The new lease standard (IFRS 16) brings about a paramount shift in lease accounting by bringing most of the off-balance sheet leases on the balance sheet of the lessees. It practically eliminates the difference between a finance and an operating lease. In this edition of Accounting and Auditing Update (AAU), our lead article highlights the impact of IFRS 16 in the Media and Entertainment (M&E) sector. The M&E sector is fairly diverse and entities in this sector generally use a diverse range of products for delivering the final content which implies that a single contract may often contain multiple components. Also, the contracts at times may involve use of third party assets, such as online servers, satellites or physical advertising space. Therefore, it becomes necessary to identify the contracts that would qualify for recognition of a lease arrangement under the new standard.
Continuing with our series on the impact of the new revenue standard (Ind AS 115), we have covered the financial services sector. The article explains how the financial services sector would be impacted by Ind AS 115 and would need to identify performance obligations in its contracts with customers and whether the revenue would be recognised over time or a point in time with the help of practical examples.
There has been a recent changes in foreign direct investment in e-commerce. The changes ensure that the marketplace entity is strictly operating as a facilitator between a buyer and seller (marketplace-based model) and is not indirectly influencing the sale price of goods or services or controlling the inventory. This change is likely to impact the e-commerce entities and our article explains key changes and their implication with the help of an illustration.
As is the case each month, we also cover a regular round-up of some recent regulatory updates in India.