Accountants' Handbook, Volume Two, Special Industries and Special Topics, 12th Edition

Chapter 37

Producers or Distributors of Films

Francis E. Scheuerell, Jr., CPA

Navigant Consulting

37.1 History of Guidance

37.2 Revenue Reporting

(a) Basic Revenue Reporting Principles

(b) Detailed Revenue Reporting Principles

(i) Persuasive Evidence of an Arrangement

(ii) Delivery

(iii) Availability

(iv) Fixed or Determinable Fee

(v) Barter Revenue

(vi) Modifications of Arrangements

(vii) Returns and Price Concessions

(viii) Licensing of Film-Related Products

(ix) Present Value

37.3 Costs and Expenses

(a) Film Costs—Capitalization

(b) Film Costs—Amortization and Participation Cost Accruals

(c) Ultimate Revenue

(d) Ultimate Participation Costs

(e) Film Costs Valuation

(f) Subsequent Events

(g) Exploitation Costs

(h) Manufacturing Costs

37.4 Presentation and Disclosure

37.1 History of Guidance

In 1974, the American Institute of Certified Public Accountants (AICPA) issued Industry Accounting Guide, Accounting for Motion Picture Films, and Statement of Position (SOP) No. 79-4, Accounting for Motion Picture Films, which provided specialized reporting principles for the industry. In 1981, the Financial Accounting Standards Board (FASB) extracted those specialized principles and presented them in its Statement No. 53, Financial Reporting by Producers and Distributors of Motion Picture Films. Between 1981 and 2000, the origin of the majority of a film's revenue expanded from distribution to movie theaters and free television to those outlets plus, for example, home video, satellite and ...