ASC 920-350: Broadcast Rights Amortization Entries

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Accounting Standards Codification (ASC) Topic 920-350, Entertainment - Broadcasters - Intangibles - Goodwill and Other, provides guidance on the accounting for broadcast rights under Generally Accepted Accounting Principles (GAAP). Broadcast rights are intangible assets that grant a broadcaster the legal right to transmit specific content, such as television shows, movies, or sporting events, over a specified period. This article will explore the key aspects of broadcast rights amortization under ASC 920-350 and provide examples of journal entries to help you better understand the accounting treatment.
 

ASC 920-350 Overview

ASC 920-350 requires broadcasters to capitalize the costs of acquiring broadcast rights as intangible assets and subsequently amortize these costs over the useful life of the rights or the period of the contract, whichever is shorter. Broadcast rights can be either finite-lived or indefinite-lived intangible assets. Finite-lived broadcast rights are subject to amortization, while indefinite-lived broadcast rights are not amortized but tested for impairment at least annually or more frequently if events or circumstances indicate that the asset may be impaired.
 

Journal Entries for Broadcast Rights Amortization

To illustrate the accounting treatment for broadcast rights amortization, let's consider an example. Broadcaster A acquires the rights to broadcast a television series for three years for a cost of $1,200,000. The broadcaster expects to air the series evenly over the three-year period.
 

Here are the journal entries for Broadcaster A to record the acquisition and amortization of the broadcast rights
 

1. Broadcaster A records the acquisition of the broadcast rights:

Debit: Broadcast Rights $1,200,000
Credit: Cash $1,200,000

In this case, the broadcaster capitalizes the cost of acquiring the broadcast rights as an intangible asset.
 

2. Broadcaster A amortizes the broadcast rights cost evenly over the three-year period:

Debit: Amortization Expense - Broadcast Rights $400,000
Credit: Accumulated Amortization - Broadcast Rights $400,000
Calculation: $1,200,000 / 3 years = $400,000 per year

The broadcaster amortizes the cost of the broadcast rights over the three-year period, recognizing an annual amortization expense of $400,000.
 

ASC 920-350 provides guidance on the accounting for broadcast rights, ensuring that broadcasters accurately reflect the costs and benefits associated with these intangible assets in their financial statements. By understanding the accounting treatment and journal entries associated with broadcast rights amortization, broadcasters can maintain accurate financial records and comply with GAAP. Adherence to the provisions of ASC 920-350 ensures that financial statements accurately reflect the financial position and performance of broadcasters, providing transparency and comparability for financial statement users.