Lease accounting for the media, entertainment, and telecommunications industries will change under the new standards. These companies lease a diverse range of assets from network space to physical advertising space.
The new leasing standards will require media, entertainment, and telecom companies to update their accounting policies based on the new principles. In some cases, extensive analysis may be required to arrive at judgments on how to apply the standards to certain lease types.
1. How will contracts for partial use of assets be treated under the new leasing standards? Understand the requirements for an asset to be considered physically distinct. Consider use of fiber optic cables or data centers.
2. Do contracts with third parties for use of their assets to create and publish content constitute leases? Major analysis may be needed to determine whether use of online servers, satellites, or physical advertising space are considered leases.
3. How are contracts that contain multiple, but unrelated, lease components treated under the new accounting standards? Consider how to separate the individual lease and non-lease components.