Lease accounting for the media, entertainment, and telecommunications industries changes under the new standards. These companies lease a diverse range of assets from network space to physical advertising space.
The new leasing standards 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 are contracts for partial use of assets 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.
In this issue, PwC details how ASC 842 stands to impact the telecommunications industry, affecting how they identify embedded leases, contract allocations, and much more.
PwC discusses the effects of the new lease accounting standard on the entertainment and media industry, from build-to-suit arrangements to the balance sheet impact of large leases.
In the lease accounting issue of their Flashpoint series, Deloitte identifies changes to the technology, media, and telecommunications (TMT) industry resulting from the new lease accounting standard.
In their "Applying IFRS" series, EY describes the changes that are underway for the telecommunications industry, such as its impacts on lessees, lease classification, and more.
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