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
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
“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.”
- 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
The standard addresses when an organization should assess films and
license agreements for program material for impairment at the film-group
The amendments in the standard also:
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.
- 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.