Film Accounting Glossary
Revenue recognition
What is revenue recognition?
Also called revenue rec.
Revenue recognition is the accounting question of when income can be recorded, which for film is when the license period begins and the title is available to the licensee, not when the contract is signed or the cash arrives.
It is why a distributor can hold a signed deal and still report no revenue for a quarter. Production accounting mostly avoids the issue, but any company-level statement or investor report turns on it.
Example
A distributor signs a $2M license in December for a window opening in March. No revenue is recognized in December: the license period has not begun and the title is not yet available to the licensee. The cash and the revenue land in different quarters.
Figures are illustrative, chosen to show the mechanics rather than to quote market rates.
Where you'll see it
Company-level and investor reporting. Production accounting mostly avoids the question, since it reports cost rather than revenue.
Common mistake
Assuming a signed licence is revenue. Recognition generally waits until the licence period begins and the title is available to the licensee.
Related questions
- When is film licence revenue recognized?
- Broadly when the licence period begins and the title is available to the licensee, not when the contract is signed or when the cash arrives.
- Does revenue recognition affect production accounting?
- Rarely. Production reporting deals with cost, not revenue. Recognition matters at company level and in investor and participation reporting.