# ASC 926-20-55: Entertainment—Films — Other Assets—Film Costs — 55 Implementation Guidance and Illustrations

Source: FASB Accounting Standards Codification, Basic View

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## ASC 926-20-55: 55 Implementation Guidance and Illustrations

[Read section](https://asc.understandingaccounting.org/asc/926/20/#55-implementation-guidance-and-illustrations)

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#### Illustrations

##### [926-20-55-1](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-1)

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This Example provides an illustration of the individual-film-forecast method of amortization for a film in its initial year of release (in accordance with paragraph [926-20-35-1](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-1)).

##### [926-20-55-2](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-2)

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This Example has the following assumptions:

1.  a
    
    Film cost: $50,000
    
2.  b
    
    Estimated ultimate revenue: $100,000
    
3.  c
    
    Actual revenue recognized in Year 1: $60,000
    
4.  d
    
    Estimated ultimate [participation costs](https://asc.understandingaccounting.org/glossary/p/#participation-costs "Parties involved in the production of a film may be compensated in part by contingent payments based on the financial results of a film pursuant to contractual formulas (participations) and by contingent amounts due under provisions of collective bargaining agreements (residuals). Such parties are collectively referred to as participants, and such costs are collectively referred to as participation costs. Participations may be given to creative talent, such as actors or writers, or to entities from whom distribution rights are licensed."): $10,000.

##### [926-20-55-3](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-3)

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Film cost amortization in Year 1:

-   $60,000 recognized revenue/$100,000 ultimate revenue x $50,000 film cost = $30,000

##### [926-20-55-4](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-4)

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Participation costs accrued in Year 1:

-   $60,000 recognized revenue/$100,000 ultimate revenue x $10,000 ultimate participation costs = $6,000

##### [926-20-55-5](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-5)

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This Example provides an illustration of the individual-film-forecast method of amortization for a film where estimates are revised subsequent to the initial year of release (in accordance with paragraph [926-20-35-3](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-3)).

##### [926-20-55-6](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-6)

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This Example has the following assumptions:

1.  a
    
    Film cost: $50,000
    
2.  b
    
    Estimated ultimate revenue:
    
    1.  1
        
        Year 1: $100,000
        
    2.  2
        
        Year 2: $90,000 (Note: not the remaining ultimate revenue starting from this year).
        
3.  c
    
    Actual revenue recognized:
    
    1.  1
        
        In Year 1: $60,000
        
    2.  2
        
        In Year 2: $10,000.
        
4.  d
    
    Estimated ultimate participation costs:
    
    1.  1
        
        Year 1: $10,000
        
    2.  2
        
        Year 2: $9,000 (Note: not the remaining ultimate participation costs starting from this year).
        
5.  e
    
    For Year 1, film cost amortization was $30,000 and participation costs accrued were $6,000.
    
6.  f
    
    Year 2 revised ultimate revenue is $90,000.

##### [926-20-55-7](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-7)

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Film Cost amortization in Year 2:

-   $10,000 recognized revenue/$30,000 remaining ultimate revenue x $20,000 unamortized [film costs](https://asc.understandingaccounting.org/glossary/f/#film-costs "Film costs include all direct negative costs incurred in the physical production of a film, as well as allocations of production overhead and capitalized interest in accordance with Topic 835. Examples of direct negative costs include costs of story and scenario; compensation of cast, directors, producers, extras, and miscellaneous staff; costs of set construction and operations, wardrobe, and accessories; costs of sound synchronization; rental facilities on location; and postproduction costs such as music, special effects, and editing.") = $6,667. The $30,000 remaining ultimate revenue is computed as follows: Year 2 revised ultimate revenue of $90,000 minus cumulative prior recognized revenue of $60,000. The $20,000 unamortized film costs is computed as follows: Film cost of $50,000 minus cumulative prior amortization of $30,000.

##### [926-20-55-8](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-8)

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Participation costs accrued in Year 2:

-   $10,000 recognized revenue/$30,000 remaining ultimate revenue x $3,000 remaining ultimate participation costs = $1,000. The $30,000 remaining ultimate revenue is computed as follows: Year 2 revised ultimate revenue of $90,000 minus cumulative prior recognized revenue of $60,000. The $3,000 remaining ultimate participation costs is as follows: Year 2 revised ultimate participation expense of $9,000 minus cumulative prior accrual of $6,000.

##### [926-20-55-9](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-9)

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[Paragraph superseded by Accounting Standards Update No. 2019-02](https://asc.understandingaccounting.org/updates/asu-2019-02/).

##### [926-20-55-10](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-10)

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[Paragraph superseded by Accounting Standards Update No. 2019-02](https://asc.understandingaccounting.org/updates/asu-2019-02/).

##### [926-20-55-11](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-11)

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[Paragraph superseded by Accounting Standards Update No. 2019-02](https://asc.understandingaccounting.org/updates/asu-2019-02/).

##### [926-20-55-12](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-12)

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This Example provides an illustration of the individual-film-forecast method of amortization for an episodic television series with multiple seasons (in accordance with paragraph [926-20-35-1](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-1)).

##### [926-20-55-13](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-13)

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This Example has the following assumptions:

1.  a
    
    An entity produces and distributes an episodic television series. Two seasons of the series are ultimately produced.
    
2.  b
    
    The entity's fiscal year end corresponds directly with the completion of each production season.
    
3.  c
    
    [Subparagraph superseded by Accounting Standards Update No. 2019-02](https://asc.understandingaccounting.org/updates/asu-2019-02/).
    
4.  d
    
    Costs of production are the following:
    
    1.  1
        
        [Subparagraph superseded by Accounting Standards Update No. 2019-02](https://asc.understandingaccounting.org/updates/asu-2019-02/).
        
    2.  2
        
        Season 1: $16,000
        
    3.  3
        
        Season 2: $18,000.
        
5.  e
    
    Recognized and remaining ultimate revenues are the following.
    
    -   ![](https://asc.understandingaccounting.org/asc-img/GUID-2BA1A11A-A74B-4CB4-9975-D6120012B640-low.gif)
        
        As of Season 1 Recognized and reported in Season 1 " $8,000 " Recognized and reported in Season 2 N/A "Remaining ultimate revenue, Season 1" " $40,000 " "Remaining ultimate revenue, Season 2" N/A " $48,000 " As of Season 2 Recognized and reported in Season 1 N/A Recognized and reported in Season 2 " $11,000 " "Remaining ultimate revenue, Season 1" " $40,000 " "Remaining ultimate revenue, Season 2" " $10,000 " " $61,000 "
        
6.  f
    
    Ultimate participation costs are as follows.
    
    -   ![](https://asc.understandingaccounting.org/asc-img/GUID-CC877281-57BF-41A4-B615-95DA14F4A9F2-low.gif)
        
        As of Season 1 " $2,000 " As of Season 2 " $3,000 "

##### [926-20-55-14](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-14)

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Amortization of film costs in accordance with paragraph [926-20-35-1](https://asc.understandingaccounting.org/asc/926/20/#926-20-35-1) is determined as follows for Seasons 1 and 2.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-78F4E593-979B-4A6C-9A7E-42CA5ABA1950-low.gif)
    
    Season 1 " $8,000 " (a) x " $16,000 " (c) = "$2,667 " " $48,000 " (b) (a) Recognized and reported revenue during the current season. (b) Remaining ultimate revenue at the beginning of the current season. (c) Remaining unamortized film costs at the beginning of Season 1.
    
-   ![](https://asc.understandingaccounting.org/asc-img/GUID-901EF232-0C4E-426F-9948-E995111C264F-low.gif)
    
    Season 2 " $11,000 " (a) x " $31,333 " (c) = "$5,650 " " $61,000 " (b) (a) Recognized and reported revenue during the current season. (b) Remaining ultimate revenue at the beginning of the current season. (c) "Remaining unamortized film costs at the beginning of Season 2 ($13,333 unamortized as of the end of Season 1 plus the $18,000 cost of production of Season 2)."

##### [926-20-55-15](https://asc.understandingaccounting.org/asc/926/20/#926-20-55-15)

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Accrual of participation costs is determined as follows.

-   ![](https://asc.understandingaccounting.org/asc-img/GUID-51982100-0983-4A9B-A4D4-BC9C14731B8D-low.gif)
    
    Season 1 " $8,000 " (a) x " $2,000 " (c) = $333 " $48,000 " (b) (a) Recognized and reported revenue during the current season. (b) Remaining ultimate revenue at the beginning of the current season. (c) Remaining unaccrued participation costs at the beginning of Season 1.
    
-   ![](https://asc.understandingaccounting.org/asc-img/GUID-3CF9A532-CEF8-4FD2-BBDD-5C373B0E23F6-low.gif)
    
    Season 2 " $11,000 " (a) x " $2,667 " (c) = $481 " $61,000 " (b) (a) Recognized and reported revenue during the current season. (b) Remaining ultimate revenue at the beginning of the current season. (c) "Remaining unaccrued participation costs at the beginning of Season 2 (ultimate cost of $3,000, less prior cumulative accural of $333)."