United States

Accounting for episodic television series

FINANCIAL REPORTING INSIGHTS  | 

Current accounting guidance provides different capitalization requirements for film production in the entertainment industry based on the type of content being produced. The Financial Accounting Standards Board (FASB) recently issued Accounting Standards Update (ASU) 2019-02, Entertainment – Films – Other Assets – Film Costs (Subtopic 926-20) and Entertainment – Broadcasters – Intangibles – Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials (a consensus of the FASB Emerging Issues Task Force), which aligns the accounting for production costs of an episodic television series with the accounting for production costs of films. 

Further, the ASU requires that an entity test films and license agreements for program material within the scope of Subtopic 920-350 for impairment at the film group level, when the film or license agreement is predominantly monetized with other films and/or license agreements. Among other amendments, the ASU also requires new disclosures about content that is either produced or licensed.

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