# ASC 405-926-35: Liabilities — Entertainment—Films — 35 Subsequent Measurement

Source: FASB Accounting Standards Codification, Basic View

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## ASC 405-926-35: 35 Subsequent Measurement

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#### Ultimate Participation Costs

##### [405-926-35-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-1)

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If, at any balance sheet date, the recognized [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "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.") liability exceeds the estimated unpaid ultimate participation costs for an individual film, the excess liability shall be reduced with an offsetting credit to unamortized [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "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."). To the extent that an excess liability exceeds unamortized film costs for that film, that excess liability shall be credited to income. For more information, see Example 1 (paragraph [926-405-55-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-1)).

##### [405-926-35-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-2)

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For the accounting of revised estimates of participation costs, see paragraph [926-20-35-3](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-3).