Dark Fiber – IRU or Lease
NEF wants you to understand the accounting impact of a lease vs. pre-paid IRUs. When building a dark fiber network, there is more to consider than just technology and communications. Depending on the contractual structure of a network and equipment, there are also tax implications to consider. Being aware of the possible tax advantages and disadvantages of dark fiber enables organizations to implement the network that benefits them financially as well as technologically. Talk to NEF to get answers to your questions about this topic and more.
The key to gaining understanding of the accounting impact of leasing, as opposed to a pre-paid IRU, lies in the basic nature of each of these contract types. According to the generally accepted accounting principals (GAAP) a lease contract is viewed as an expense, and a pre-paid IRU contract is viewed as an asset.
The essential difference in the accounting impact of leasing vs. pre-paid IRUs is whether it is classified as an asset or liability and the effect it has on the cash flow, balance sheet, and taxes of the organization. Being aware of the possible tax implications is wise when embarking upon building a dark fiber network. Speak to your accountant or tax professional about which situation is most advantageous for your organization.
To find out if dark fiber is right for you from a communications or an accounting standpoint, contact
NEF today. Get the power of choice in connectivity.