Telecommunications entities have been grappling with the accounting for long-term capacity arrangements ever since International Financial Reporting Standards came into widespread use, and a new standard issued in 2016 (IFRS 16) will soon add another layer of complexity. Starting in 2019, entities will need to apply IFRS 16 accounting requirements for leases.
This new standard is prompting many operators to reconsider, given the guidance the standard provides, whether their capacity arrangements contain leases.
This report applies IFRS 16 to a variety of common capacity arrangements to see if they contain leases, and it explores these arrangements’ impact on accounting.
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