[CPWAT]

Hey guys I have a quick question regarding operating lease.

Since most of the questions encountered so far are for equipment or building rent.

How about software subscription(monthly service charge)?

I know you just expense it on a monthly basis, but if you sign a 36 months security software agreement. Do you put the 12 months service fee as current lease liability?

[mskcle]

I'm probably not interpreting it the way you are thinking, but in my mind that sounds more like a contract (i.e. contract liability) that would be handled with the new revenue recognition standards. I'm not sure exactly to how leasing software would go as far as acquisition and returning it?

AUD - 83
BEC - 87
FAR - 86
REG - 88

"You must be really good at math"- Everyone when I say I'm an accountant

[Anonymous]

I think you are talking more about prepaid expenses…You would expense 12 months worth and put the rest in prepaid expenses (which is an asset).

[jakemikey777]

CPWAT,

Intangibles like software are neither in scope for asc 840 or 842; however, you may have an embedded lease issue in which there may be equipment attached to a software agreement. You'll have to subject the equipment to multi element lease accounting by bi curating the lease and non lease elements, then perform lease classification testing over the lease element to determine if you even have an operating lease. I don't expect the exam to test you in this detail, so to answer your question no you do not

[Author]

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