| Summary of Significant Accounting Policies | 2.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated and combined (thereafter referred to
as “consolidated”) financial statements have been
prepared from the Parent’s historical accounting records and
are presented on a stand-alone basis. The Parent owns a residual
interest in proceeds from the sale of Sponsor B Units, which are
not presented as part of these stand-alone consolidated financial
statements and footnotes. All inter-company balances and
transactions have been eliminated upon consolidation and
combination. These consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S.
GAAP”).
The consolidated statements of operations include all revenues and
costs directly attributable to Owl Rock. The consolidated
statements of financial condition of Owl Rock include assets and
liabilities of the Parent that are specifically identifiable or
otherwise attributable to the Company. Management of Owl Rock and
the Parent consider these allocations to be a reasonable reflection
of the utilization of services by, or the benefits provided to Owl
Rock.
Certain prior period amounts have been reclassified for consistency
with the current period presentation. These reclassifications had
no effect on the reported consolidated results of operations.
Use of Estimates
The preparation of consolidated financial statements in conformity
with GAAP requires management to make assumptions and estimates
that affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities at the date of the
consolidated financial statements and the reported amounts of
revenues and expenses during the reporting periods. Actual results
could differ from these estimates and such differences could be
material to the consolidated financial statements.
Principles of Consolidation
The Company consolidates those entities in which it has a direct or
indirect controlling financial interest based on either a variable
interest model or voting interest model. The Company determines
whether an entity should be consolidated by first evaluating
whether it holds a variable interest in the entity. Entities that
are not variable interest entities (“VIEs”) are further
evaluated for consolidation under the voting interest model
(“VOE”).
An entity is considered to be a VIE if any of the following
conditions exist: (a) the total equity investment at risk is
not sufficient to permit the entity to finance its activities
without additional subordinated financial support, (b) the
holders of equity investment at risk, as a group, lack either the
direct or indirect ability through voting rights or similar rights
to make decisions that have a significant effect on the success of
the entity or the obligation to absorb the expected losses or right
to receive the expected residual returns, or (c) the voting
rights of some equity investors are disproportionate to their
obligation to absorb losses of the entity, their rights to receive
returns from an entity, or both and substantially all of the
entity’s activities either involve or are conducted on behalf
of an investor with disproportionately few voting rights.
Fees that are customary and commensurate with the level of services
provided by the Company, and where the Company does not hold other
economic interests in the entity that would absorb more than an
insignificant amount of the expected losses or returns of the
entity, would not be considered a variable interest. The Company
factors in all economic interests, including proportionate
interests through related parties, to determine if fees are
considered a variable interest. Where the Company’s interests
in funds are primarily management fees, incentive fees, and/or
insignificant direct or indirect equity interests through related
parties, the Company is not considered to have a variable interest
in such entities.
The Company consolidates all VIEs for which it is the primary
beneficiary. An entity is determined to be the primary beneficiary
if it holds a controlling financial interest, which is defined as
having (a) the power to direct the activities of the VIE that
most significantly impact the entity’s economic performance
and (b) the obligation to absorb losses of the entity or the
right to receive benefits from the entity that could potentially be
significant to the VIE.
The Company determines whether it is the primary beneficiary of a
VIE at the time it becomes involved with a VIE and continuously
reconsiders that conclusion. In evaluating whether the Company is
the primary beneficiary, the Company evaluates its direct and
indirect economic interests in the entity. The consolidation
analysis is generally performed qualitatively, however, if the
primary beneficiary is not readily determinable, a quantitative
analysis may also be performed. This analysis requires judgment,
including: (1) determining whether the equity investment at
risk is sufficient to permit the entity to finance its activities
without additional subordinated financial support,
(2) evaluating whether the equity holders, as a group, can
make decisions that have a significant effect on the success of the
entity, (3) determining whether two or more parties’
equity interests should be aggregated, (4) determining whether
the equity investors have proportionate voting rights to their
obligations to absorb losses or rights to receive returns from an
entity and (5) evaluating the nature of relationships and
activities of the parties involved in determining which party
within a related-party group is most closely associated with a VIE
and hence would be deemed the primary beneficiary.
Cash and Cash Equivalents
Cash and cash equivalents of the Company include demand deposit
accounts.
As of March 31, 2021 and December 31, 2020, the Company
had cash balances with financial institutions in excess of Federal
Deposit Insurance Corporation insured limits. The Company monitors
the credit standing of these financial institutions.
Net Capital Requirement
As a registered broker-dealer, Securities is subject to SEC Rule
15c3-1,
Leases
Right-of-use 2016-02,
The Company determines if an arrangement is a lease at inception.
Right-of-use Right-of-use right-of-use
As the Company’s leases do not provide an implicit rate, the
Company uses its estimated incremental borrowing rate based on
information available at the lease commencement date in determining
the present value of lease payments. The determination of an
appropriate incremental borrowing rate requires judgment. The
Company determines its incremental borrowing rate based on data for
instruments with similar characteristics, including recently issued
debt, as well as other factors.
The operating lease assets include any lease payments made and
include lease incentives. Lease terms include options to extend or
terminate when it is reasonably certain that the Company will
exercise that option. In addition, the Company separates lease and
non-lease
Lease expense for operating lease payments, which is comprised of
amortization of right-of-use right-of-use
Other Assets
Other assets include deferred transaction costs, deferred tax
assets, fixed assets, capital contribution receivable, prepaid
expenses and other. Fixed assets, consisting of furniture, fixtures
and equipment, leasehold improvements, computer hardware, and
internal-use
Direct costs associated with developing, purchasing, or otherwise
acquiring software for internal use are capitalized and amortized
on a straight-line basis over the expected useful life of the
software, beginning when the software is ready for its intended
purpose. Costs incurred for upgrades and enhancements that will not
result in additional functionality are expensed as incurred.
Fixed assets are depreciated or amortized on a straight-line basis
over an asset’s estimated useful life, with the corresponding
depreciation and amortization expense included within general,
administrative and other expenses on the Company’s
consolidated statements of operations. The estimated useful life
for leasehold improvements is the lesser of the remaining lease
term and the life of the asset, while other fixed assets and
internal-use
Direct and incremental costs incurred in connection with the Blue
Owl transaction are capitalized and deferred in the consolidated
statements of financial condition within other assets. These costs
will be recorded as a reduction of capital when the transaction
becomes effective.
Distributions
Distributions to members are determined in accordance with the
Company’s operating agreements and are recorded on the
payment date.
Non-controlling
Non-controlling non-controlling
Revenue Recognition
Revenues consist primarily of management fees, incentive fees and
administrative and other transaction fees. Effective
January 1, 2018, the Company adopted the Financial Accounting
Standards Board (“FASB”) Topic 606 (“ASC
606”), Revenue from Contracts with Customers
Pursuant to ASC 606, the Company recognizes revenue at the time of
transfer of promised goods or services to customers in an amount
that reflects the consideration to which the Company expects to be
entitled in exchange for those goods or services. Under this
standard, revenue is based on a contract with a determinable
transaction price and distinct performance obligations with
probable collectability. Revenues cannot be recognized until the
performance obligation(s) are satisfied and control is transferred
to the customer.
Management Fees
Management fees are recognized over the period in which the
investment management services are performed because customers
simultaneously consume and receive benefits continuously over time.
Payment terms and fee rates of management fees vary by fund.
Management fees are generally based upon a defined percentage of
average fair value of gross assets (excluding cash) or average fair
value of gross assets (excluding cash) plus undrawn commitments in
the case of the Company’s business development companies
(“BDCs”), or fair value of gross assets (excluding
cash), fair value of investments plus undrawn commitments, or
invested capital in the case of the Company’s long-dated
private funds (“Private Debt funds”) and separately
managed accounts (“Managed Accounts”). The
contractual terms of management fees vary by fund structure and
investment strategy.
Management fees also include a fee based on the net investment
income of the Company’s BDCs, Owl Rock Capital Corporation,
Owl Rock Capital Corporation II, Owl Rock Technology Finance Corp.
and Owl Rock Core Income Corp. (and should such BDC be listed in
the future, Owl Rock Capital Corporation III, collectively,
“BDC Part I Fees”), which are subject to performance
hurdles. Such BDC Part I Fees are classified as management fees in
the consolidated statements of operations as they are predictable
and recurring in nature, not subject to contingent repayment and
cash-settled each quarter.
Incentive Fees
Incentive fees earned on the performance of certain fund structures
are recognized based on the fund’s performance during the
period, subject to the achievement of minimum return levels in
accordance with the respective terms set out in each fund’s
investment management agreement. Incentive fees are realized at the
end of a measurement period, typically annually. Once realized,
such fees are no longer subject to reversal. The Company recognizes
incentive fee revenue only when the amount is realized and no
longer subject to reversal.
Administrative, Transaction and Other Fees
Administrative, transaction and other fees are comprised of fee
income earned from services provided to portfolio companies, dealer
manager revenue, and administrative fees reimbursed by products
managed by the Company (“Owl Rock products”).
Fee income is earned for services provided to portfolio companies,
which may include arrangement, syndication, origination,
structuring analysis, capital structure and business plan advice
and other services. The fees are recognized as income when the
services rendered are completed.
Dealer manager revenue consists of commissions earned for providing
distribution services to certain Owl Rock products. Dealer manager
revenue is recorded on an accrual basis as earned.
Administrative fees represent expenses incurred by certain
professionals of the Company and reimbursed by products managed by
the Company. The Company may incur certain costs in connection with
satisfying its performance obligations for investment management
services or similar agreements – primarily employee travel
costs – for which it receives reimbursements from its
customers under the administrative agreements or similar agreements
with Owl Rock products. For reimbursable travel costs, the Company
concluded it controls the services provided by its employees and
other parties and, therefore, is acting as principal. For
reimbursable costs incurred in connection with satisfying its
performance obligations for administration services, the Company
concluded it does not control, with the exception of the allocable
compensation and employee travel costs, the services provided by
its employees and other parties and, therefore, is acting as agent.
Accordingly, the Company records expenses for which it is acting as
the principal on a gross basis within administrative, transaction
and other fees, general, administrative and other expenses,
compensation and benefits and records costs for which it is agent
on a net basis within due from affiliates, net, within the
consolidated statements of financial condition.
Compensation and Benefits
Compensation and benefits consist of salaries, bonuses,
commissions, long-term deferral programs, benefits and payroll
taxes. Compensation is accrued over the related service period and
long-term deferral program awards are paid out based on the various
vesting dates.
On September 15, 2020, the Company issued a special incentive
award (the “Award”). The Award is determined in
relation to the fair value of Owl Rock, measured by an independent
third party valuation firm, was fully vested upon issuance, will be
settled in cash and is subject to the terms and conditions of the
Award. The Award is classified as a liability and will be
remeasured at fair value, which is equal to its settlement value,
each reporting period until it is settled. The Award incurred a
non-cash
On December 28, 2020, the Company entered into an agreement to
convert the cash settled Award into 9.05 million restricted
stock units of Blue Owl common stock upon closing of the
transaction. As this modification is contingent upon the
closing of the transaction, it will not be recognized until the
contingency is resolved.
Deferred Financing Costs
The Company records expenses related to debt obligations as
deferred financing costs. These expenses are deferred and evenly
amortized over the life of the related debt instrument and included
within interest expense within the consolidated statements of
operations. Deferred financing costs are presented on the
consolidated statements of financial condition as a direct
deduction from the outstanding debt obligations liability.
Income Taxes
Certain subsidiaries of the Company (the “Taxable
Partnerships”) are treated as partnerships for federal income
tax purposes and, accordingly, are generally not subject to federal
and state income taxes, as such taxes are the responsibility of
certain direct and indirect owners of the Taxable Partnerships.
However, the Taxable Partnerships are subject to Unincorporated
Business Tax in New York City and Connecticut at 4.00% and 6.99%,
respectively (“UBT”) and other state taxes. Certain
subsidiaries of the Company (the “Taxable
Corporations”) are domestic and foreign corporations.
Depending on the domicile of the Taxable Corporations, their income
is subject to either U.S. federal, state and local income taxes or
foreign income taxes (for which a foreign tax credit can generally
offset U.S. corporate taxes imposed on the same income).
The Company accounts for income taxes and UBT using the asset and
liability method under which deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities, and their respective tax basis by
applying statutory tax rates. The measurement of deferred tax
assets is reduced by a valuation allowance if, based upon available
evidence, it is more likely than not, that some or all of the
deferred tax asset will not be realized. Interest and penalties, if
any, assessed under the relevant tax law are recognized as incurred
within income tax expense in the consolidated statements of
operations. Based on the available evidence, the Company has
determined that it is more likely than not that all deferred tax
assets will be realized and that a valuation allowance is not
needed as of March 31, 2021 and December 31, 2020.
The Company is required to determine whether its tax positions are
more-likely-than-not more-likely-than-not
New Accounting Pronouncements
The Company considers the applicability and impact of all ASUs
issued. ASUs not listed below were assessed and either determined
to be not applicable or expected to have minimal impact on its
consolidated financial statements.
In June 2016, the FASB issued ASU 2016-13 , Financial
Instruments - Credit Losses (Topic 326): Measurement of Credit
Losses on Financial Instruments 2018-19, 2019-04, 2019-05, 2019-11 2016-13”). The 2016-13 2016-13
In December 2019, the FASB issued ASU 2019-12 , Income Taxes
(Topic 740): Simplifying the Accounting for Income
Taxes. 2019-12
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform
(Topic 848). 2020-04 | 2.
Summary of Significant Accounting Policies
Basis of Presentation
The accompanying consolidated and combined (thereafter referred to
as “consolidated”) financial statements have been
prepared from the Parent’s historical accounting records and
are presented on a stand-alone basis. The Parent owns a residual
interest in proceeds from the sale of Sponsor B Units, which are
not presented as part of these stand-alone consolidated financial
statements and footnotes. All inter-company balances and
transactions have been eliminated upon consolidation and
combination. These consolidated financial statements have been
prepared in accordance with accounting principles generally
accepted in the United States of America (“U.S.
GAAP”).
The consolidated statements of operations include all revenues and
costs directly attributable to Owl Rock. The consolidated
statements of financial condition of Owl Rock include assets and
liabilities of the Parent that are specifically identifiable or
otherwise attributable to the Company. Management of Owl Rock and
the Parent consider these allocations to be a reasonable reflection
of the utilization of services by, or the benefits provided to Owl
Rock.
Certain prior period amounts have been reclassified for consistency
with the current period presentation. These reclassifications had
no effect on the reported results of operations
Use of Estimates
The preparation of financial statements in conformity with GAAP
requires management to make assumptions and estimates that affect
the reported amounts of assets and liabilities, the disclosure of
contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during
the reporting periods. Actual results could differ from these
estimates and such differences could be material to the
consolidated financial statements.
Principles of Consolidation
The Company consolidates those entities in which it has a direct or
indirect controlling financial interest based on either a variable
interest model or voting interest model. The Company determines
whether an entity should be consolidated by first evaluating
whether it holds a variable interest in the entity. Entities that
are not variable interest entities (“VIEs”) are further
evaluated for consolidation under the voting interest model
(“VOE”).
An entity is considered to be a VIE if any of the following
conditions exist: (a) the total equity investment at risk is
not sufficient to permit the entity to finance its activities
without additional subordinated financial support, (b) the
holders of equity investment at risk, as a group, lack either the
direct or indirect ability through voting rights or similar rights
to make decisions that have a significant effect on the success of
the entity or the obligation to absorb the expected losses or right
to receive the expected residual returns, or (c) the voting
rights of some equity investors are disproportionate to their
obligation to absorb losses of the entity, their rights to receive
returns from an entity, or both and substantially all of the
entity’s activities either involve or are conducted on behalf
of an investor with disproportionately few voting rights.
Fees that are customary and commensurate with the level of services
provided by the Company, and where the Company does not hold other
economic interests in the entity that would absorb more than an
insignificant amount of the expected losses or returns of the
entity, would not be considered a variable interest. The Company
factors in all economic interests, including proportionate
interests through related parties, to determine if fees are
considered a variable interest. Where the Company’s interests
in funds are primarily management fees, incentive fees, and/or
insignificant direct or indirect equity interests through related
parties, the Company is not considered to have a variable interest
in such entities.
The Company consolidates all VIEs for which it is the primary
beneficiary. An entity is determined to be the primary beneficiary
if it holds a controlling financial interest, which is defined as
having (a) the power to direct the activities of the VIE that
most significantly impact the entity’s economic performance
and (b) the obligation to absorb losses of the entity or the
right to receive benefits from the entity that could potentially be
significant to the VIE.
The Company determines whether it is the primary beneficiary of a
VIE at the time it becomes involved with a VIE and continuously
reconsiders that conclusion. In evaluating whether the Company is
the primary beneficiary, the Company evaluates its direct and
indirect economic interests in the entity. The consolidation
analysis is generally performed qualitatively, however, if the
primary beneficiary is not readily determinable, a quantitative
analysis may also be performed. This analysis requires judgment,
including: (1) determining whether the equity investment at
risk is sufficient to permit the entity to finance its activities
without additional subordinated financial support,
(2) evaluating whether the equity holders, as a group, can
make decisions that have a significant effect on the success of the
entity, (3) determining whether two or more parties’
equity interests should be aggregated, (4) determining whether
the equity investors have proportionate voting rights to their
obligations to absorb losses or rights to receive returns from an
entity and (5) evaluating the nature of relationships and
activities of the parties involved in determining which party
within a related-party group is most closely associated with a VIE
and hence would be deemed the primary beneficiary.
Cash and Cash Equivalents
Cash and cash equivalents of the Company include demand deposit
accounts.
As of December 31, 2020 and 2019, the Company had cash
balances with financial institutions in excess of Federal Deposit
Insurance Corporation insured limits. The Company monitors the
credit standing of these financial institutions.
Net Capital Requirement
As a registered broker-dealer, Securities is subject to SEC Rule
15c3-1,
Other Assets
Other assets include fixed assets, capital contribution receivable,
prepaid expenses and other. Fixed assets, consisting of furniture,
fixtures and equipment, leasehold improvements, computer hardware,
and internal-use
Direct costs associated with developing, purchasing, or otherwise
acquiring software for internal use are capitalized and amortized
on a straight-line basis over the expected useful life of the
software, beginning when the software is ready for its intended
purpose. Costs incurred for upgrades and enhancements that will not
result in additional functionality are expensed as incurred.
Fixed assets are depreciated or amortized on a straight-line basis
over an asset’s estimated useful life, with the corresponding
depreciation and amortization expense included within general,
administrative and other expenses on the Company’s
consolidated statements of operations. The estimated useful life
for leasehold improvements is the lesser of the remaining lease
term and the life of the asset, while other fixed assets and
internal-use
Direct and incremental costs incurred in connection with the Blue
Owl transaction are capitalized and deferred in the consolidated
statements of financial condition within other assets. These costs
will be recorded as a reduction of capital when the transaction
becomes effective.
Distributions
Distributions to members are determined in accordance with the
Company’s operating agreements and are recorded on the
payment date.
Non-controlling
Non-controlling non-controlling
Revenue Recognition
Revenues consist primarily of management fees, incentive fees and
administrative and other transaction fees. Effective
January 1, 2018, the Company adopted the Financial Accounting
Standards Board (“FASB”) Topic 606 (“ASC
606”), Revenue from Contracts with Customers
Pursuant to ASC 606, the Company recognizes revenue at the time of
transfer of promised goods or services to customers in an amount
that reflects the consideration to which the Company expects to be
entitled in exchange for those goods or services. Under this
standard, revenue is based on a contract with a determinable
transaction price and distinct performance obligations with
probable collectability. Revenues cannot be recognized until the
performance obligation(s) are satisfied and control is transferred
to the customer.
Management Fees
Management fees are recognized over the period in which the
investment management services are performed because customers
simultaneously consume and receive benefits continuously over time.
Payment terms and fee rates of management fees vary by fund.
Management fees are generally based upon a defined percentage of
average fair value of gross assets (excluding cash) or average fair
value of gross assets (excluding cash) plus undrawn commitments in
the case of the Company’s business development companies
(“BDCs”), or fair value of gross assets (excluding
cash), fair value of investments plus undrawn commitments, or
invested capital in the case of the Company’s long-dated
private funds (“Private Debt funds”) and separately
managed accounts (“Managed Accounts”). The
contractual terms of management fees vary by fund structure and
investment strategy.
Management fees also include a fee based on the net investment
income of the Company’s BDCs, Owl Rock Capital Corporation,
Owl Rock Capital Corporation II, Owl Rock Technology Finance Corp.
and Owl Rock Core Income Corp. (and should such BDC be listed in
the future, Owl Rock Capital Corporation III, collectively,
“BDC Part I Fees”), which are subject to performance
hurdles. Such BDC Part I Fees are classified as management fees in
the consolidated statements of operations as they are predictable
and recurring in nature, not subject to contingent repayment and
cash-settled each quarter.
Incentive Fees
Incentive fees earned on the performance of certain fund structures
are recognized based on the fund’s performance during the
period, subject to the achievement of minimum return levels in
accordance with the respective terms set out in each fund’s
investment management agreement. Incentive fees are realized at the
end of a measurement period, typically annually. Once realized,
such fees are no longer subject to reversal. The Company recognizes
incentive fee revenue only when the amount is realized and no
longer subject to reversal.
Administrative, Transaction and Other Fees
Administrative, transaction and other fees are comprised of fee
income earned from services provided to portfolio companies, dealer
manager revenue, and administrative fees reimbursed by products
managed by the Company (“Owl Rock products”).
Fee income is earned for services provided to portfolio companies,
which may include arrangement, syndication, origination,
structuring analysis, capital structure and business plan advice
and other services. The fees are recognized as income when the
services rendered are completed.
Dealer manager revenue consists of commissions earned for providing
distribution services to certain Owl Rock products. Dealer manager
revenue is recorded on an accrual basis as earned.
Administrative fees represent expenses incurred by certain
professionals of the Company and reimbursed by products managed by
the Company. The Company may incur certain costs in connection with
satisfying its performance obligations for investment management
services or similar agreements – primarily employee travel
costs – for which it receives reimbursements from its
customers under the administrative agreements or similar agreements
with Owl Rock products. For reimbursable travel costs, the Company
concluded it controls the services provided by its employees and
other parties and, therefore, is acting as principal. For
reimbursable costs incurred in connection with satisfying its
performance obligations for administration services, the Company
concluded it does not control, with the exception of the allocable
compensation and employee travel costs, the services provided by
its employees and other parties and, therefore, is acting as agent.
Accordingly, the Company records expenses for which it is acting as
the principal on a gross basis within administrative, transaction
and other fees and general, administrative and other expenses, and
records costs for which it is agent on a net basis within due from
affiliates, net, within the consolidated statements of financial
condition.
Compensation and Benefits
Compensation and benefits consist of salaries, bonuses,
commissions, long-term deferral programs, benefits and payroll
taxes. Compensation is accrued over the related service period and
long-term deferral program awards are paid out based on the various
vesting dates.
On September 15, 2020, the Company issued a special incentive
award (the “Award”). The Award is determined in
relation to the fair value of Owl Rock, measured by an independent
third party valuation firm, was fully vested upon issuance, will be
settled in cash and is subject to the terms and conditions of the
Award. The Award is classified as a liability and will be
remeasured at fair value, which is equal to its settlement value,
each reporting period until it is settled. The Award incurred a
non-cash
On December 28, 2020, the Company entered into an agreement to
convert the cash settled Award into 9.05 million restricted
stock units of Blue Owl common stock upon closing of the
transaction. As this modification is contingent upon the
closing of the transaction, it will not be recognized until the
contingency is resolved.
Deferred Financing Costs
The Company records expenses related to debt obligations as
deferred financing costs. These expenses are deferred and evenly
amortized over the life of the related debt instrument and included
within interest expense within the consolidated statements of
operations. Deferred financing costs are presented on the
consolidated statements of financial condition as a direct
deduction from the outstanding debt obligations liability.
Income Taxes
Certain subsidiaries of the Company (the “Taxable
Partnerships”) are treated as partnerships for federal income
tax purposes and, accordingly, are generally not subject to federal
and state income taxes, as such taxes are the responsibility of
certain direct and indirect owners of the Taxable Partnerships.
However, the Taxable Partnerships are subject to Unincorporated
Business Tax in New York City and Connecticut at 4.00% and 6.99%,
respectively (“UBT”) and other state taxes. Certain
subsidiaries of the Company (the “Taxable
Corporations”) are domestic and foreign corporations.
Depending on the domicile of the Taxable Corporations, their income
is subject to either U.S. federal, state and local income taxes or
foreign income taxes (for which a foreign tax credit can generally
offset U.S. corporate taxes imposed on the same income).
The Company accounts for income taxes and UBT using the asset and
liability method under which deferred tax assets and liabilities
are recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities, and their respective tax basis by
applying statutory tax rates. The measurement of deferred tax
assets is reduced by a valuation allowance if, based upon available
evidence, it is more likely than not, that some or all of the
deferred tax asset will not be realized. Interest and penalties, if
any, assessed under the relevant tax law are recognized as incurred
within income tax expense in the consolidated statements of
operations. Based on the available evidence, the Company has
determined that it is more likely than not that all deferred tax
assets will be realized and that a valuation allowance is not
needed as of December 31, 2020 and 2019.
The Company is required to determine whether its tax positions are
more-likely-than-not more-likely-than-not
New Accounting Pronouncements
The Company considers the applicability and impact of all
accounting standard updates (“ASU”) issued. ASUs not
listed below were assessed and either determined to be not
applicable or expected to have minimal impact on its consolidated
financial statements.
In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) right-of-use
In October 2018, the FASB issued ASU 2018-17, Consolidation (Topic
810): Targeted Improvements to Related Party Guidance for Variable
Interest Entities 2018-17, 2018-17
In December 2019, the FASB issued ASU 2019-12 , Income Taxes
(Topic 740): Simplifying the Accounting for Income
Taxes. 2019-12
In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform
(Topic 848). 2020-04 |
