
to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the
fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. The Company’s
securities and other investments owned and securities sold and not yet purchased are comprised of equity securities including,
common and preferred stocks, warrants, and options corporate bonds; other fixed income securities including, government and agency
bonds; loans receivable valued at fair value; and investments in partnerships. Investments in equity securities that are based
on quoted prices in active markets are included in Level 1 of the fair value hierarchy. The Company also holds nonpublic equity
securities for which there is little or no public market and fair value is determined by management on a consistent basis. For
investments where little or no public market exists, management’s determination of fair value is based on the best available
information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into
consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities
and liquidity risks. These investments are included in Level 3 of the fair value hierarchy. Investments in partnership interests
include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds.
The Company also invests in priority investment funds and the underlying securities held by these funds are primarily corporate
and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. The Company’s
partnership and investment fund interests are valued based on the Company’s proportionate share of the net assets of the
partnerships and funds; the value for these investments are derived from the most recent statements received from the general partner
or fund administrator. These partnership and investment fund interests are valued at net asset value (“NAV”) and are
excluded from the fair value hierarchy in the table below in accordance with ASC “Topic 820: Fair Value Measurements.”
At December 31, 2020 and 2019, partnership and investment fund interests valued at NAV of $74,923 and $27,617, respectively, are
included in securities and other investments owned in the accompanying consolidated balance sheets. Securities and other
investments owned also include investments in nonpublic entities that do not have a readily determinable fair value and do not
report NAV per share. These investments are accounted for using a measurement alternative under which they are measured at cost
and adjusted for observable price changes and impairments. Observable price changes result from, among other things, equity transactions
for the same issuer executed during the reporting period, including subsequent equity offerings or other reported equity transactions
related to the same issuer. For these transactions to be considered observable price changes of the same issuer, we evaluate whether
these transactions have similar rights and obligations, including voting rights, distribution preferences, conversion rights, and
other factors, to the investments we hold. Any investments adjusted to their fair value by applying the measurement alternative
are disclosed as nonrecurring fair value measurements, including the level in the fair value hierarchy that was used. We had no
investments measured at fair value on a nonrecurring basis for the years ended December 31, 2020 and 2019. At December 31, 2020,
investments in nonpublic entities valued using a measurement alternative of $26,948 are included in securities and other investments
owned in the accompanying consolidated balance sheets. The fair value of mandatorily
redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry
comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models. The following tables
present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of December 31,
2020 and 2019.
Financial Assets and Liabilities Measured at Fair Value
on a Recurring Basis at December 31, 2020 Using
Quoted prices in Other Significant
Fair value at active markets for observable unobservable
December 31 identical assets inputs inputs
2020 (Level 1) (Level 2) (Level 3)
Assets:
Securities and other investments owned:
Equity securities $ 670,340 $ 521,048 $ — $ 149,292
Corporate bonds 3,195 — 3,195 —
Other fixed income securities 1,913 — 1,913 —
Total securities and other investments owned 675,448 521,048 5,108 149,292
Loans receivable, at fair value 390,689 — — 390,689
Total assets measured at fair value $ 1,066,137 $ 521,048 $ 5,108 $ 539,981
Liabilities:
Securities sold not yet purchased:
Equity securities $ 4,575 $ 4,575 $ — $ —
Corporate bonds 4,288 — 4,288 —
Other fixed income securities 1,242 — 1,242 —
Total securities sold not yet purchased 10,105 4,575 5,530 —
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,700 — — 4,700
Total liabilities measured at fair value $ 14,805 $ 4,575 $ 5,530 $ 4,700
Financial Assets and Liabilities Measured at Fair Value
on a Recurring Basis at December 31, 2019 Using
Quoted prices in Other Significant
Fair value at active markets for observable unobservable
December 31 identical assets inputs inputs
2019 (Level 1) (Level 2) (Level 3)
Assets:
Securities and other investments owned:
Equity securities $ 353,162 $ 243,911 $ — $ 109,251
Corporate bonds 19,020 — 19,020 —
Other fixed income securities 8,414 — 8,414 —
Total securities and other investments owned 380,596 243,911 27,434 109,251
Loans receivable, at fair value 43,338 — — 43,338
Total assets measured at fair value $ 423,934 $ 243,911 $ 27,434 $ 152,589
Liabilities:
Securities sold not yet purchased:
Equity securities $ 5,360 $ 5,360 $ — $ —
Corporate bonds 33,436 — 33,436 —
Other fixed income securities 3,024 — 3,024 —
Total securities sold not yet purchased 41,820 5,360 36,460 —
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,616 — — 4,616
Total liabilities measured at fair value $ 46,436 $ 5,360 $ 36,460 $ 4,616 As of December 31, 2020
and 2019, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $539,981
and $152,589, respectively, or 20.3% and 6.6%, respectively, of the Company’s total assets. In determining the fair value
for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate the value,
including where applicable, over-the-counter market trading activity. The following table
summarizes the significant unobservable inputs in the fair value measurement of level 3 financial assets and liabilities by category
of investment and valuation technique as of December 31, 2020:
Fair value at
December 31, Weighted
2020 Valuation Technique Unobservable Input Range Average
Assets:
Equity securities $ 149,292 Market approach Multiple of EBITDA 5.50x - 8.00x 6.20x
Multiple of PV-10 0.27x 0.27x
Market price of related security $0.40 - $30.15/share $2.98
Option pricing model Annualized volatility 0.34 - 1.11 0.54
Loans receivable at fair value 390,689 Discounted cash flow Market interest rate 4.9% - 37.5% 16.7%
Market approach Market price of related security $0.40/share $0.40
Total level 3 assets measured at fair value $ 539,981
Liabilities:
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 $ 4,700 Market approach Operating income multiple 6.0x 6.0x The changes in Level
3 fair value hierarchy during the year ended December 31, 2020 and 2019 are as follows:
Level 3 Level 3 Changes During the Period Level 3
Balance at Fair Relating to Purchases, Transfer in Balance at
Beginning of Value Undistributed Sales and and/or out End of
Year Adjustments Earnings Settlements of Level 3 Period
Year Ended December 31, 2020
Equity securities $ 109,251 $ (4,358 ) $ — $ 54,178 $ (9,779 ) $ 149,292
Loans receivable at fair value 43,338 (21,676 ) 4,052 139,127 225,848 390,689
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,616 — 84 — — 4,700
Year Ended December 31, 2019
Equity securities $ 24,577 $ (4,809 ) $ 1,424 $ 91,243 $ (3,184 ) $ 109,251
Loans receivable at fair value 33,731 10,999 1,621 (3,013 ) — 43,338
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 4,633 — (17 ) — — 4,616 The Company adopted
ASU 2016-13 and its amendment ASU 2019-05 effective January 1, 2020. Pursuant to ASU 2016-13 and its amendment ASU 2019-05, the
Company elected the irrevocable fair value option for all outstanding loans receivable that were measured at amortized cost as
of December 31, 2019. The loans receivable, at fair value are included in transfers into level 3 fair value assets in the
above table. The amounts reported
in the table above for the years ended December 31, 2020 and 2019 include the amount of undistributed earnings attributable to
the noncontrolling interests that is distributed on a quarterly basis. The carrying amounts reported in the consolidated financial
statements for cash and cash equivalents, restricted cash, accounts receivable, accounts payable and accrued expenses and other
liabilities approximate fair value based on the short-term maturity of these instruments. As of December 31,
2020, the senior notes payable had a carrying amount of $870,783 and fair value of $898,606. The carrying amount of the term loan
approximates fair value because the effective yield of such instrument is consistent with current market rates of interest for
instruments of comparable credit risk. During the years
ended December 31, 2020 and 2019, except for the impact of the intangible impairment charge as described in Note 8- Goodwill
and Other Intangible Assets, there were no assets or liabilities measured at fair value on a non-recurring basis. The fair
value of the indefinite-lived intangible assets was determined based on a discounted cash flow model using a rate of
13.8%. The indefinite-lived intangible assets are level 3 assets in the fair value hierarchy. In the first quarter of
2020, certain tradenames in the Brand segment with a carrying value in the amount of $101,200 at December 31, 2019 had a fair
value of $97,200 at March 31, 2020, which resulted in an impairment charge of $4,000. In the second quarter of 2020, certain
tradenames in the Brands segment with a carrying value in the amount of $98,000 at March 31, 2020 had a fair value of $89,500
at June 30, 2020, which resulted in an impairment charge of $8,500. |
| Derivative and Foreign Currency Translation | (u)
Derivative and Foreign Currency Translation The Company periodically
uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain loans receivable
and Auction and Liquidation engagements with operations outside the United States. During the twelve months ended December 31,
2020, the Company’s use of derivatives consisted of the purchase of forward exchange contracts in the amount of 12,700 Euros,
of which 6,700 Euros were settled. As of December 31, 2020, forward exchange contracts in the amount of 6,000 Euros were outstanding.
The Company did not use any derivative contracts during the twelve months ended December 31, 2019. The forward exchange
contracts were entered into to improve the predictability of cash flows related to a retail store liquidation engagement and a
loan receivable. The net loss from forward exchange contracts was $285 during the year ended December 31, 2020. This amount is
reported as a component of selling, general and administrative expenses in the consolidated statement of income. The Company transacts
business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined
to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United
States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated
into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included
in stockholders’ equity as a component of accumulated other comprehensive income in the accompanying consolidated balance
sheets. Transaction (losses) gains were ($639), ($238) and 1,294, during the years ended December 31, 2020, 2019 and 2018,
respectively. These amounts are included in selling, general and administrative expenses in the Company’s consolidated statements
of income. |
| Common Stock Warrants | (v)
Common Stock Warrants The Company issued 821,816
warrants to purchase common stock of the Company (the “Wunderlich Warrants”) in connection with the acquisition of
Wunderlich Securities, Inc. (“Wunderlich”) on July 3, 2017. The Wunderlich Warrants entitle the holders of the warrants
to acquire shares of the Company’s common stock from the Company at an exercise price of $17.50 per share, subject to, among
other matters, the proper completion of an exercise notice and payment. The exercise price and the number of shares of Company
common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which include stock splits,
subdivisions or reclassifications of the Company’s common stock. On May 16, 2019, the Company repurchased 638,311 warrants
for $2,777 ($4.35 per warrant). On June 11, 2020, 167,352 warrants held in escrow from the acquisition of Wunderlich were cancelled
in accordance with the terms of the escrow instructions. The Wunderlich Warrants expire on July 3, 2022. As of December 31,
2020, Wunderlich Warrants to purchase 16,153 shares of common stock were outstanding. On
October 28, 2019, the Company issued 200,000 warrants to purchase common stock of the Company (the “BR Brands Warrants”)
in connection with the acquisition of a majority ownership interest in BR Brand Holdings LLC. The BR Brands Warrants entitle the
holders of the warrants to acquire shares of the Company’s common stock from the Company at an exercise price of $26.24 per
share. One-third of the BR Brands Warrants immediately vested and became exercisable upon issuance, and the remaining two-thirds
of warrants will vest and become exercisable following the first and/or second anniversaries of the closing, subject to BR Brands’
(or another related joint venture with Bluestar Alliance LLC) satisfaction of specified financial performance targets. The BR Brands
warrants expire three years after the last vesting event occurs. |
| Equity Investment | (w)
Equity Investment At December 31, 2020
and 2019, equity investments of $54,953 and $51,235, respectively, are included in prepaid expenses and other assets in the accompanying
consolidated balance sheets. bebe stores, inc. At December 31, 2020, the
Company had a 39.5% ownership interest in bebe stores, inc. (“bebe”). On November 10, 2020, the Company purchased an
additional 1,500,000 shares of newly issued common stock of bebe for $7,500 and increased its’ ownership interest increased
from 31.5% to 39.5%. The equity ownership in bebe is accounted for under the equity method of accounting and is included in prepaid
expenses and other assets in the consolidated balance sheets. National Holdings Corporation In 2018, the Company entered
into an agreement to acquire shares of National Holdings Corporation (“National Holdings”), a Nasdaq-listed issuer,
from Fortress Biotech, Inc. for an aggregate purchase price totaling approximately $22,900. The transaction was completed in two
tranches. In the first tranche, which was completed in the fourth quarter of 2018, the Company acquired shares representing 24%
of the total outstanding shares of National Holdings. The second tranche was completed in the first quarter of 2019. As of December
31, 2020, the Company had purchased 6,159,550 shares of National Holdings’ common stock, representing 45.2% of National Holdings’
outstanding shares, respectively, at $3.25 per share. The carrying value for the National Holdings investment is included in prepaid
expenses and other assets in the consolidated balance sheets. The equity ownership in National Holdings is accounted for under
the equity method of accounting. Other Equity Investments
The Company has other equity
investments, the largest being a 40% ownership interest in Lingo Management, LLC (“Lingo”) which was acquired in November
2020. The equity ownership in these other investments are accounted for under the equity method of accounting and is included in
prepaid expenses and other assets in the consolidated balance sheets. As of December 31, 2020,
the carrying values of the Company’s equity investment in bebe exceeded the fair value based on the quoted market prices.
In consideration of these facts, the Company evaluated its investment for impairment. The Company did not utilize bright-line tests
in the evaluation. Based on the available facts and information regarding the operating results of bebe, the Company’s ability
and intent to hold the investments until recovery, the relative amount of the declines, and the length of time that the fair values
were less than the carrying values, the Company concluded that recognition of impairment losses in earnings was not required. However,
the Company will continue to monitor the investment and it is possible that impairment losses will be recorded in earnings in future
periods based on changes in facts and circumstances or intentions. |
| Loan Participations Sold | (x)
Loan Participations Sold As of December 31, 2020
and 2019, the Company has sold investments to third parties (“Participants”) that are accounted for as secured borrowings
under ASC Topic 860, Transfers and Servicing. Under ASC Topic 860, a partial loan transfer does not qualify for sale accounting
in order for sale treatment to be allowed. A participation or other partial loan transfer that meets the definition of a participating
interest is classified as loan receivable and the portion transferred is recorded as a secured borrowing under loan participations
sold in the consolidated balance sheet. The Participants are entitled to payments made by the borrower of the related loan equal
to the current loan participations sold outstanding at the interest rates for the respective investment. In the event that the
borrower defaults, the Participants have rights to payments from such borrower, but do not have recourse to the Company. The terms
of the loan participations sold are commensurate with the terms of the related loan. As of December 31, 2020
and 2019, the Company had entered into participation agreements for a total of $17,316 and $12,478, respectively. In addition,
the interest income and interest expense related to the loan participations sold is presented gross on the consolidated statements
of income. |
| Supplemental Non-cash Disclosures | (y)
Supplemental Non-cash Disclosures During
the year ended December 31, 2020, non-cash investing activities included $11,133 non-cash conversions of equity method investments
and $26,238 conversion of loans receivable to shares of stock. In connection with the purchase of a loan receivable in the amount
of $61,687, the Company funded $24,434 in cash and the remaining $37,253 remains payable as a note payable at December 31, 2020. During
the year ended December 31, 2020, other non-cash activities included the recognition of new operating lease During
the year ended December 31, 2019, non-cash activities included the conversion of loans receivable in the amount of $12,209
into securities and other investments owned, the recognition of new operating issuance of warrants to
purchase the Company’s stock in the amount of $990 related to the purchase of BR Brand. |
| Reclassifications | (z) Reclassifications As of December 31,
2019, loans receivable recorded at fair value of $43,338 were previously included in securities and other investments owned, at
fair value. These loans receivable amounts have been reclassified and reported in loans receivable, at fair value to conform to
the 2020 presentation. During the year ended December 31, 2019, trading income and fair value adjustments on loans of $106,463
were previously included in services and fees income in the capital markets segment. These trading income and fair value adjustments
on loans amounts have been reclassified and reported in trading income and fair value adjustments on loans to conform to the 2020
presentation. For the years
ended December 31 2019 and 2018, $3,194 and $2,628 of dividends received from equity method investments that were previously
included in cash flows from investing activities have been reclassified and included in cash flows from operating activities to conform to the 2020 presentation. |
| Variable Interest Entity | (aa)
Variable Interest Entity The Company holds
interests in certain variable interest entities (“VIEs”) that are not consolidated as the Company is not the primary
beneficiary. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes involved with a VIE and
reconsiders that conclusion at each reporting date. In evaluating whether the Company is the primary beneficiary, the Company evaluates
its economic interests in the entity held either directly by the Company or indirectly through related parties. The consolidation
analysis can generally be performed qualitatively; however, if it is not readily apparent that the Company is not the primary beneficiary,
a quantitative analysis may also be performed. In 2018, the
operations of GACP II, LP, a private debt investment limited partnership (the “Partnership”) commenced. The Company’s
investment in the Partnership is a VIE since the unaffiliated limited partners do not have substantive kick-out or participating
rights to remove the Company’s subsidiary that is the general partner managing the Partnership. The Company has determined
that it is not the primary beneficiary due to the fact that its fee arrangements are considered at-market and thus not deemed to
be variable interests, and it does not hold any other interests in the Partnership that are considered to be more than insignificant. In November 2020,
the Company formed Lingo Management, LLC (“Lingo”), a joint venture with an unaffiliated third party. Lingo is a VIE
because the entity does not have enough equity at risk to finance its activities without additional subordinated financial support.
The Company has determined that it is not the primary beneficiary because it does not have the power to direct the activities of
the VIE that most significantly impact the entity’s financial performance. The Company’s variable interests in Lingo
include loans receivable at fair value and an equity investment accounted for under the equity method of accounting. The carrying value
of the Company’s investments in the VIEs that were not consolidated is shown below.
December 31, December 31,
Partnership investments $ 23,200 $ 12,780
Due from related party 63,081 12
Maximum exposure to loss $ 86,281 $ 12,792 |
| Recent Accounting Standards | (ab)
Recent Accounting Standards Not
yet adopted In December 2019,
the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019-12,
Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes. This standard simplifies the accounting for income taxes
by removing certain exceptions for recognizing deferred taxes on investments, performing intra-period allocations, and calculating
income taxes in interim periods. The ASU also adds guidance to reduce the complexity in certain areas, including recognizing deferred
taxes for tax goodwill and allocating taxes to members of a consolidated group. The revised guidance will be applied prospectively
and is effective for SEC filers for annual periods or interim periods with fiscal years beginning after December 15, 2020. Early
adoption is permitted for interim or annual periods for which financial statements have not been issued. The Company is finalizing
its assessment of the potential impact of this ASU and does not expect it to have any material impact on its consolidated results
of operations, cash flows, financial position or disclosures. In
March 2020, FASB issued ASU No. 2020-04, “Reference Rate Reform (Topic 848)” (“ASU 2020-04”), which provides
optional guidance for a limited period of time to ease potential accounting impacts associated with transitioning away from reference
rates that are expected to be discontinued, such as the London Interbank Offered Rate ("LIBOR"). The amendments in ASU
2020-04 apply only to contracts, hedging relationships, and other transactions that reference LIBOR or another reference rate expected
to be discontinued. The amendments in ASU 2020-04 are effective through December 31, 2022. The Company is currently assessing the
potential impacts the adoption of ASU 2020-04 may have on its consolidated results of operations, cash flows, financial position
or disclosures. In August 2020, the
FASB issued ASU 2020-06, Debt – Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging-Contracts
in Entity’s Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity’s Own Equity.
This Update addresses issues identified as a result of the complexity associated with applying generally accepted accounting principles
(GAAP) for certain financial instruments with characteristics of liabilities and equity. In addressing the complexity, the Board
focused on amending the guidance on convertible instruments and the guidance on the derivatives scope exception for contracts in
an entity’s own equity. For convertible instruments, the Board decided to reduce the number of accounting models for convertible
debt instruments and convertible preferred stock. Limiting the accounting models results in fewer embedded conversion features
being separately recognized from the host contract as compared with current GAAP. In addition to eliminating certain accounting
models, the ASU also provides guidance to enhance information transparency by making targeted improvements to the disclosures for
convertible instruments and earnings-per-share (EPS) guidance. Additionally, the ASU amends the guidance for the derivatives scope
exception for contracts in an entity’s own equity to reduce form-over-substance-based accounting conclusions, and to amend
the related EPS guidance. The amendments in this update are effective for public business entities for fiscal periods beginning
after December 15, 2021, including interim periods within those fiscal years. Early adoption is permitted, but no earlier than
fiscal years beginning after December 15, 2020. The Company has not yet adopted this update and is currently evaluating the effect,
if any, this new standard will have on its financial condition and results of operations. In October 2020, the
FASB issued ASU 2020-08, Codification Improvements to Subtopic 310-20, Receivables-Nonrefundable Fees and Other Costs. The amendments
in this Update clarify that an entity should reevaluate whether a callable debt security is within the scope of paragraph 310-20-35-33
for each reporting period. The Update is intended to clarify the Codification and make the Codification easier to understand and
easier to apply by eliminating inconsistencies and providing clarifications. The amendments in this update are effective for public
business entities for fiscal periods beginning after December 15, 2020, including interim periods within those fiscal years. Early
adoption is not permitted. The Company has not yet adopted this update which is effective for the Company beginning January 1,
2021. The Company has assessed the impact of this ASU and does not expect it to have any material impact on its consolidated results
of operations, cash flows, financial position or disclosures. In October 2020, the
FASB issued ASU 2020-10, Codification Improvements. The Update contains amendments that improve the consistency of the Codification
by including all disclosure guidance in the appropriate Disclosure Section (Section 50). Many of the Amendments arose because the
Board provided an option to give certain information either on the face of the financial statements or in the notes to financial
statements and that option was only included in the Other Presentation Matters Section (Section 45) of the Codification. The option
to disclose information in the notes to financial statements should have been codified in the Disclosure section as well as the
Other Presentation Matters Section (or other Section of the Codification in which the option to disclose in the notes to financial
statements appears). These amendments are not expected to change current practice but are intended to improve the Codification
by ensuring that all guidance that requires or provides an option for an entity to provide information in the notes to financial
statements is included in the Disclosure Section of the Codification, thus reducing the likelihood that the disclosure requirement
would be missed. The Board does not anticipate that the amendments will result in any changes to current GAAP. The amendments in
the Update are effective for annual periods beginning after December 15, 2020, for public business entities. Early application
of the amendments is permitted for public business entities for any annual or interim period for which financial statements have
not been issued. The amendments in the Update should be applied retrospectively. The Company is finalizing its assessment of the
potential impact of this ASU and does not expect it to have any material impact on its consolidated results of operations, cash
flows, financial position or disclosures. Recently
adopted In June 2016, the FASB
issued ASU 2016-13, Financial Instruments − Credit Losses (Topic 326): In May 2019, the FASB issued ASU No. 2019-05,
Financial Instruments − Credit Losses (Topic 326); Targeted Transition Relief,” which allows entities to irrevocably
elect, upon adoption of ASU 2016-13, the fair value option on financial instruments that (1) were previously recorded at amortized
cost and (2) are within the scope of ASC 326-20 if the instruments are eligible for the fair value option under ASC 825-10. The Company adopted
the new credit losses standard effective January 1, 2020. Pursuant to ASU 2016-13 and its amendment ASU 2019-05, the Company elected
the irrevocable fair value option for all outstanding loans receivable that were previously measured at amortized cost. Under the
fair value option, loans receivable are now measured at each reporting period based upon their exit value in an orderly transaction
and unrealized gains or losses from changes in fair value are recorded in the consolidated statements of income. These loans are
no longer subject to evaluation for impairment through an allowance for loan loss as such losses will be captured through fair
value changes. The impact of adopting ASC 326 was immaterial to the consolidated financial statements. |
