Entertainment—Films

ASC 926 (Entertainment—Films) supplies only incremental, industry-specific guidance for producers and distributors that own or hold rights to exploit films in any market or territory; entities in scope must still apply all other applicable GAAP, and recorded music (Topic 928), cable television (Topic 922), broadcasters (Topic 920), and marketed software (Topic 985, Subtopic 720-35) are excluded (926-10-05-1, 15-1 through 15-3). The core measurement subtopic, 926-20, requires film costs (including production overhead and property/adaptation costs, but not administrative and general expenses) to be capitalized and reported as a separate balance sheet asset (926-20-25-1 through 25-5). The central idea is the predominant monetization strategy determined when capitalization begins: a film monetized on its own is amortized by the individual-film-forecast-computation method (current-period revenue ÷ estimated remaining unrecognized ultimate revenue at the beginning of the fiscal year), while a film in a film group is expensed based on a reasonably reliable estimate of its use (926-20-35-1 through 35-3C). Ultimate revenue estimates are revised each reporting date with prospective catch-up (926-20-35-3), are capped at 10 years from release (926-20-35-5), and unamortized costs are written down to fair value upon triggering events—write-downs may never be restored (926-20-35-13).

Subtopics

1. 10Overall5 ¶

   ASC 926-10 is the overall/scope subtopic for Entertainment—Films. It establishes that Topic 926 provides only incremental, industry-specific guidance on film costs, participation costs, and manufacturing costs for producers and distributors that own or hold rights to distribute or exploit films in any market or territory. Entities in scope must still apply all other applicable GAAP not contained in Topic 926.

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2. 20Other Assets—Film Costs69 ¶

   ASC 926-20 governs how film production and distribution entities capitalize, amortize, impair, and disclose film costs, which must be reported as a separate asset on the balance sheet (926-20-25-1). Films predominantly monetized on their own are amortized by the individual-film-forecast-computation method — current-period revenue over remaining unrecognized ultimate revenue as of the beginning of the fiscal year (926-20-35-1) — while films in a film group are expensed based on a reasonably reliable estimate of the film's use (926-20-35-2). Unamortized film costs are written down to fair value when triggering events indicate impairment, and such write-downs may never be restored (926-20-35-13).

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