Film Accounting Glossary
Negative cost
What is negative cost?
Also called cost of production, or certified negative cost.
Negative cost is the total certified cost of producing the finished picture, from development through delivery of the answer print or its digital equivalent, excluding distribution and marketing.
The name survives from the era when the deliverable was a physical negative. It is the figure participation statements start from and the number a studio capitalizes and then amortizes against revenue, so how it is calculated is contractually defined rather than merely accounting practice.
Example
Development $242,000, production $7.4M, post and delivery $760,000, financing costs $290,000: a certified negative cost of about $8.7M. That figure, not the budget, is what participation statements start deducting from.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
The bottom line of the final cost report, then the starting point for every participation calculation and incentive claim.
Common mistake
Assuming negative cost equals the budget. It is the certified final figure including development, financing costs, and delivery, and it is what participations deduct from.
Related questions
- What is included in negative cost?
- Everything spent to deliver the finished picture: development, production, post and delivery, and in many definitions financing costs and overhead charges.
- Why is it called negative cost?
- The term survives from when the deliverable was a physical film negative. It now means the total certified cost of producing the picture, however it is delivered.