current and noncurrent classification

ASC 340-928 governs when a music entity may capitalize advance royalties paid to artists, the cost of record masters, and minimum guarantees paid in advance by licensees. Capitalization hinges on recoverability: an advance royalty or the record company's share of record master cost is an asset only if the artist's past performance and current popularity provide a sound basis for estimating recovery from future royalties or sales. Capitalized amounts are charged to expense as royalties are earned or amortized over the recorded performance's life in relation to expected net revenue, with immediate write-off of nonrecoverable portions.

This Subtopic governs how broadcasters account for the liabilities they incur under license agreements for program material. A broadcaster recognizes both an asset (the program rights) and a liability when the license period begins and the conditions in 920-350-25-2 are met, measuring both at either the fair value or the gross amount of the liability, with any discount accreted as interest under Topic 835. The liability is then split between current and noncurrent on the balance sheet according to the payment terms.