ASC 705-926

Entertainment—Films

705 Cost of Sales and Services

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In brief

IntermediateRecognition Industry-specific Subsequent measurement

This Subtopic governs how film production and distribution entities account for costs of manufacturing or duplicating products held for sale, such as videocassettes and digital video discs. Manufacturing/duplication costs are charged to expense on a unit-specific basis when the related product revenue is recognized (705-926-25-1). The cost of theatrical film prints is instead expensed over the period benefited (705-926-25-2).

Key points (5)

The Subtopic addresses costs incurred by film production and distribution entities to manufacture or duplicate products held for sale, such as videocassettes and video discs (705-926-05-1).
Scope follows the Overall Subtopic on films, Section 926-20-15 (705-926-15-1).
Manufacturing costs are part of the costs of producing a film (705-926-25-1).
Manufacturing or duplication costs of products for sale must be charged to expense on a unit-specific basis when the related product revenue is recognized (705-926-25-1).
The cost of theatrical film prints must be charged to expense over the period benefited (705-926-25-2).

For students. The key distinction is timing: duplication costs of sellable copies track the specific units' revenue (matching), while theatrical print costs are amortized over the benefit period rather than matched to individual sales. Students often mistakenly lump film print costs in with capitalized film production costs amortized under 926-20.

film costs manufacturing and duplication costs unit-specific expense recognition theatrical film prints period benefited cost of sales product revenue recognition

Machine-generated study aid for ASC 705-926. Check the source paragraphs below.

705-926-00Status

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705-926-00-1

The following table identifies the changes made to this Subtopic.

Paragraph	Action	Accounting Standards Update	Date

Revenue	Superseded	Accounting Standards Update No. 2014-09	05/28/2014

926-705-25-1	Amended	Accounting Standards Update No. 2014-09	05/28/2014

705-926-05Overview and Background

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705-926-05-1

This Subtopic presents the accounting by entities in the film production and distribution industry for costs incurred to manufacture or duplicate products held for sale, such as videocassettes and video discs.

705-926-15Scope and Scope Exceptions

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Overall Guidance

705-926-15-1

This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-20-15.

705-926-25Recognition

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Costs of Products Held for Sale

705-926-25-1

The costs of producing a film include manufacturing costs. An entity shall charge manufacturing or duplication costs of products for sale, such as videocassettes and digital video discs, to expense on a unit-specific basis when the related product revenue is recognized.

Theatrical Film Prints

705-926-25-2

An entity shall charge the cost of theatrical film prints to expense over the period benefited.