ASC

ASC 350-922

Entertainment—Cable Television

350 Intangibles—Goodwill and Other

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In brief

IntermediateIndustry-specificRecognitionSubsequent measurementIntangibles and goodwill

This Subtopic governs intangible-type costs incurred by cable television systems, principally programming and other system costs during the "prematurity period" and franchise application costs. During the prematurity period, fixed system costs incurred in anticipation of a fully operating system are split between current operations (expensed) and future operations (capitalized) using the subscriber-based fraction in 922-360-35-3, and amortization is computed using that same fraction. Costs of successful franchise applications are capitalized and amortized under Topic 350, while unsuccessful or abandoned franchise costs are expensed.

Key points (7)
  • During the prematurity period, programming and other system costs incurred in anticipation of a fully operating system that do not vary significantly with subscriber count are allocated between current and future operations; the current portion is expensed and the remainder capitalized (350-922-25-1).
  • The amount expensed currently equals the month's total of such costs multiplied by the fraction described in paragraph 922-360-35-3; covered costs include property taxes, pole/underground duct/antenna site/microwave rental based on a fully operating system, and local origination programming required by the franchise (350-922-25-1).
  • Prematurity-period amortization expense equals the monthly amortization of total capitalized costs expected at completion of the prematurity period multiplied by the same 922-360-35-3 fraction, using the post-prematurity amortization method (350-922-35-1).
  • Costs capitalized under paragraph 922-350-25-1 are amortized over the same period used to depreciate the main cable television plant (350-922-35-2).
  • Capitalization does not stop when total cost exceeds a recoverable amount; capitalization continues and the provision reducing capitalized costs to recoverable value is increased (350-922-35-3).
  • Costs of successful franchise applications are capitalized (350-922-25-3) and amortized under Topic 350 (350-922-35-4), while costs of unsuccessful applications and abandoned franchises are charged to expense (350-922-40-1, 922-720-25-4).
  • Interest costs during the prematurity period are capitalized as provided in paragraph 922-835-25-1 (350-922-25-2).

For students. This is narrow industry guidance, but it illustrates a rare rule: capitalization continues even when costs exceed recoverable value, with a valuation provision instead. A common misunderstanding is thinking all franchise costs are capitalized — only successful applications qualify; unsuccessful and abandoned ones are expensed.

prematurity periodprogramming costsfranchise application costscost allocation fractioncapitalization and amortizationrecoverable value provisioncable television plant

Machine-generated study aid for ASC 350-922. Check the source paragraphs below.

350-922-00Status

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350-922-00-1
The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
922-350-30-1AmendedAccounting Standards Update No. 2009-0207/01/2009

350-922-05Overview and Background

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350-922-05-1
This Subtopic provides guidance for various intangible costs incurred by entities in the cable television industry, such as programming costs and franchise application costs.

350-922-15Scope and Scope Exceptions

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Overall Guidance

350-922-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 922-10-15.

350-922-25Recognition

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Prematurity Period—Programming and Other System Costs

350-922-25-1
During the prematurity period, programming costs and other system costs that are incurred in anticipation of servicing a fully operating system and that will not vary significantly regardless of the number of subscribers shall be allocated between current and future operations. The proportion attributable to current operations shall be expensed currently and the remainder shall be capitalized. The amount to be expensed currently shall be determined by multiplying the total of such costs for the month by the fraction determined for that month as described in paragraph 922-360-35-3. Those costs include property taxes based on valuation as a fully operating system; pole, underground duct, antenna site, and microwave rental based on rental costs for a fully operating system; and local origination programming to satisfy franchise requirements.
350-922-25-2
Refer to paragraph 922-835-25-1 concerning the capitalization of interest costs during the prematurity period.

Franchise Application Costs

350-922-25-3
Costs of successful franchise applications shall be capitalized.

350-922-30Initial Measurement

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350-922-35Subsequent Measurement

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Amortization During the Prematurity Period

350-922-35-1
During the prematurity period, amortization expense shall be determined by multiplying the monthly amortization of total capitalized costs expected on completion of the prematurity period by the same fraction described in paragraph 922-360-35-3, using the amortization method that will be applied by the entity after the prematurity period.

Amortization of Capitalized Costs

350-922-35-2
Costs that have been capitalized in accordance with paragraph 922-350-25-1 shall be amortized over the same period used to depreciate the main cable television plant.

Recoverability

350-922-35-3
Certain intangible assets are subject to the provisions of Topic 360. Other intangible assets are subject to the provisions of Topic 350. Capitalization of costs shall not cease when the total cost reaches an amount that is not fully recoverable. Capitalization of costs shall continue, and the provision required to reduce capitalized costs to recoverable value shall be increased.

Franchise Application Costs

350-922-35-4
Costs of successful franchise applications capitalized under paragraph 922-350-25-3 shall be amortized in accordance with the provisions of Topic 350.

350-922-40Derecognition

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Unsuccessful Franchise Applications and Abandoned Franchises

350-922-40-1
As indicated in paragraph 922-720-25-4, costs of unsuccessful franchise applications and abandoned franchises shall be charged to expense.

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