Table of Contents WEWORK COMPANIES INC. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS JUNE 30, 2019 (UNAUDITED) Disaggregation of Revenue The following table provides disaggregated detail of the Company’s revenue by major source for the six months ended June 30, 2018 and 2019: Six Months Ended June 30, (Amounts in thousands) 2018 2019 Membership and service revenue $713,956 $1,348,772 Other revenue 49,815 186,648 Total revenue $763,771 $1,535,420 Note 4. Leasing Arrangements In connection with the preparation of these interim condensed consolidated financial statements as of June 30, 2019, the Company adopted ASC 842 and the related amendments using the modified retrospective approach, as if such adoption had occurred on January 1, 2019. The results for reporting periods beginning after January 1, 2019 are presented in accordance with ASC 842, while prior period amounts were not adjusted and continue to be reported in accordance with ASC 840. The policies discussed below, and as otherwise discussed in Note 2, replace the lease policies disclosed in Note 2, “Summary of Significant Accounting Policies,” of our financial statements for the year ended December 31, 2018 as it relates to the accounting and presentation of leases for 2019. Lessee Accounting The Company has a significant portfolio of real estate leases in connection with its business. The Company also leases certain equipment and has service contracts, including warehouse agreements, where we control identified assets, such as warehouse space, and therefore these arrangements represent embedded leases under ASC 842. The Company determines whether an arrangement is a lease at inception. For each lease arrangement identified, the Company determines its classification as an operating or finance lease. At lease commencement, the Company recognizes a lease obligation and corresponding right-of-use asset based on the initial present value of the fixed lease payments using the Company’s incremental borrowing rates for its population of leases. The incremental borrowing rate represents, the rate of interest the Company would have to pay to borrow over a similar term, and with a similar security, the funds necessary to obtain an asset of similar value to the right-of-use asset in a similar economic environment. The commencement date is the date the Company takes initial possession or control of the leased premise or asset, which is generally when the Company enters the leased premises and begins to make improvements in preparation for its intended use. The Company’s leases do not provide a readily determinable implicit discount rate. Therefore, management estimates the incremental borrowing rate used to discount the lease payments based on the information available at lease commencement. The Company utilized a model consistent with the credit quality for its outstanding debt instruments to estimate its specific incremental borrowing rates that align with applicable lease terms. As of June 30, 2019, the weighted average remaining lease term for leases included within the total lease obligation is 14 years for operating leases and 11 years for finance leases. As of June 30, 2019, the weighted average discount rate used for determining the total lease obligation and right-of-use asset was 8.2% for operating leases and 7.6% for financing leases. Non-cancelable lease terms for most of the Company’s real estate leases typically range between 10-20 years and may also provide for renewal options. Renewal options are typically solely at the Company’s discretion and are only included within the lease obligation and right-of-use asset when the Company is reasonably certain that the renewal options would be exercised. F-88