ASC

ASC 720-926

Entertainment—Films

720 Other Expenses

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In brief

IntermediateRecognitionDisclosureIndustry-specific

This Subtopic governs how film production and distribution entities account for certain costs incurred to develop and market a film, including overall deal costs and exploitation costs. Costs of overall deals that cannot be identified with specific projects are charged to expense as incurred over the related time period (720-926-25-1), advertising costs follow Subtopic 720-35 (720-926-25-2), and all other exploitation costs, including marketing costs, are expensed as incurred (720-926-25-3).

Key points (6)
  • The Subtopic covers compensation and other costs incurred to develop and market a film, including participation costs and exploitation costs (720-926-05-1).
  • Scope follows the Entertainment—Films Overall Subtopic scope in Section 926-10-15 (720-926-15-1).
  • Costs of overall deal arrangements that cannot be identified with specific projects are expensed as incurred over the related time period (720-926-25-1).
  • Advertising costs are accounted for under Subtopic 720-35 (720-926-25-2).
  • All other exploitation costs, including marketing costs, are expensed as incurred (720-926-25-3).
  • An entity must disclose its methods of accounting for exploitation costs (720-926-50-1).

For students. The key takeaway is that film marketing and other exploitation costs are period expenses, not capitalized film costs — a common error is assuming launch advertising can be deferred and matched against future film revenue. Note advertising is carved out to Subtopic 720-35's rules rather than governed here.

exploitation costsoverall deal arrangementsparticipation costsadvertising costsmarketing costsexpense as incurredfilm production and distribution

Machine-generated study aid for ASC 720-926. Check the source paragraphs below.

720-926-05Overview and Background

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720-926-05-1
This Subtopic addresses the accounting by entities in the film production and distribution industry for certain compensation and other costs incurred to develop and market a film. Those costs include participation and exploitation costs.

720-926-15Scope and Scope Exceptions

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Overall Guidance

720-926-15-1
This Subtopic follows the same Scope and Scope Exceptions as outlined in the Overall Subtopic, see Section 926-10-15.

720-926-25Recognition

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Overall Deals

720-926-25-1
An entity may enter into an overall deal arrangement. An entity shall charge the costs of overall deals that cannot be identified with specific projects to expense as they are incurred over the related time period.

Exploitation Costs

720-926-25-2
An entity shall account for advertising costs in accordance with the provisions of Subtopic 720-35.
720-926-25-3
All other exploitation costs, including marketing costs, shall be expensed as incurred.

720-926-50Disclosure

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Exploitation Costs

720-926-50-1
An entity shall disclose its methods of accounting for exploitation costs.

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