# ASC 230-926: Statement of Cash Flows — Entertainment—Films

Source: FASB Accounting Standards Codification, Basic View

[Read online](https://asc.understandingaccounting.org/asc/230/926/)

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## ASC 230-926: Statement of Cash Flows — Entertainment—Films

### Machine-generated study aids

```json
{
  "summary": "This Subtopic tells film production and distribution entities how to classify certain film-related cash flows in the statement of cash flows. Cash outflows for film costs, participation costs, exploitation costs, and manufacturing costs are operating activities—not investing—even though film costs are capitalized as assets. Amortization of film costs is added back in the reconciliation of net income to net cash flows from operating activities.",
  "key_points": [
    "The Subtopic addresses classification of costs incurred to produce and market films and presentation of film cost amortization in the statement of cash flows (230-926-05-1).",
    "Scope follows the Entertainment—Films Overall Subtopic scope in Section 926-10-15 (230-926-15-1).",
    "Cash outflows for film costs, participation costs, exploitation costs, and manufacturing costs are reported as operating activities (230-926-45-1).",
    "Amortization of film costs is included in the reconciliation of net income to net cash flows from operating activities (230-926-45-1)."
  ],
  "categories": [
    "Presentation",
    "Cash flows",
    "Industry-specific"
  ],
  "audience_level": "intermediate",
  "student_note": "The common misunderstanding is assuming that because film costs are capitalized as long-lived assets, the related cash outflows belong in investing activities; ASC 230-926-45-1 requires operating classification, with amortization added back under the indirect method.",
  "related_topics": [
    "926-10",
    "926-20",
    "230-10"
  ],
  "key_concepts": [
    "film costs",
    "participation costs",
    "exploitation costs",
    "manufacturing costs",
    "operating activities classification",
    "amortization add-back",
    "indirect method reconciliation"
  ]
}
```

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## ASC 230-926-05: 05 Overview and Background

[Read section](https://asc.understandingaccounting.org/asc/230/926/#05-overview-and-background)

SEC content: no

##### [230-926-05-1](https://asc.understandingaccounting.org/asc/230/926/#230-926-05-1)

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This Subtopic provides guidance to entities in the film production and distribution industry on the classification in the statement of cash flows of certain costs incurred to produce and [market](https://asc.understandingaccounting.org/glossary/m/#market "A distribution channel within a certain territory. Examples of markets include theatrical exhibition, home video, pay television, free television, and the licensing of film-related products.") [films](https://asc.understandingaccounting.org/glossary/f/#films "Feature films, television specials, television series, or similar products (including animated films and television programming) that are sold, licensed, or exhibited, whether produced on film, video tape, digital, or other video recording format."). This Subtopic also provides guidance for presenting the amortization of [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing.") in the statement of cash flows.

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## ASC 230-926-15: 15 Scope and Scope Exceptions

[Read section](https://asc.understandingaccounting.org/asc/230/926/#15-scope-and-scope-exceptions)

SEC content: no

#### Overall Guidance

##### [230-926-15-1](https://asc.understandingaccounting.org/asc/230/926/#230-926-15-1)

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This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15.

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## ASC 230-926-45: 45 Other Presentation Matters

[Read section](https://asc.understandingaccounting.org/asc/230/926/#45-other-presentation-matters)

SEC content: no

#### Reporting Cash Flows

##### [230-926-45-1](https://asc.understandingaccounting.org/asc/230/926/#230-926-45-1)

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An entity shall report cash outflows for [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing."), [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed."), [exploitation costs](https://asc.understandingaccounting.org/glossary/e/#exploitation-costs "All direct costs (including marketing, advertising, publicity, promotion, and other distribution expenses) incurred in connection with the distribution of a film."), and manufacturing costs as operating activities in the statement of cash flows, and it shall include the amortization of film costs in the reconciliation of net income to net cash flows from operating activities.