Company: QXO-PB
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001628280-25-040367
Chunk: 62

Company: QXO, Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 62
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 the capitalized cost is depreciated over the useful life of the related asset. In connection with the Beacon Acquisition, the Company recognized $28.4 million of asset retirement obligations, which are included in other long-term liabilities on the condensed consolidated balance sheet.Financial InstrumentsFair value is defined as 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. To increase the comparability of fair value measures, the following hierarchy prioritizes the inputs to valuation methodologies used to measure fair value:•Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.•Level 2: Observable prices that are based on inputs not quoted on active markets but corroborated by market data.•Level 3: Unobservable inputs are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.The Company’s current financial assets and liabilities approximate fair value due to their short-term nature and include cash and cash equivalents, accounts receivable, vendor rebates receivable, income tax receivable, prepaid expenses and other current assets, accounts payable, and accrued liabilities.Additionally, the Company has a free-standing interest rate swap that was acquired in the Beacon Acquisition. The fair value of the free-standing interest rate swap is determined through the use of a pricing model, which utilizes verifiable inputs such as market interest rates that are observable at commonly quoted intervals (generally referred to as the “forward curve”) for the full term of the agreement and is classified as Level 2 in the fair value hierarchy. As of June 30, 2025, the fair value of the interest rate swap was $4.5 million. The free-standing interest rate swap is included in prepaid expenses and other current assets when in an asset position or accrued expenses when in a liability position on the condensed consolidated balance sheets. The amount of gain (loss) on the change in fair value of the free-standing interest rate swap is recognized in interest (expense) income, net, on the condensed consolidated statements of operations.Net SalesThe Company records net sales when performance obligations with the customer are satisfied. All contracts have a single performance obligation as the promise to transfer the individual good is not separately identifiable from other promises and is, therefore, not distinct. Performance obligations are satisfied at a point in time and net sales are recognized when title and risk of