There may not be any accounting for quality in some of today’s entertainment offerings, but the Financial Accounting Standards Board (FASB) has issued an accounting standards update designed to help align accounting for production costs on films and episodic shows broadcast on television and streaming services.
In presenting its update, the Norwalk-based FASB acknowledged that recent changes in entertainment production and distribution models – particularly the rise of subscription-based revenue models used in online streaming services – made longstanding accounting standards outdated. The new update requirements include a mandate for disclosures about content that is either produced or licensed and addresses cash flow classification for license agreements.
“Stakeholders told us that the current capitalization guidance doesn’t enable organizations that use subscription-based revenue models to provide relevant information to investors,” FASB Chairman Russell G. Golden said. “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.”
FASB stated that the standard goes into effect for public companies for fiscal years beginning after Dec. 15, 2019, and interim periods within those fiscal years. For all other organizations, the standard is effective for fiscal years beginning after Dec. 15, 2020, and interim periods within those fiscal years.