# ASC 405-926: Liabilities — Entertainment—Films Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/405/926/) 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. Tables and mathematical or amendment markup are retained as HTML where Markdown would lose structure. Source downloaded (UTC): 2026-09-10T00:17:22.936Z to 2026-09-10T00:17:44.605Z Record version: sha256:9b3fb6efddb8c1cabb677250cb432404d3317b8c449cf881b91ab8b1ff39706c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926: Liabilities — Entertainment—Films ### Machine-generated study aids ```json { "summary": "ASC 405-926 governs how film production and distribution entities accrue participation costs — amounts owed to third parties such as actors and writers — and costs of insignificant post-release changes to a film. Participation costs are accrued using the individual-film-forecast-computation method (current period actual revenue over estimated remaining unrecognized ultimate revenue at the beginning of the fiscal year), but only when it is probable an entity will sacrifice assets to settle the obligation, and never for less than amounts currently payable. If the recorded participation liability exceeds estimated unpaid ultimate participation costs, the excess reduces unamortized film costs first, then goes to income.", "key_points": [ "Participation costs are accrued using the individual-film-forecast-computation method, applying the fraction of current period actual revenue over estimated remaining unrecognized ultimate revenue as of the beginning of the fiscal year to unaccrued ultimate participation costs (405-926-25-1).", "A participation liability is accrued only if it is probable there will be a sacrifice of assets to settle the obligation, and accrued participation costs at each balance sheet date shall not be less than amounts the entity is obligated to pay as of that date (405-926-25-2).", "Accrual begins when the film is released and the entity begins recognizing revenue from that film, and continues on fully amortized films as revenue is recognized (405-926-25-3; 405-926-25-5).", "Estimates of unaccrued ultimate participation costs must use assumptions consistent with the entity's estimates of film costs, exploitation costs, and ultimate revenue, as limited by 926-20-35-5 and 926-20-35-11 (405-926-25-4).", "Costs expected for changes to a film that are not significant under a licensing arrangement are accrued and charged to expense if revenue recognition begins before the costs are incurred (405-926-25-6).", "Any recognized participation liability in excess of estimated unpaid ultimate participation costs is reduced with an offsetting credit to unamortized film costs, and only the remainder beyond unamortized film costs is credited to income (405-926-35-1; Example 1 at 926-405-55-1).", "Disclose the amount of accrued participation liabilities expected to be paid during the upcoming operating cycle and the methods of accounting for participation costs (405-926-50-1; 405-926-50-2)." ], "categories": [ "Recognition", "Subsequent measurement", "Disclosure", "Industry-specific" ], "audience_level": "intermediate", "student_note": "The classic trap is treating participation costs as ratably expensed or as payable-based; instead they follow the same revenue-based forecast ratio as film cost amortization, floored at amounts currently due. Also remember the excess-liability reversal cascades to unamortized film costs first — income only after film costs are exhausted.", "related_topics": [ "926-20", "926-10", "926-405", "450-20", "606" ], "key_concepts": [ "participation costs", "individual-film-forecast-computation method", "ultimate revenue", "unamortized film costs", "probable sacrifice of assets", "film cost amortization", "insignificant changes to a film", "accrued participation liability" ] } ``` Source downloaded (UTC): 2026-09-10T00:17:22.936Z to 2026-09-10T00:17:22.936Z Record version: sha256:ebfc208af5cad6bde09080d689f3b18efe5ce83fb6103af78229ac1772f8c670 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-00: 00 Status [Read section](https://asc.understandingaccounting.org/asc/405/926/#00-status) SEC content: no ##### [405-926-00-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-00-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:22.936Z to 2026-09-10T00:17:22.936Z Record version: sha256:8d8d88682e70b13a9d02d978721b1f313d8a9378cc3e8fab534efd06de9cdd8c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The following table identifies the changes made to this Subtopic.
ParagraphActionAccounting Standards UpdateDate
RevenueSupersededAccounting Standards Update No. 2014-0905/28/2014
Significant ChangesSupersededAccounting Standards Update No. 2019-0203/06/2019
Significant Changes to a FilmAddedAccounting Standards Update No. 2019-0203/06/2019
926-405-25-1AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-2AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-3AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-5AmendedAccounting Standards Update No. 2014-0905/28/2014
926-405-55-6AmendedAccounting Standards Update No. 2014-0905/28/2014
Source downloaded (UTC): 2026-09-10T00:17:24.635Z to 2026-09-10T00:17:24.635Z Record version: sha256:2ebf58d12325c5c828886bac8727da0de9ea8c37039b856eecd76b65b09954f2 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/405/926/#05-overview-and-background) SEC content: no ##### [405-926-05-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:24.635Z to 2026-09-10T00:17:24.635Z Record version: sha256:b244f4d466152a8d36cd3706af30d2c5a074277dae24e7b17d708f1f2da798d6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic provides guidance to entities in the film production and distribution industry on the accounting for costs incurred to compensate third parties involved in the production of a film, such as actors or writers. These costs are referred to as [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."). This Subtopic also addresses the accounting for costs incurred to make insignificant changes to a film after its initial availability to a customer. Source downloaded (UTC): 2026-09-10T00:17:26.473Z to 2026-09-10T00:17:26.473Z Record version: sha256:3af41b65a01dee94c09436021a4631b749aee9b0dfd014bbbdd8d704f0616505 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/405/926/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [405-926-15-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:26.473Z to 2026-09-10T00:17:26.473Z Record version: sha256:281ca0df37c779196df12c1f3674a55f32d614397d43e09ad55eb2f0d1279e87 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15. Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:60828de462cdd6c68385e0d95365535509ca174b424ac38b2e6c4e4db8566a5b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/405/926/#25-recognition) SEC content: no #### Participation Costs ##### [405-926-25-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:3742a9327d036321493c7f7d93de07cf9fb7291e3d5d54435e6a4b4c8f0dbaf0 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall accrue (expense) [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.") 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). 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. 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 [926-20-35-5(a)](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-5), for each film before [exploitation costs](https://asc.understandingaccounting.org/glossary/e/#exploitation-costs "All direct costs (including marketing, advertising, publicity, promotion, and other distribution expenses) incurred in connection with the distribution of a film."), manufacturing costs, and other period expenses. ##### [405-926-25-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:1350d0e41facc782d5c434f798d20eebd9920f9dea11562b566c07336d16f178 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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. ##### [405-926-25-3](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:b01c1d8dfe881285b6f0f6b1613d6d58e6f4b9f7e76fab43d19be70ba636c983 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall begin accruing (expensing) participation costs when a film is released and it begins to recognize revenue from that film. ##### [405-926-25-4](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:98b2c4ad44bc896635f738e89e9b4deeace98810004fbd0fbb773f9df402c63f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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 [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."), exploitation costs, and ultimate revenue, as limited by paragraphs [926-20-35-5](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-5) and [926-20-35-11](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-11). ##### [405-926-25-5](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:67d096f1032c46c08db969ab1ac6b493661e34566228e6095197a5650e4a0068 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. A film may continue to generate revenue after its film costs are fully amortized. When revenue is recorded on fully amortized [films](https://asc.understandingaccounting.org/glossary/f/#films "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."), an entity shall accrue associated participation costs as that revenue is recognized. #### Costs Incurred for Insignificant Changes to a Film ##### [405-926-25-6](https://asc.understandingaccounting.org/asc/405/926/#405-926-25-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:32.820Z to 2026-09-10T00:17:32.820Z Record version: sha256:0c79cea9c8e6f8e6aea511f7432004cc78c375806a995d57be51f2ad2eced939 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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](https://asc.understandingaccounting.org/glossary/s/#significant-changes "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.") 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. Source downloaded (UTC): 2026-09-10T00:17:35.142Z to 2026-09-10T00:17:35.142Z Record version: sha256:c0186a825a2bb287d0d6a88270ab351cab8dca6fee3f821cab601396b257bce9 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-35: 35 Subsequent Measurement [Read section](https://asc.understandingaccounting.org/asc/405/926/#35-subsequent-measurement) SEC content: no #### Ultimate Participation Costs ##### [405-926-35-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:35.142Z to 2026-09-10T00:17:35.142Z Record version: sha256:3b77930425a8afb380de2ab052e440f6e0eb5372309249460226b88c9c9e6296 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:35.142Z to 2026-09-10T00:17:35.142Z Record version: sha256:e94773533a5ee7b55e512b4bafaab3b9f5b22e58b9e336abffec444a7936cad7 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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). Source downloaded (UTC): 2026-09-10T00:17:38.268Z to 2026-09-10T00:17:38.268Z Record version: sha256:def930361671081698638c01a471f04672641f2713ed5ecc3004015531e70b9b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-50: 50 Disclosure [Read section](https://asc.understandingaccounting.org/asc/405/926/#50-disclosure) SEC content: no #### Accrued Participation Liabilities ##### [405-926-50-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-50-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:38.268Z to 2026-09-10T00:17:38.268Z Record version: sha256:ef88dba3cfd63ca041006bde39a5092297ca8500f0452ed8542ce1fb87b13d6b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose the amount of accrued participation liabilities that it expects to pay during the upcoming operating cycle. #### Participation Costs ##### [405-926-50-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-50-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:38.268Z to 2026-09-10T00:17:38.268Z Record version: sha256:9591818af84e6397b30c7c6b20615e6bbffd98dd7862447bb9b186230ca09efe Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. An entity shall disclose its methods of accounting for [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."). Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:1c6f88fbf1510b548791908cc011b169293ed42db2147dee146c38641bd16d86 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 405-926-55: 55 Implementation Guidance and Illustrations [Read section](https://asc.understandingaccounting.org/asc/405/926/#55-implementation-guidance-and-illustrations) SEC content: no #### Illustrations ##### [405-926-55-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-1) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:1e085d5cc7ac7d3b10cb8d725200cabc015fcfcecce1bae83a6e86cd8899822f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. This Example illustrates the adjustment of a participation liability that is in excess of a revised estimate of amounts ultimately payable (in accordance with paragraph [926-405-35-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-1)). ##### [405-926-55-2](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-2) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:1ac7eccb03b11c1907bdc6ce4cc768da5951ce893df0f58b8243861bb2ae13de Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. In accordance with paragraph [926-405-35-1](https://asc.understandingaccounting.org/asc/405/926/#405-926-35-1), a participation liability that exceeds the unpaid amount expected to be ultimately payable shall be offset against the remaining carrying value of the corresponding film. This scenario can result from changes in ultimate revenue and cost estimates that result in reduced expectations of ultimate [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."). ##### [405-926-55-3](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-3) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:8b7c471de282594ccd3efe3453caad75918ad4a639cfbb72ed5f3738bc8afbf1 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Assume the following: 1. a Film cost: $50,000 2. b Estimated ultimate revenue: 1. 1 Year 1: $100,000 2. 2 Year 2: $80,000. 3. c Actual revenue recognized: 1. 1 In Year 1: $60,000 2. 2 In Year 2: $10,000. 4. d Estimated ultimate participation costs: 1. 1 Year 1: $10,000 2. 2 Year 2: $0. 5. e For Year 1, film cost amortization was $30,000, and participation costs accrued were $6,000. ##### [405-926-55-4](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-4) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:a4f626f07110ee3a07b5a1ac51cfae96b3da6e52fe9a5978833215d42a8e7f8a Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Adjustments of Participation Liability and [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.") in Year 2. - ![ ](https://asc.understandingaccounting.org/asc-img/GUID-644C1B0C-5013-48EB-A2BC-CB54CD59C52B-low.gif) Unamortized Film Costs Participation Liability Balance at end of Year 1 " $20,000 " " $6,000 " Adjustment to eliminate excess liability " (6,000)" " (6,000)" Adjusted balances " $14,000 " $- ##### [405-926-55-5](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-5) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:643795c0ac195a76d8a1cf96470110f95aa421defaf7e8318964a58bb3401a8e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Film cost amortization in Year 2: - $10,000 recognized revenue/$20,000 remaining ultimate revenue x $14,000 unamortized film costs = $7,000 - The $20,000 remaining ultimate revenue is computed as follows: Year 2 revised ultimate revenue of $80,000 minus cumulative prior recognized revenue of $60,000. - The $14,000 unamortized film costs is computed as follows: Film cost of $50,000 minus cumulative prior amortization of $30,000 and minus the excess participation liability adjustment of $6,000. ##### [405-926-55-6](https://asc.understandingaccounting.org/asc/405/926/#405-926-55-6) Pending content: no Source downloaded (UTC): 2026-09-10T00:17:41.616Z to 2026-09-10T00:17:41.616Z Record version: sha256:6b314be987226642014239525d0e1e90618f6aab23a20cf7a1a6c74f49182ed3 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. Participation costs accrued in Year 2: - $10,000 recognized revenue/$20,000 remaining ultimate revenue x $0 remaining ultimate participation costs = $0 - The $20,000 remaining ultimate revenue is computed as follows: Year 2 revised ultimate revenue of $80,000 minus cumulative prior recognized revenue of $60,000. - Estimated ultimate participation costs were reduced to $0 in Year 2; accordingly, the excess liability was reversed and no further accruals are required.