# ASC 720-928: Other Expenses — Entertainment—Music Source: FASB Accounting Standards Codification, Basic View [Read online](https://asc.understandingaccounting.org/asc/720/928/) 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): 2026-09-10T01:10:22.861Z to 2026-09-10T01:10:30.076Z Record version: sha256:f7f264c9a91476e598c5d174c400cbee4915090153ddb9ea80dfb452f76c2c5f Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-928: Other Expenses — Entertainment—Music ### Machine-generated study aids ```json { "summary": "This Subtopic tells music-industry entities when to expense artist royalties, record master production costs, advance minimum guarantees paid by licensees, and other license fees. The core rule is that artist royalties (adjusted for anticipated returns) are charged to expense in the period the record sale occurs, advances are expensed as royalties are subsequently earned, and any advance or minimum guarantee that appears unrecoverable is expensed when the loss becomes evident (720-928-25-1, 720-928-25-3).", "key_points": [ "Royalties earned by artists, as adjusted for anticipated returns, are charged to expense in the period in which the sale of the record takes place (720-928-25-1).", "Advance royalties are charged to expense as subsequent royalties are earned by the artist (720-928-25-1).", "Any portion of an artist advance that subsequently appears not to be fully recoverable from future royalties is charged to expense in the period the loss becomes evident (720-928-25-1).", "The portion of record master cost borne by the record company that is not reported as an asset under 928-340-25-2 is charged to expense (720-928-25-2).", "A minimum guarantee paid in advance by a licensee that no longer appears recoverable through future use of the licensed rights is expensed to the extent nonrecoverable (720-928-25-3, referencing 928-340-35-3).", "The Subtopic follows the scope of the Overall Subtopic in Section 928-10-15 (720-928-15-1)." ], "categories": [ "Recognition", "Industry-specific", "Impairment" ], "audience_level": "intermediate", "student_note": "The trap is treating advances as permanent assets: an advance royalty or minimum guarantee is capitalized only while recoverable, and must be expensed as royalties are earned or as soon as nonrecoverability becomes evident. Pair this expense guidance with the asset-side rules in 928-340.", "related_topics": [ "928-10", "928-340", "928-405", "926", "606" ], "key_concepts": [ "artist royalties", "advance royalties", "record master costs", "minimum guarantee", "license agreements", "recoverability", "anticipated returns", "expense recognition" ] } ``` Source downloaded (UTC): 2026-09-10T01:10:22.861Z to 2026-09-10T01:10:22.861Z Record version: sha256:f9524fceb14467b80929178f5a6ec891e7f22c7c21ba54c6075cbf679db9309b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-928-05: 05 Overview and Background [Read section](https://asc.understandingaccounting.org/asc/720/928/#05-overview-and-background) SEC content: no ##### [720-928-05-1](https://asc.understandingaccounting.org/asc/720/928/#720-928-05-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:10:22.861Z to 2026-09-10T01:10:22.861Z Record version: sha256:80dc4657c0e3bf05e4e0020fffaa9cc2fede16f558642a0531507a67ac680938 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. 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."). Source downloaded (UTC): 2026-09-10T01:10:25.607Z to 2026-09-10T01:10:25.607Z Record version: sha256:a282a74872ab38dbbf8b6ade8503bcaf19a2ca24aafbd07e3a903a5120d9737c Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-928-15: 15 Scope and Scope Exceptions [Read section](https://asc.understandingaccounting.org/asc/720/928/#15-scope-and-scope-exceptions) SEC content: no #### Overall Guidance ##### [720-928-15-1](https://asc.understandingaccounting.org/asc/720/928/#720-928-15-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:10:25.607Z to 2026-09-10T01:10:25.607Z Record version: sha256:d295bf0f09a4bc4b587af14b74d21ef7dc37215c45a7056a910e31f9130763e0 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 928-10-15. Source downloaded (UTC): 2026-09-10T01:10:30.076Z to 2026-09-10T01:10:30.076Z Record version: sha256:f964e82b5185a96451c5253654d58b00d9e6ac828580b96fc27c82a20e55d52b Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. ## ASC 720-928-25: 25 Recognition [Read section](https://asc.understandingaccounting.org/asc/720/928/#25-recognition) SEC content: no #### Licensor Accounting ##### [720-928-25-1](https://asc.understandingaccounting.org/asc/720/928/#720-928-25-1) Pending content: no Source downloaded (UTC): 2026-09-10T01:10:30.076Z to 2026-09-10T01:10:30.076Z Record version: sha256:5455f871932134a622386a312d0fe10194e6ff4834d38231127d154e377ac04e Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The amount of [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, as adjusted for anticipated returns, shall be charged to expense of the period in which the sale of the record takes place. [Advance royalties](https://asc.understandingaccounting.org/glossary/a/#advance-royalty "An amount paid to music publishers, record producers, songwriters, or other artists in advance of their earning royalties from record or music sales. Such an amount is based on contractual terms and is generally nonrefundable.") shall be charged to expense as subsequent royalties are earned by the artist. Any portion of such advances that subsequently appear not to be fully recoverable from future royalties to be earned by the artist shall be charged to expense during the period in which the loss becomes evident. ##### [720-928-25-2](https://asc.understandingaccounting.org/asc/720/928/#720-928-25-2) Pending content: no Source downloaded (UTC): 2026-09-10T01:10:30.076Z to 2026-09-10T01:10:30.076Z Record version: sha256:7dbbd695e8fe0baf1d4e5af7f0d7963efa561b2ccd20a6b84b5a86c62a8addd6 Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. The portion of the [record master](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.") cost borne by the record company not reported as an asset in accordance with paragraph [928-340-25-2](https://asc.understandingaccounting.org/asc/340/928/#340-928-25-2) shall be charged to expense. #### Licensee Accounting ##### [720-928-25-3](https://asc.understandingaccounting.org/asc/720/928/#720-928-25-3) Pending content: no Source downloaded (UTC): 2026-09-10T01:10:30.076Z to 2026-09-10T01:10:30.076Z Record version: sha256:a0202aac5dbadfa103ddf79cb294add8a3f1f398874c012813c14357e27f58cb Snapshot version: sha256:15aea8165dff9f5ae47d9484f8470588b13b307f56e1d50801bf4d85ec190e3f Effective as of: not established by retrieval timestamps. As described in paragraph [928-340-35-3](https://asc.understandingaccounting.org/asc/340/928/#340-928-35-3), if all or a portion of a [minimum guarantee](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 subsequently appears not to be recoverable through future use of the rights obtained under the license, the nonrecoverable portion shall be charged to expense.