ASU 2012-07 — Entertainment—Films (Topic 926)

Topic 926, Entertainment—Films, requires that if evidence of a possible need for a write-down of unamortized film costs occurs after the date of the balance sheet but before the financial statements are issued, a rebuttable presumption exists that the conditions leading to the writeoff existed at the balance sheet date. Topic 926 requires that those conditions be incorporated into the fair value measurement used in the impairment test as of the balance sheet date as if they were known with certainty at that date, unless an entity can demonstrate that those conditions did not exist at that date. Questions have arisen about the apparent conflict between the guidance in Topic 926 and the guidance in Topic 820, Fair Value Measurement. Specifically, the fair value guidance in Topic 820 requires calculation of an exit price under current market conditions at the measurement date. That exit price may be calculated under conditions of uncertainty because the cash flows used were estimates rather than known amounts. In contrast, Topic 926 requires that an entity's fair value analysis performed as of a period end date reflect those results that become known after the measurement date to the extent that an entity cannot overcome the rebuttable presumption. This Update aligns the guidance on fair value measurements in the impairment test of unamortized film costs with the guidance on fair value measurements in other instances within U.S. generally accepted accounting principles.

This Accounting Standards Update is the final version of Proposed Accounting Standards Update EITF-12E—Entertainment—Films (Topic 926) which has been deleted.

Issued: October 24, 2012