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:
- a
When to recognize the asset acquired under such license agreements in the financial statements
- b
At what amounts to record the asset
- c
Amortization of the capitalized amounts recorded.
Guidance also is provided in this Subtopic on the accounting for
network affiliation agreements that are terminated.
See paragraph
920-350-25-2 for guidance on recording the obligation incurred by a broadcaster licensee under a program license agreement.
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.