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Determining when to recognise a broadcast right

A sporting competition – rights secured over a number of seasons

Entity A (the licensee) signs a contract with a licensor for the exclusive rights to broadcast matches in a long-established sporting competition covering the whole season for a number of years. The entity is required to pay agreed amounts at the start of each season, with the rights to that season and future seasons reverting to the licensor if payment is not made on time. Entity A concludes that an obligation does not exist until the beginning of each season for the amount payable to secure rights for that season.

Based on an evaluation of the factors above, the entity concludes that it has an asset for the rights to broadcast matches in each season and recognises that asset at the start of each season. The entity discloses a commitment for amounts payable in future years without recognising any asset or liability at that time.

Rights to broadcast the future output of a film production company

Entity B (the licensee) signs a contract with a film production company (the licensor) whereby the entity agrees to pay amounts in the future for a specified number of films that the licensor will release in that year, but neither the licensee not the licensor knows which films will be released when they sign the contract.

Based on an evaluation of the facts and circumstances, Entity B concludes that the underlying resource (the films) is not sufficiently developed to be identifiable at the time of signing the contract. Instead, the entity concludes that the criteria for recognising an intangible asset are not met until delivery of the films by the licensor.