Kakao Mobility, Changing Accounting Standards Causes 1 Trillion KRW Revenue Loss Over 4 Years

Change in Accounting Standards from Gross Method to Net Method

Kakao Mobility's revenue has been found to have evaporated by more than 1 trillion won over the past four years following a change in accounting standards.

Photo by Mun Ho-nam / Kakao Mobility 자료사진 munonam@

According to the Financial Supervisory Service's electronic disclosure system (DART) on the 25th, the consolidated revenue for 2020, recently corrected by Mobility, decreased by 85.4 billion won from the original 280.1 billion won to 194.7 billion won.

This is the result of changing the revenue recognition accounting standard in the financial statements from the gross method to the net method. For 2021, revenue dropped by 226.2 billion won from 546.5 billion won to 320.3 billion won, and for 2022, it decreased by 307.8 billion won from 791.5 billion won to 483.7 billion won.

Additionally, according to the financial statements included in the recent shareholder meeting notice sent by Mobility to shareholders, last year's consolidated revenue was 601.4 billion won. While it was previously understood to exceed 1 trillion won under the gross method, it effectively decreased by around 400 billion won.

Thus, over the past four years (2020?2023), Kakao Mobility's revenue decline has been found to exceed 1 trillion won.

Kakao Mobility, while operating a franchise taxi business, received 20% of the operating revenue as royalties from drivers (individual taxis) or taxi companies (corporate taxis), but returned 16?17% to these operators as compensation for advertising and data under business partnership contracts.

Using this method, Mobility applied the gross method to its revenue, recognizing the entire 20% as its own revenue. However, the Financial Supervisory Service stated that the net method should be applied in this case, recognizing only 3?4% of the fare as revenue, and has been conducting audits since the second half of last year.

Last month, the Financial Supervisory Service judged that Kakao Mobility intentionally engaged in accounting fraud by illegally inflating revenue since 2020 (violation of the External Audit Act) and issued a preliminary notice of the highest level of sanctions to the company.

Accordingly, Kakao Mobility changed the revenue recognition accounting standard in its financial statements to the net method starting this year and also restated past figures according to the net method in a corrected disclosure.

This content was produced with the assistance of AI translation services.