# ASC 340-928: Other Assets and Deferred Costs — Entertainment—Music Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/340/928/) Study and research edition. Verify current requirements with the official source. Summaries, enrichment, and tags are machine-generated study aids. Paragraph html preserves source markup; snippet is abbreviated. Pending content is not necessarily effective. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-09T23:57:11.675Z to 2026-09-09T23:57:36.379Z Record version: sha256:9c4b5abc7b4106c9405c00e121efa5bf8092e90b6f857225677c8e7be70966a1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928: Other Assets and Deferred Costs — Entertainment—Music ### Machine-generated study aids ```json { "summary": "ASC 340-928 governs when a music entity may capitalize advance royalties paid to artists, the cost of record masters, and minimum guarantees paid in advance by licensees. Capitalization hinges on recoverability: an advance royalty or the record company's share of record master cost is an asset only if the artist's past performance and current popularity provide a sound basis for estimating recovery from future royalties or sales. Capitalized amounts are charged to expense as royalties are earned or amortized over the recorded performance's life in relation to expected net revenue, with immediate write-off of nonrecoverable portions.", "key_points": [ "An advance royalty paid to an artist is reported as an asset only if the artist's past performance and current popularity provide a sound basis for estimating recoverability from future royalties (340-928-25-1).", "The portion of record master cost borne by the record company is an asset if that same past-performance/current-popularity test supports recovery from future sales (340-928-25-2); the portion recoverable from the artist's royalties is accounted for as an advance royalty (340-928-25-3).", "Minimum guarantees paid in advance by a licensee are reported as an asset by the licensee (340-928-25-4).", "Advance royalties are charged to expense as subsequent royalties are earned by the artist, and any portion that appears not to be fully recoverable is expensed in the period the loss becomes evident (340-928-35-1).", "Capitalized record master cost is amortized over the estimated life of the recorded performance using a method that reasonably relates the amount to net revenue expected to be recognized (340-928-35-2).", "Minimum guarantees are charged to expense in accordance with the license agreement terms, with any nonrecoverable portion expensed (340-928-35-3).", "Advance royalties are classified as current and noncurrent assets as appropriate (340-928-45-1), and the capitalized record master cost borne by the record company is disclosed separately (340-928-50-1)." ], "categories": [ "Recognition", "Subsequent measurement", "Impairment", "Industry-specific" ], "audience_level": "intermediate", "student_note": "This is a classic industry-specific capitalization rule: the asset test is a judgmental recoverability standard tied to the artist's track record and current popularity, not a bright line. A common mistake is capitalizing the entire record master cost — only the portion borne by the record company is tested for capitalization; the portion recoverable from the artist's royalties is treated as an advance royalty.", "related_topics": [ "928-720", "928-10", "928-405", "340-10", "926-340" ], "key_concepts": [ "advance royalties", "record master costs", "minimum guarantees", "recoverability assessment", "artist past performance and current popularity", "amortization over estimated life", "licensee capitalization", "current and noncurrent classification" ] } ``` Source downloaded (UTC): 2026-09-09T23:57:11.675Z to 2026-09-09T23:57:11.675Z Record version: sha256:2354352740e024d60e4c3984de9c9c55357657c223a307ce6a840c1ee5a85059 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/340/928/#00-status) SEC content: no ##### [340-928-00-1](https://asc.understandingaccounting.org/asc/340/928/#340-928-00-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:11.675Z to 2026-09-09T23:57:11.675Z Record version: sha256:8445f9bc186eaa5cd2ed9f6c7f124cd75127949fb47478ff88a16a170afe2741 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
928-340-35-2AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-09T23:57:14.741Z to 2026-09-09T23:57:14.741Z Record version: sha256:2d65e31babf6abd76a6fb4d0680394bbb1adcea5395c1bcaa7f23d6e617411a8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/340/928/#05-overview-and-background) SEC content: no ##### [340-928-05-1](https://asc.understandingaccounting.org/asc/340/928/#340-928-05-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:14.741Z to 2026-09-09T23:57:14.741Z Record version: sha256:950341022bf38ce47e29b7ace2663d7752bf07c8abbeb891d7826883db1a4175 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A [licensing agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreements "Contractual arrangements entered into by an owner (licensor) of a record master or music copyright with a licensee granting the licensee the right to sell or distribute records or music for a fixed fee paid to the licensor or for a fee based on sales of records or music. License agreements are modifications of the compulsory provisions of the copyright law.") may require [advance royalties](https://asc.understandingaccounting.org/glossary/a/#advance-royalty "An amount paid to music publishers, record producers, songwriters, or other artists in advance of their earning royalties from record or music sales. Such an amount is based on contractual terms and is generally nonrefundable.") to be paid to artists and [minimum guarantees](https://asc.understandingaccounting.org/glossary/m/#minimum-guarantee "An amount paid in advance by a licensee to a licensor for the right to sell or distribute records or music.") to be advanced to licensors. This Subtopic addresses the accounting for such royalties and guarantees by an entity in the music industry. It also addresses the accounting by such entities for the costs to produce [record masters](https://asc.understandingaccounting.org/glossary/r/#record-master "The master tape resulting from the performance of the artist. It is used to produce molds for commercial record production and other tapes for use in making cartridges, cassettes, DVDs, and reel tapes. The costs of producing a record master include the cost of the musical talent (musicians, vocal background, and arrangements); the cost of the technical talent for engineering, directing, and mixing; costs for the use of the equipment to record and produce the master; and studio facility charges. Under the standard type of artist contract, the record company bears a portion of the cost and recovers a portion of the cost from the artist out of designated royalties earned. However, either party may bear all or most of the cost."). Source downloaded (UTC): 2026-09-09T23:57:18.275Z to 2026-09-09T23:57:18.275Z Record version: sha256:6c8fb02aae140bbbf3ba981a5c1196fc52c3182668f8a7c1081967ca24f1b68d Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/340/928/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [340-928-15-1](https://asc.understandingaccounting.org/asc/340/928/#340-928-15-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:18.275Z to 2026-09-09T23:57:18.275Z Record version: sha256:87ee4d33e96cbf09e501dbd2cd7bfd6d65a66ed23718af2f80e97944fca9d557 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 928-10-15. Source downloaded (UTC): 2026-09-09T23:57:23.467Z to 2026-09-09T23:57:23.467Z Record version: sha256:52993503deb88731eff03b8de5edf789c8adee91cc788fc156a0dd713fd4dd48 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/340/928/#25-recognition) SEC content: no #### Licensor Accounting ##### [340-928-25-1](https://asc.understandingaccounting.org/asc/340/928/#340-928-25-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:23.467Z to 2026-09-09T23:57:23.467Z Record version: sha256:157c2825f5c6d5f923c78861d1c221ffe11d30bc96cd0eeef32c1ff6a33a607e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An [advance royalty](https://asc.understandingaccounting.org/glossary/a/#advance-royalty "An amount paid to music publishers, record producers, songwriters, or other artists in advance of their earning royalties from record or music sales. Such an amount is based on contractual terms and is generally nonrefundable.") paid to an artist shall be reported as an asset if the past performance and current popularity of the artist to whom the advance is made provide a sound basis for estimating that the amount of the advance will be recoverable from future [royalties](https://asc.understandingaccounting.org/glossary/r/#royalties "Amounts paid to record producers, songwriters, or other artists for their participation in making records and to music publishers for their copyright interest in music. Amounts for artists are determined by the terms of personal service contracts negotiated between the artists and record entities and usually are determined based upon a percentage of sales activity and license fee income, adjusted for estimated sales returns. Royalties for publishing are based on the copyright or other applicable laws, but the requirements of the law may be modified by licenses issued by the publishers.") to be earned by the artist. ##### [340-928-25-2](https://asc.understandingaccounting.org/asc/340/928/#340-928-25-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:23.467Z to 2026-09-09T23:57:23.467Z Record version: sha256:cca25ddbad096830569fad04d5a614f81a39fe9ae94fcb2a64b5ce4c0b61d697 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the [record master](https://asc.understandingaccounting.org/glossary/r/#record-master "The master tape resulting from the performance of the artist. It is used to produce molds for commercial record production and other tapes for use in making cartridges, cassettes, DVDs, and reel tapes. The costs of producing a record master include the cost of the musical talent (musicians, vocal background, and arrangements); the cost of the technical talent for engineering, directing, and mixing; costs for the use of the equipment to record and produce the master; and studio facility charges. Under the standard type of artist contract, the record company bears a portion of the cost and recovers a portion of the cost from the artist out of designated royalties earned. However, either party may bear all or most of the cost.") cost borne by the record company shall be reported as an asset if the past performance and current popularity of the artist provides a sound basis for estimating that the cost will be recovered from future sales. ##### [340-928-25-3](https://asc.understandingaccounting.org/asc/340/928/#340-928-25-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:23.467Z to 2026-09-09T23:57:23.467Z Record version: sha256:dfc18246e0313502e65612708cded2f8ae18e6941a3bd1e6bb1a42b007c1320b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the record master cost recoverable from the artist's royalties shall be accounted for as an advance royalty, as discussed in this Subtopic and Subtopic 928-720. #### Licensee Accounting ##### [340-928-25-4](https://asc.understandingaccounting.org/asc/340/928/#340-928-25-4) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:23.467Z to 2026-09-09T23:57:23.467Z Record version: sha256:4ff162d0a461eb614a89219cc731220b7c20d06c27a12f0a60af3762591e0178 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. If [minimum guarantees](https://asc.understandingaccounting.org/glossary/m/#minimum-guarantee "An amount paid in advance by a licensee to a licensor for the right to sell or distribute records or music.") are paid in advance by a licensee, such guarantees shall be reported as an asset by the licensee. Source downloaded (UTC): 2026-09-09T23:57:26.624Z to 2026-09-09T23:57:26.624Z Record version: sha256:dd14fe69cf65a870ac03f913a4c0e59aeb99b465a6543d772c1b76990e4e5863 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/340/928/#35-subsequent-measurement) SEC content: no #### Licensor Accounting ##### [340-928-35-1](https://asc.understandingaccounting.org/asc/340/928/#340-928-35-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:26.624Z to 2026-09-09T23:57:26.624Z Record version: sha256:d8acd89f2fe95e2c76a962d4647d3815cb7b3db0c53b07669104c10dbc6e62e8 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As indicated in paragraph [928-720-25-1](https://asc.understandingaccounting.org/asc/720/928/#720-928-25-1), [advance royalties](https://asc.understandingaccounting.org/glossary/a/#advance-royalty "An amount paid to music publishers, record producers, songwriters, or other artists in advance of their earning royalties from record or music sales. Such an amount is based on contractual terms and is generally nonrefundable.") shall be charged to expense as subsequent [royalties](https://asc.understandingaccounting.org/glossary/r/#royalties "Amounts paid to record producers, songwriters, or other artists for their participation in making records and to music publishers for their copyright interest in music. Amounts for artists are determined by the terms of personal service contracts negotiated between the artists and record entities and usually are determined based upon a percentage of sales activity and license fee income, adjusted for estimated sales returns. Royalties for publishing are based on the copyright or other applicable laws, but the requirements of the law may be modified by licenses issued by the publishers.") are earned by the artist. Any portion of such advances that subsequently appear not to be fully recoverable from future royalties to be earned by the artist shall be charged to expense during the period in which the loss becomes evident. ##### [340-928-35-2](https://asc.understandingaccounting.org/asc/340/928/#340-928-35-2) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:26.624Z to 2026-09-09T23:57:26.624Z Record version: sha256:ccfef1572dfb581060f080ddf428e6ead39f8d2573192aca8d09a2b73c6967f5 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the [record master](https://asc.understandingaccounting.org/glossary/r/#record-master "The master tape resulting from the performance of the artist. It is used to produce molds for commercial record production and other tapes for use in making cartridges, cassettes, DVDs, and reel tapes. The costs of producing a record master include the cost of the musical talent (musicians, vocal background, and arrangements); the cost of the technical talent for engineering, directing, and mixing; costs for the use of the equipment to record and produce the master; and studio facility charges. Under the standard type of artist contract, the record company bears a portion of the cost and recovers a portion of the cost from the artist out of designated royalties earned. However, either party may bear all or most of the cost.") cost recognized as an asset shall be amortized over the estimated life of the recorded performance using a method that reasonably relates the amount to the net revenue expected to be recognized. #### Licensee Accounting ##### [340-928-35-3](https://asc.understandingaccounting.org/asc/340/928/#340-928-35-3) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:26.624Z to 2026-09-09T23:57:26.624Z Record version: sha256:25373b2a686864b81fd3cb3b309103ab72e6aee75fc55cc531f7e5d722def390 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Minimum guarantees](https://asc.understandingaccounting.org/glossary/m/#minimum-guarantee "An amount paid in advance by a licensee to a licensor for the right to sell or distribute records or music.") paid in advance, and reported as an asset by the licensee in accordance with paragraph [928-340-25-4](https://asc.understandingaccounting.org/asc/340/928/#340-928-25-4), shall subsequently be charged to expense in accordance with the terms of the [license agreement](https://asc.understandingaccounting.org/glossary/l/#license-agreements "Contractual arrangements entered into by an owner (licensor) of a record master or music copyright with a licensee granting the licensee the right to sell or distribute records or music for a fixed fee paid to the licensor or for a fee based on sales of records or music. License agreements are modifications of the compulsory provisions of the copyright law."). If all or a portion of the minimum guarantee subsequently appears not to be recoverable through future use of the rights obtained under the license, the nonrecoverable portion shall be charged to expense. Source downloaded (UTC): 2026-09-09T23:57:29.691Z to 2026-09-09T23:57:29.691Z Record version: sha256:09db430f4b973c70302caef5a84c725bf288050c6230c5e61decf8695f98165a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928-45: 45 Other Presentation Matters [Read section](https://asc.understandingaccounting.org/asc/340/928/#45-other-presentation-matters) SEC content: no #### Licensor Accounting ##### [340-928-45-1](https://asc.understandingaccounting.org/asc/340/928/#340-928-45-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:29.691Z to 2026-09-09T23:57:29.691Z Record version: sha256:75a30f676eb8cb18cad96825bc5d6ea31427dc8e626450dc373b81b72f439eae Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. [Advance royalties](https://asc.understandingaccounting.org/glossary/a/#advance-royalty "An amount paid to music publishers, record producers, songwriters, or other artists in advance of their earning royalties from record or music sales. Such an amount is based on contractual terms and is generally nonrefundable.") shall be classified as current and noncurrent assets, as appropriate. Source downloaded (UTC): 2026-09-09T23:57:32.291Z to 2026-09-09T23:57:32.291Z Record version: sha256:8e71349ec09b2e532cea0932deb76aea6ac2fd92de95821f0dd262066f627f45 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 340-928-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/340/928/#50-disclosure) SEC content: no #### Licensor Accounting ##### [340-928-50-1](https://asc.understandingaccounting.org/asc/340/928/#340-928-50-1) Pending content: no Source downloaded (UTC): 2026-09-09T23:57:32.291Z to 2026-09-09T23:57:32.291Z Record version: sha256:fb62841eba3819971c4d361b35c1c0d8aae3fd5512aaae30d6febe54755a32f4 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the [record master](https://asc.understandingaccounting.org/glossary/r/#record-master "The master tape resulting from the performance of the artist. It is used to produce molds for commercial record production and other tapes for use in making cartridges, cassettes, DVDs, and reel tapes. The costs of producing a record master include the cost of the musical talent (musicians, vocal background, and arrangements); the cost of the technical talent for engineering, directing, and mixing; costs for the use of the equipment to record and produce the master; and studio facility charges. Under the standard type of artist contract, the record company bears a portion of the cost and recovers a portion of the cost from the artist out of designated royalties earned. However, either party may bear all or most of the cost.") cost borne by the record company that is recorded as assets shall be disclosed separately.