# ASC 720-928-05: Other Expenses — Entertainment—Music — 05 Overview and Background

Source: FASB Accounting Standards Codification, Basic View

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## ASC 720-928-05: 05 Overview and Background

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##### [720-928-05-1](https://asc.understandingaccounting.org/asc/720/928/#720-928-05-1)

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This Subtopic provides guidance for accounting when an entity in the music industry expenses any of the following:

1.  a
    
    [Royalties](https://asc.understandingaccounting.org/glossary/r/#royalties "Amounts paid to record producers, songwriters, or other artists for their participation in making records and to music publishers for their copyright interest in music. Amounts for artists are determined by the terms of personal service contracts negotiated between the artists and record entities and usually are determined based upon a percentage of sales activity and license fee income, adjusted for estimated sales returns. Royalties for publishing are based on the copyright or other applicable laws, but the requirements of the law may be modified by licenses issued by the publishers.") earned by artists
    
2.  b
    
    Costs to produce [record masters](https://asc.understandingaccounting.org/glossary/r/#record-master "The master tape resulting from the performance of the artist. It is used to produce molds for commercial record production and other tapes for use in making cartridges, cassettes, DVDs, and reel tapes. The costs of producing a record master include the cost of the musical talent (musicians, vocal background, and arrangements); the cost of the technical talent for engineering, directing, and mixing; costs for the use of the equipment to record and produce the master; and studio facility charges. Under the standard type of artist contract, the record company bears a portion of the cost and recovers a portion of the cost from the artist out of designated royalties earned. However, either party may bear all or most of the cost.")
    
3.  c
    
    [Minimum guarantees](https://asc.understandingaccounting.org/glossary/m/#minimum-guarantee "An amount paid in advance by a licensee to a licensor for the right to sell or distribute records or music.") paid in advance by a licensee to a licensor
    
4.  d
    
    Other fees paid under [license agreements](https://asc.understandingaccounting.org/glossary/l/#license-agreements "Contractual arrangements entered into by an owner (licensor) of a record master or music copyright with a licensee granting the licensee the right to sell or distribute records or music for a fixed fee paid to the licensor or for a fee based on sales of records or music. License agreements are modifications of the compulsory provisions of the copyright law.").