{"schema_version":2,"canonical_url":"https://asc.understandingaccounting.org/asc/405/926/#25-recognition","source":"FASB Accounting Standards Codification, Basic View","usage":"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.","topic":"405","topic_title":"Liabilities","subtopic":"405-926","subtopic_title":"Entertainment—Films","section":{"number":"25","label":"25 Recognition","anchor":"25-recognition","is_sec":false,"groups":[{"block":null,"heading":"Participation Costs","paragraphs":[{"citation":"405-926-25-1","para":"25-1","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E1B55B2B-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity shall accrue (expense) <a href=\"/glossary/p/#participation-costs\" class=\"term\" title=\"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.\"><span>participation costs</span></a> using the individual-film-forecast-computation method, which accrues (expenses) such costs in the same ratio that current period actual revenue (numerator) bears to estimated remaining unrecognized ultimate revenue as of the beginning of the current fiscal year (denominator). </span></span><span class=\"sfragment\" id=\"sfr_E1B55C46-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> That is, unaccrued (not yet expensed) ultimate participation costs at the beginning of the current fiscal year are multiplied by the individual-film-forecast-computation method fraction. </span></span><span class=\"sfragment\" id=\"sfr_E1B55D33-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\"> In this way, in the absence of changes in estimates, participation costs are accrued (expensed) in a manner that yields a constant rate of profit over the ultimate period, as described in paragraph <a href=\"/asc/926/20/#926-20-35-5\" class=\"xref\">926-20-35-5(a)</a>, for each film before <a href=\"/glossary/e/#exploitation-costs\" class=\"term\" title=\"All direct costs (including marketing, advertising, publicity, promotion, and other distribution expenses) incurred in connection with the distribution of a film.\"><span>exploitation costs</span></a>, manufacturing costs, and other period expenses. </span></span></div></div>","snippet":"An entity shall accrue (expense) participation costs using the individual-film-forecast-computation method, which accrues (expenses) such costs in the same ratio that current period actual revenue (numerator) bears to es…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:3742a9327d036321493c7f7d93de07cf9fb7291e3d5d54435e6a4b4c8f0dbaf0","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}},{"citation":"405-926-25-2","para":"25-2","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E1B55E1F-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity shall accrue a liability for participation costs only if it is probable that there will be a sacrifice of assets to settle its obligation under the terms of the participation agreement. At each balance sheet date, accrued participation costs shall not be less than the amounts that an entity is obligated to pay as of that date. </span></span></div></div>","snippet":"An entity shall accrue a liability for participation costs only if it is probable that there will be a sacrifice of assets to settle its obligation under the terms of the participation agreement. At each balance sheet da…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:1350d0e41facc782d5c434f798d20eebd9920f9dea11562b566c07336d16f178","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}},{"citation":"405-926-25-3","para":"25-3","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E1B55EFD-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">An entity shall begin accruing (expensing) participation costs when a film is released and it begins to recognize revenue from that film. </span></span></div></div>","snippet":"An entity shall begin accruing (expensing) participation costs when a film is released and it begins to recognize revenue from that film.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:b01c1d8dfe881285b6f0f6b1613d6d58e6f4b9f7e76fab43d19be70ba636c983","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}},{"citation":"405-926-25-4","para":"25-4","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E1B55FD3-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">Estimates of unaccrued (that is, not yet expensed) ultimate participation costs are used in the individual-film-forecast-computation method to arrive at current period participation cost expense. Such costs shall be determined using assumptions that are consistent with an entity's estimates of <a href=\"/glossary/f/#film-costs\" class=\"term\" title=\"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.\"><span>film costs</span></a>, exploitation costs, and ultimate revenue, as limited by paragraphs <a href=\"/asc/926/20/#926-20-35-5\" class=\"xref\">926-20-35-5</a> and <a href=\"/asc/926/20/#926-20-35-11\" class=\"xref\">926-20-35-11</a>.</span></span></div></div>","snippet":"Estimates of unaccrued (that is, not yet expensed) ultimate participation costs are used in the individual-film-forecast-computation method to arrive at current period participation cost expense. Such costs shall be dete…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:98b2c4ad44bc896635f738e89e9b4deeace98810004fbd0fbb773f9df402c63f","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}},{"citation":"405-926-25-5","para":"25-5","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E1B560BF-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A film may continue to generate revenue after its film costs are fully amortized. When revenue is recorded on fully amortized <a href=\"/glossary/f/#films\" class=\"term\" title=\"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.\"><span>films</span></a>, an entity shall accrue associated participation costs as that revenue is recognized. </span></span></div></div>","snippet":"A film may continue to generate revenue after its film costs are fully amortized. When revenue is recorded on fully amortized films, an entity shall accrue associated participation costs as that revenue is recognized.","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:67d096f1032c46c08db969ab1ac6b493661e34566228e6095197a5650e4a0068","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:17f3c13a489da27af5c11d90eb8983d29851758ee7432827cd0242419b95f7f4","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}},{"block":null,"heading":"Costs Incurred for Insignificant Changes to a Film","paragraphs":[{"citation":"405-926-25-6","para":"25-6","html":"<div class=\"asc-body\"><div class=\"norm-text\"><span class=\"sfragment\" id=\"sfr_E1B561B8-6E93-1014-A13F-6E4B94C84136\"><span class=\"sfragment-source\">A licensing arrangement may require an entity to make changes to a film after its initial availability to a customer. Those changes may be deemed <a href=\"/glossary/s/#significant-changes\" class=\"term\" title=\"Changes that are additive to a film; that is, the creation of new or additional content after the film is initially available to the customer. For example, reshooting a scene or creating additional special effects are significant changes. (P) December 16, 2019; (N) December 16, 2020926-20-65-2Glossary term superseded by Accounting Standards Update No. 2019-02.\"><span>significant</span></a> or not significant. Any costs expected to be incurred for changes that are not significant shall be accrued and charged to expense if an entity begins to recognize revenue from the arrangement before incurring those costs.</span></span></div></div>","snippet":"A licensing arrangement may require an entity to make changes to a film after its initial availability to a customer. Those changes may be deemed significant or not significant. Any costs expected to be incurred for chan…","pending":false,"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:0c79cea9c8e6f8e6aea511f7432004cc78c375806a995d57be51f2ad2eced939","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:180453256ae22f11d0f7dca7ec66901a73745b859d625a8451e9fd040832dace","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}}],"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:60828de462cdd6c68385e0d95365535509ca174b424ac38b2e6c4e4db8566a5b","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}},"provenance":{"source_url":"https://asc.fasb.org/","snapshot_version":"sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f","record_version":"sha256:60828de462cdd6c68385e0d95365535509ca174b424ac38b2e6c4e4db8566a5b","downloaded_from":"2026-09-10T00:17:32.820Z","last_downloaded_at":"2026-09-10T00:17:32.820Z","date_scope":"source_page","effective_as_of":null,"effective_as_of_status":"Not established by retrieval timestamps","source_key":"1943274/2147477848","source_sha256":"c9cb94e62650a444c6763d733dd8b632a222b3d551dbfa57b37f593d9a089282"}}