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Technically, Uber has the loss even before the car is returned, since the asset value has already declined. Businesses are supposed to report losses and profits

Technically, Uber has the loss even before the car is returned, since the asset value has already declined. Businesses are supposed to report losses and profits when they occur, not when cash changed hands. Companies are supposed to "mark to market" assets that are on the books at an inflated rate. But, most companies resist doing this until an auditor or government agency forces them to do it. This was the crux of the financial meltdown, banks were reporting mortgages on their balance sheets that were effectively worthless, given risk of non-repayment and depreciation of the collateral, as full-value assets. Thus, they were not seen as being insolvent.

wjnc 9y ago
That's the general accounting principle, but accounting is pretty hard. Leases get pretty complicated quicky. For example in a sale and leaseback under IAS17 even 'profits' you make at the outset (let's call them economic profits), you are only allowed to recognize proportionally to the time of the contrary. Here the precautionary nature beats the realisation principle. Here's an example of how accounting is hard with differences between US GAAP and IFRS [1]. Uber loses half it's revenue under a new US GAAP principle... [1] https://www.ft.com/content/74447ca2-6b0b-11e7-bfeb-33fe0c5b7eaa https://www.ft.com/content/74447ca2-6b0b-11e7-bfeb-33fe0c5b7...