Circuit City postponed release of 4th-quarter and year-end result...
Circuit City postponed release of 4th-quarter and year-end results for 7-14 days in order to finish reviewing its lease accounting practices, the chain said Tues. Circuit City results were scheduled to be out today (Wed.). The firm said March…
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4 it was reviewing leases to ensure accounting policies consistently complied with new SEC rule. At the time, Circuit said it didn’t expect review to spur restatements of reported earnings. CFO Michael Foss said Tues. the chain hasn’t decided if a restatement is necessary. That’s because as the review was winding up, the firm found discrepancies in accounting for leases on buildings the company build on leased land, then transferred to landlords after construction costs were reimbursed. Circuit City’s independent auditors recently found that a seller-lessee, by not recovering all construction costs, has “continuing involvement” in the property, the company said. Previously, the company had found that no lease arrangement in which it was involved had met the criteria for continuing involvement, Circuit City said. As a result of any accounting adjustment, fiscal 2005 earnings could be reduced by up to 5 cents per share to a projected range of 28 cents-30 cents, the chain said.