ASC 920
Active
ASC 920 – Entertainment–Broadcasters
Governs program license agreements, amortization of program rights, and barter transactions for entertainment broadcasters.
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Conceptual Framework Linkage
When does a licensed program right actually become an asset?
Broadcasters commonly LICENSE programming content (movies, syndicated shows) from producers/distributors for airing over a specified period. A key question is WHEN the broadcaster should recognise the licensed program right as an ASSET (with a corresponding LIABILITY for amounts owed) – ASC 920 answers this with a specific FOUR-CRITERIA test (Section 3), reflecting that merely SIGNING a license agreement isn't itself sufficient.
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Scope
Television and radio broadcasters
ASC 920 applies to entities operating television and radio BROADCAST stations and networks, addressing programming rights, barter arrangements, and network affiliation relationships specific to the broadcast industry.
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Program License Agreements – the Four Recognition Criteria
ALL FOUR conditions must be met before recognising an asset/liability
CriterionRequirement
1The COST of the program is KNOWN or reasonably DETERMINABLE
2The program has been ACCEPTED by the licensee (broadcaster) in accordance with the license agreement's terms (e.g. meets technical/content standards)
3The program is AVAILABLE for its FIRST SHOWING or telecast
4The LICENSE PERIOD for the program has BEGUN
Until ALL FOUR conditions are satisfied, NO asset or liability is recognised for the program license – even if the license agreement has been legally SIGNED.
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Amortization of Program Rights
Typically accelerated, reflecting greater value in earlier showings
Program rights are AMORTISED to expense based on the PATTERN in which the program's economic benefits are expected to be CONSUMED – for programs with a limited number of permitted showings, this is often an ACCELERATED pattern (a GREATER portion of cost amortised against the FIRST showing than subsequent showings), reflecting that the FIRST airing typically commands the HIGHEST advertising value and audience interest.
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Barter Transactions
Advertising time exchanged for programming or merchandise, at fair value
Broadcasters commonly engage in BARTER transactions – exchanging ADVERTISING TIME for PROGRAMMING content or merchandise/services, WITHOUT cash changing hands. Such transactions are measured at the FAIR VALUE of the assets/services received (or given, if more clearly evident) – the broadcaster records both BARTER REVENUE (or a program asset) and BARTER EXPENSE for the advertising time delivered, generally recognised as the related advertising airs or the programming is used.
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Network Affiliation Agreements
Compensation arrangements between networks and local affiliate stations
NETWORK AFFILIATION agreements govern the relationship between a broadcast NETWORK and its local AFFILIATE stations – including compensation arrangements for carrying network programming, and any capitalisable costs associated with entering or renewing such agreements, accounted for under general intangible asset principles (ASC 350) where applicable.
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Worked Example – Program License Asset/Liability Recognition
Timing the recognition event
Example: Licensing a syndicated sitcom package
A broadcaster signs a license agreement in October for a $2,000,000 syndicated sitcom package. The programs are accepted (meeting technical standards) in November, but the license period doesn't begin – and the first show isn't available for airing – until January 1 of the following year.
Even though the agreement was SIGNED in October and the programs ACCEPTED in November, NO asset or liability is recognised until January 1 – the point at which ALL FOUR criteria (known cost, acceptance, availability for first showing, AND license period commencement) are simultaneously satisfied. At that point, the broadcaster recognises a $2,000,000 program rights asset and a corresponding $2,000,000 liability.
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Worked Example – a Barter Transaction
Measuring an exchange with no cash involved
Example: Trading airtime for syndicated programming
A local station exchanges $150,000 (fair value) of unsold advertising airtime for a syndicated game show package with an equivalent $150,000 fair value.
The station records a $150,000 program rights asset (for the game show package received) and a corresponding $150,000 barter liability (representing the obligation to air the bartered advertising). As the advertising spots actually AIR, barter REVENUE of $150,000 is recognised, offset by barter EXPENSE as the program episodes are used – reflecting the fair value exchange even though no cash changed hands.
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Disclosure Requirements
What ASC 920 requires
Basis of accounting for program licenses, including the amortisation method usedNature and amount of barter transactions during the period
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Critical Judgments & Estimates
Where judgement matters most
SIGNIFICANT JUDGEMENTS
Whether all four program license recognition criteria have been metAppropriate amortisation pattern reflecting expected benefit consumption across showings
SIGNIFICANT ESTIMATES
Fair value of assets/services exchanged in barter transactions
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No Dedicated IFRS Broadcaster Standard – Discussion
General intangible asset and inventory principles apply instead
IFRS has NO dedicated broadcaster industry standard paralleling ASC 920. A broadcaster reporting under IFRS would apply GENERAL principles – recognising program rights as an INTANGIBLE ASSET (IAS 38) or INVENTORY (IAS 2) once control is obtained and future economic benefits are probable, amortised over the pattern of expected benefit consumption – arriving at BROADLY similar practical outcomes to ASC 920's four-criteria test and accelerated amortisation approach, but WITHOUT a codified, industry-specific four-part recognition test of the same kind.
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Statement Mapping
Where every ASC 920 event lands
EventStatement(s) affectedNotes
Program license recognitionBSAsset and liability recognised once all four criteria are met
Program rights amortisationISTypically accelerated across showings
Barter transactionBS ISRecognised at fair value; revenue/expense as the exchange is used
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Related Topics
Cross-reference map
TopicConnection
ASC 926Entertainment–Films – shares related cost capitalisation and amortisation concepts for licensed content
ASC 606Supplies the general revenue recognition framework for advertising revenue and barter arrangements
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Quick-Reference Glossary
Program license agreement
A contract granting a broadcaster the right to air licensed programming content for a specified period and number of showings.
Barter transaction
An exchange of advertising airtime for programming or other goods/services, without cash, measured at fair value.
Network affiliation agreement
A contract governing the relationship and compensation arrangement between a broadcast network and a local affiliate station.
Financial statement key
BS Balance sheet
IS Income statement
SE Statement of changes in equity
OCI Other comprehensive income
SCF Statement of cash flows