NORWALK, Conn.–(BUSINESS WIRE)–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.

“Stakeholders told us that the current capitalization guidance doesn’t
enable organizations that use subscription-based revenue models to
provide relevant information to investors,” said FASB Chairman Russell
G. Golden. “The new standard converges the guidance for films and
episodic content. This better reflects the economics of an episodic
television series and improves the information provided to investors
about the various types of produced and licensed content.”

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.

For public companies, the standard is effective for fiscal years
beginning after December 15, 2019, and interim periods within those
fiscal years. For all other organizations, the standard is effective for
fiscal years beginning after December 15, 2020, and interim periods
within those fiscal years. Early adoption is permitted.

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
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.

Contacts

MEDIA:
John C. Pappas
(203) 956-3440
[email protected]