ASC

ASC 350-920

Entertainment—Broadcasters

350 Intangibles—Goodwill and Other

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In brief

IntermediateRecognitionSubsequent measurementImpairmentIndustry-specific

This Subtopic tells a broadcaster (licensee) how to account for rights acquired under a license agreement for program material: when to recognize the asset and related liability, at what amounts to record them, and how to amortize and test them for impairment. The core rule is that the license is treated as a purchase of a right or group of rights, recognized when the license period begins and three cost/acceptance/availability conditions are met, then amortized based on estimated future showings and carried at the lower of unamortized cost or fair value. It also governs accounting for terminated network affiliation agreements.

Key points (7)
  • A broadcaster shall account for a program license agreement and any exhibition rights acquired as a purchase of a right or group of rights (350-920-25-1).
  • An asset and liability are reported when the license period begins and all three conditions are met: cost of each program is known or reasonably determinable, the material has been accepted by the licensee, and the program is available for its first showing or telecast (350-920-25-2).
  • Capitalized cost is measured under one of the methods in 920-405-30-1 and allocated to individual programs in a package based on relative value to the broadcaster; the asset is reported at the lower of unamortized cost or fair value on a program-by-program, series, package, or daypart basis (350-920-30-1 through 30-3).
  • Amortization is based on the estimated number of future showings, except licenses for unlimited showings of cartoons and similar programs, which may be amortized over the agreement period; feature programs are amortized program-by-program and series as a series, with an accelerated method if the first showing is more valuable (350-920-35-1 through 35-2).
  • A license agreement that is part of a film group is tested for impairment under 926-20-35-12 and 926-20-35-12B; otherwise under 920-350-35-3, and a writeoff from unamortized cost to fair value establishes a new cost basis (350-920-35-2A, 35-3).
  • On termination of a network affiliation agreement not immediately replaced, the unamortized balance is charged to expense; if immediately replaced, a loss is recognized only to the extent unamortized cost exceeds the fair value of the new affiliation, and no gain is recognized (350-920-40-1).
  • Required disclosures include amortization and impairment methods and units of account, aggregate amortization expense and its income statement caption, and the portion of capitalized license costs expected to be amortized in each of the next three operating cycles (350-920-50-1 through 50-4).

For students. Watch the recognition trigger: the licensee capitalizes the full asset and liability when the license period begins and the program is available for its first telecast — not as installment payments are made — and the fee is owed whether or not the rights are ever exercised. A common misunderstanding is treating these agreements as executory contracts or leases rather than as a purchase of rights.

program license agreementbroadcaster licenseecapitalized program rightsestimated number of future showingslower of unamortized cost or fair valuenetwork affiliation agreementfilm group impairmentdaypart

Machine-generated study aid for ASC 350-920. Check the source paragraphs below.

350-920-00Status

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350-920-05Overview and Background

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350-920-05-1
This Subtopic addresses the accounting and reporting by a broadcaster licensee for the rights acquired under a license agreement for program material. Guidance is provided on:
  1. a
    When to recognize the asset acquired under such license agreements in the financial statements
  2. b
    At what amounts to record the asset
  3. c
    Amortization of the capitalized amounts recorded.
Guidance also is provided in this Subtopic on the accounting for network affiliation agreements that are terminated.
350-920-05-2
See paragraph 920-350-25-2 for guidance on recording the obligation incurred by a broadcaster licensee under a program license agreement.
350-920-05-3
A typical license agreement for program material grants a licensee the right to broadcast a specified number or an unlimited number of showings during the license period for a fee. Ordinarily, the fee is paid in installments over a period generally shorter than the license period. The agreement usually contains a separate license for each program in the package. The license expires at the earlier of the last allowed telecast or the end of the license period. The licensee pays the required fee whether or not the rights are exercised. If the licensee does not exercise the contractual rights, the rights revert to the licensor with no refund to the licensee. The license period is not intended to provide continued use of the program material throughout that period but rather to define a reasonable period of time within which the licensee can exercise the limited rights to use the program material.

350-920-15Scope and Scope Exceptions

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Overall Guidance

350-920-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 920-10-15.

350-920-25Recognition

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License Agreements for Program Material—Exhibition Rights

350-920-25-1
A broadcaster (licensee) shall account for a license agreement for program material and any exhibition right(s) acquired under a license agreement for program material as a purchase of a right or group of rights.
350-920-25-2
A licensee shall report an asset and a liability for the rights acquired and obligations incurred under a license agreement when the license period begins and all of the following conditions have been met:
  1. a
    The cost of each program is known or reasonably determinable.
  2. b
    The program material has been accepted by the licensee in accordance with the conditions of the license agreement.
  3. c
    The program is available for its first showing or telecast. Except when a conflicting license prevents usage by the licensee, restrictions under the same license agreement or another license agreement with the same licensor on the timing of subsequent showings shall not affect this availability condition.

350-920-30Initial Measurement

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License Agreements for Program Material

350-920-30-1
Paragraph 920-405-30-1 presents the alternative methods under which a broadcaster shall report the amount of the asset and liability for a broadcast license agreement.
350-920-30-2
The capitalized costs to be amortized shall be determined under one of the methods specified in paragraph 920-405-30-1. Those costs shall be allocated to individual programs within a package on the basis of the relative value of each to the broadcaster, which ordinarily would be specified in the contract.
350-920-30-3
The capitalized costs of rights to program materials shall be reported in the balance sheet at the lower of unamortized cost or fair value on a program-by-program, series, package, or daypart basis, as appropriate.

350-920-35Subsequent Measurement

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License Agreements for Program Material—Amortization

350-920-35-1
The capitalized costs of license agreements for program material, including license agreements in a film group, shall be amortized based on the estimated number of future showings, except that licenses providing for unlimited showings of cartoons and programs with similar characteristics may be amortized over the period of the agreement because the estimated number of future showings may not be determinable.
350-920-35-2
Feature programs shall be amortized on a program-by-program basis; however, amortization as a package may be appropriate if it approximates the amortization that would have been provided on a program-by-program basis. Program series and other syndicated products shall be amortized as a series. If the first showing is more valuable to a station than reruns, an accelerated method of amortization shall be used. However, the straight-line amortization method may be used if each showing is expected to generate similar revenues.

License Agreements for Program Material—Valuation

350-920-35-2A
If a license agreement within the scope of this Subtopic is part of a film group (see paragraphs
926-20-35-3B through 35-3C
), it shall be reviewed for impairment in accordance with paragraphs 926-20-35-12 and 926-20-35-12B. If the license agreement is not part of a film group, it shall be reviewed for impairment in accordance with paragraph 920-350-35-3.
350-920-35-3
If management's expectations of the programming usefulness of a program, series, package, or daypart are revised downward, it may be necessary to write off to the income statement the amount by which the unamortized capitalized costs exceed fair value. A writeoff from unamortized cost to fair value establishes a new cost basis.

350-920-40Derecognition

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Termination of a Network Affiliation Agreement

350-920-40-1
If a network affiliation agreement is terminated and not immediately replaced or under agreement to be replaced, the unamortized balance of the amount originally allocated to the network affiliation agreement shall be charged to expense. If a network affiliation is terminated and immediately replaced or under agreement to be replaced, a loss shall be recognized to the extent that the unamortized cost of the terminated affiliation exceeds the fair value of the new affiliation. Gain shall not be recognized if the fair value of the new network affiliation exceeds the unamortized cost of the terminated affiliation.

350-920-45Other Presentation Matters

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License Agreements for Program Material

350-920-45-1
The asset recorded for the rights acquired under a license agreement for program material shall be presented separately from films that are accounted for under Subtopic 926-20 either on the balance sheet or in the notes to financial statements.

Network Affiliation Agreements

350-920-45-2
Network affiliation agreements and other such items ordinarily are presented in the balance sheet of a broadcaster as intangible assets.

350-920-50Disclosure

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License Agreements for Program Material

350-920-50-1
An entity shall disclose its methods of accounting for the rights acquired under a license agreement, including, but not limited to, the following methods:
  1. a
    The method or method(s) used in computing amortization
  2. b
    For impairment, a description of the unit(s) of account used for impairment testing and the method(s) used for determining fair value.
350-920-50-2
The following information shall be disclosed in the financial statements or the notes to financial statements for each period for which a statement of financial performance is presented:
  1. a
    The aggregate amortization expense for the period
  2. b
    The caption in the income statement where the amortization is recorded.
Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:
220-40-65-1The following information shall be disclosed in the financial statements or the notes to financial statements for each period for which a statement of financial performance is presented:
  1. a
    The aggregate amortization expense for the period
  2. b
    The caption in the income statement where the amortization is recorded.
See paragraphs
220-40-50-21 through 50-25
for additional disclosure requirements.
350-920-50-3
For the most recent annual period for which a statement of financial position is presented, an entity shall disclose in the notes to financial statements the portion of the costs of license agreements recognized at the date of the most recent statement of financial position that an entity expects to amortize within each of the next three operating cycles. An operating cycle is presumed to be 12 months. An entity shall disclose its operating cycle if it is other than 12 months.
350-920-50-4
For impairment amounts recognized for a license agreement that is not included in a film group, the following information shall be disclosed in the notes to financial statements that include the period in which the impairment losses are recognized:
  1. a
    A description of the facts and circumstances leading to the impairment
  2. b
    The amount of impairment losses
  3. c
    The caption in the income statement where the impairment losses are recorded
  4. d
    If applicable, the segment(s) under Topic 280 where the impairment losses are recorded.
Transition date:(P) December 16, 2026; (N) December 16, 2026Transition guidance:
220-40-65-1For impairment amounts recognized for a license agreement that is not included in a film group, the following information shall be disclosed in the notes to financial statements that include the period in which the impairment losses are recognized:
  1. a
    A description of the facts and circumstances leading to the impairment
  2. b
    The amount of impairment losses
  3. c
    The caption in the income statement where the impairment losses are recorded
  4. d
    If applicable, the segment(s) under Topic 280 where the impairment losses are recorded.
See paragraphs
220-40-50-21 through 50-25
for additional disclosure requirements.

350-920-55Implementation Guidance and Illustrations

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Illustrations

350-920-55-1
This Example illustrates accounting for a license agreement for television program material in accordance with this Topic.
350-920-55-2
This Example has the following assumptions:
  1. a
    End of Fiscal Year—December 31
  2. b
    Contract Execution Date—July 31, 19X1
  3. c
    Number of Films and Telecasts Permitted—four films, two telecasts each
  4. d
    Payment Schedule—$1,000,000 at contract execution date, $6,000,000 on January 1, 19X2, 19X3, and 19X4
  5. e
    Appropriate Interest Rate for Imputation of Interest—12 percent per year
  6. f
    Fees, License Periods, and Film Availability Dates.
    • Stated License Periods Film Availability Dates Film Total Fee From To(a) A "$8,000,000" 10/1/X1 9/30/X3 9/1/X1 B "5,000,000" 10/1/X1 9/30/X3 9/1/X1 C "3,750,000" 9/1/X2 8/31/X4 12/1/X1 D "2,250,000" 9/1/X3 8/31/X5 12/1/X2 "$19,000,000" (a) The actual license periods expire at the earlier of the second telecast or the end of the stated license period.
  7. g
    Telecast Dates and Revenues.
    • First Telecast Second Telecast Film Date Percent of Total Revenue Date Percent of Total Revenue A 3/1/X2 60% 6/1/X3 40% B 5/1/X2 70% 7/1/X3 30% C 6/1/X3 75% 6/1/X4 25% D 12/1/X4 65% 8/1/X5 35%
350-920-55-3
For purposes of imputing interest, it is assumed that the $1,000,000 payment on July 31, 19X1 and the $6,000,000 payments on January 1, 19X2 and 19X3 relate to Films A and B and the $6,000,000 payment on January 1, 19X4 relates to Films C and D. Other simplifying assumptions or methods of assigning the payments to the films could be made.
  • Payment Discounted Present Value (rounded to 000s) Film Date Amount As of Date Amount A and B 7/31/X1 " $1,000,000 " 10/1/X1 " $1,000,000 " 1/1/X2 " 6,000,000 " 10/1/X1 " 5,825,000 " 1/1/X3 " 6,000,000 " 10/1/X1 " 5,201,000 " " $13,000,000 " " $12,026,000 " C 1/1/X4 " $3,750,000 " 9/1/X2 " $3,219,000 " D 1/1/X4 " $2,250,000 " 9/1/X3 " $2,163,000 " " $6,000,000 "
350-920-55-4
Asset and Liability Recognition (Fair Value Approach)
  • License Period Year of Asset and Liability Recognition Film From To 19X1 19X2 19X3 A 10/1/X1 9/30/X3 " $7,401,000 " ( a) B 10/1/X1 9/30/X3 " 4,625,000 " ( a) C 9/1/X2 8/31/X4 " $3,219,000 " " $2,163,000 " D 9/1/X3 8/31/X5 (a) "Discounted present value of $12,026,000 allocated 8/13 to film A and 5/13 to film B based on stated license fees."
350-920-55-5
Expense Recognition (Fair Value Approach)
  • Year of Expense Recognition Film 19X1 19X2 19X3 19X4 19X5 A " $204,000 " (I) (a) " $396,000 " (I) (b) " 4,441,000 " (A) (c) " $2,960,000 " (A) (d) B " 127,000 " (I) (e) " 247,000 " (I) (f) " 3,238,000 " (A) (g) " 1,387,000 " (A) (h) C " 129,000 " (I) (i) " 402,000 " (I) (j) " 2,414,000 " (A) (k) " $805,000 " (A) (l) D " 87,000 " (I) (m) " 1,406,000 " (A) (n) " $757,000 " (A) (o) " $331,000 " " $8,451,000 " " $7,250,000 " " $2,211,000 " " $757,000 " (I) Accrued interest expense (A) Amortization of program cost (a) "Interest at 12% for 3 months on liability of $11,026,000 allocated 8/13 to Film A" (b) "Interest at 12% for 1 year on liability of $5,357,000 ($11,026,000 plus $331,000 less 1/1/X2 payment of $6,000,000) allocated 8/13 to Film A" (c) "$7,401,000 × 60%" (d) "$7,401,000 × 40%" (e) "Interest at 12% for 3 months on liability of $11,026,000 allocated 5/13 to Film B" (f) "Interest at 12% for 1 year on liability of $5,357,000 ($11,026,000 plus $331,000 less 1/1/X2 payment of $6,000,000) allocated 5/13 to Film B" (g) "$4,625,000 × 70%" (h) "$4,625,000 × 30%" (i) "Interest at 12% for 4 months on liability of $3,219,000" (j) "Interest at 12% for 1 year on liability of $3,348,000 ($3,219,000 plus $129,000)" (k) "$3,219,000 × 75%" (l) "$3,219,000 × 25%" (m) "Interest at 12% for 4 months on liability of $2,163,000" (n) "$2,163,000 × 65%" (o) "$2,163,000 × 35%"
350-920-55-6
Asset and Liability Recognition (Gross Approach)
  • License Period Year of Asset and Liability Recognition Film From To 19X1 19X2 19X3 A 10/1/X1 9/30/X3 " $8,000,000 " B 10/1/X1 9/30/X3 " 5,000,000 " C 9/1/X2 8/31/X4 " $3,750,000 " D 9/1/X3 8/31/X5 " $2,250,000 "
350-920-55-7
Expense Recognition (Gross Approach)
  • Year of Expense Recognition (a) Film 19X1 19X2 19X3 19X4 19X5 A " $4,800,000 " (b) " $3,200,000 " (c) B " 3,500,000 " (d) " 1,500,000 " (e) C " 2,813,000 " (f) " $937,000 " (g) D " 1,463,000 " (h) " $787,000 " (i) $- " $8,300,000 " " $7,513,000 " " $2,400,000 " " $787,000 " (a) "Under the gross approach, all costs under a license agreement are recorded as amortization of program cost." (b) "$8,000,000 × 60%" (c) "$8,000,000 × 40%" (d) "$5,000,000 × 70%" (e) "$5,000,000 × 30%" (f) "$3,750,000 × 75%" (g) "$3,750,000 × 25%" (h) "$2,250,000 × 65%" (i) "$2,250,000 × 35%"

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