Specialized Industry GAAP: Entertainment and Media (Course Id 1990)

Accounting - Accounting for Course Id 1990

This course is divided into three parts. Part I is designed to help you navigate the specialized accounting principles and practices for the media and entertainment (M&E) industry. It discusses all the important authoritative pronouncements on GAAP for broadcasters, cable television, films, and music. Relevant references to and excerpts from ASC 920, ASC 922, ASC 926, and ASC 928 are discussed throughout the course. It also provides specific examples to illustrate the application. Part II focuses on the ASC 606 revenue recognition requirements since it supersedes most industry-specific guidance. Entities across industries are required to follow the guidance of ASC 606. Part III highlights key aspects of the lease standard as leases are common in the M&E industry. 

NASBA QAS - Text - Technical - NASBA Registry - 1990

Course Learning Objectives

1. Recognize the basic principles of accounting for broadcasters, cable television, films, and music.
2. Recognize different film costs, including participation costs, exploitation costs, and manufacturing costs, and their accounting.
3. Identify the revenue model requirements (e.g. identification of the contract, licenses of intellectual property) that replace the legacy industry-specific revenue guidance.
4. Identify the key lease accounting requirements that create significant changes for the M&E companies.

Chapter 1 - Specialized Industry GAAP: Entertainment and Media

PART I:    INDUSTRY-SPECIFIC GUIDANCE

I. Accounting for Broadcasters

A. General Rules

B. Program License Agreements

1. Exhibition Rights

2. Amortization

3. Valuation

C. Network Affiliation Agreements

D. Presentation and Disclosures

1. Program License Agreements

2. Statement of Cash Flows

Comprehensive Illustration

II. Accounting for Cable Television

A. General Rules

B. Establishment of the Prematurity Period

C. Costs Incurred During the Prematurity Period

1. Property, Plant, and Equipment

2. Intangibles

3. Interest Costs

4. Other Expenses

Review Questions - Section 1

III. Accounting for Films

A. General Rules

B. Film Costs

1. Definitions

2. Amortization

3. Ultimate Revenue

4. Change in Predominant Monetization Strategy

C. Participation Costs

D. Impairment

1. Indicators

2. Use of Discounted Cash Flow Model

3. Allocating Impairment Losses to a Film Group

E. Film Properties

F. Presentation and Disclosures

Comprehensive Illustrations

1. Participation Liability

2. Individual Film Forecast Computation Method - Episodic Television Series

IV. Entertainment - Music

A. General Rules

B. Artists Compensation Cost

C. Record Master Costs

Review Questions - Section 2

PART II:    REVENUE STANDARD

I. The Revenue Recognition Model

Step 1. Identify the Contract with a Customer

Step 2. Identify the Performance Obligations in the Contract

1. Identification of Promises in a Contract

2. Determination of Distinct Goods or Services

3. Options to Acquire Additional Goods or Services

Step 3. Determine the Transaction Price

1. Forms of Variable Consideration

2. Constraint on Variable Consideration

3. Significant Financing Component

4. Noncash Consideration (Barter Arrangements)

5. Consideration Payable to a Customer

Step 4. Allocate the Transaction Price to the Performance Obligations

1. Definition of Standalone Selling Prices

2. Estimating Standalone Selling Prices

3. Allocating Discounts

4. Allocating Variable Consideration

Step 5. Recognize Revenue When (or as) the Entity Satisfies a Performance Obligation

1. Transfer of Control

2. Satisfaction of Performance Obligations

II. Licenses of Intellectual Property

A. The Nature of the Entity’s Promise

B. Contractual Restrictions

C. Other Considerations

1. Sales-Based or Usage-Based Royalties

2. Sale with a Right of Return

PART III:    LEASE ACCOUNTING

A. General Rules

B. The Core Principles

1. Definition of a Lease

2. Lease Classification

Review Questions - Section 3

Appendix A: Superseded Industry-Specific Guidance

Appendix B: Impairment Indicators

Glossary