FASB Improves Accounting for Episodic Television Series
Norwalk, CT, March 6, 2019—The Financial Accounting Standards Board (FASB) today issued an Accounting Standards Update (ASU) that helps organizations align their accounting for production costs for films and episodic content produced for television and streaming services.
In recent years, the entertainment industry experienced a significant change in production and distribution models. For example, online streaming services have introduced subscription-based revenue models.
However, current accounting guidance provides organizations in the entertainment industry with differing capitalization requirements for content production:
- For films, production costs are capitalized.
- For episodic content (for example, a TV series that airs a new episode each week), production costs are capitalized subject to a constraint based on contracted revenues in the initial and secondary markets.
The standard addresses when an organization should assess films and license agreements for program material for impairment at the film-group level.
The amendments in the standard also:
- Amend presentation requirements
- Require that an organization provide new disclosures about content that is either produced or licensed, and
- Address cash flow classification for license agreements.
The ASU and a brief video on the standard are available at www.fasb.org.
About the Financial Accounting Standards Board
Established in 1973, the FASB is the independent, private-sector, not-for-profit organization based in Norwalk, Connecticut, that establishes financial accounting and reporting standards for public and private companies and not-for-profit organizations that follow Generally Accepted Accounting Principles (GAAP). The FASB is recognized by the Securities and Exchange Commission as the designated accounting standard setter for public companies. FASB standards are recognized as authoritative by many other organizations, including state Boards of Accountancy and the American Institute of CPAs (AICPA). The FASB develops and issues financial accounting standards through a transparent and inclusive process intended to promote financial reporting that provides useful information to investors and others who use financial reports. The Financial Accounting Foundation (FAF) supports and oversees the FASB. For more information, visit www.fasb.org.