|
About Us: Film Costs and Revenue Generation
Film costs include costs to acquire rights, “develop” (the process whereby underlying material, such as a book, manuscript or screenplay, are made ready for production into a motion picture by creating a finished screenplay which takes in to account the desires of the creative elements as well as the constraints of the budget and production schedule), “package” (the process whereby creative elements, such as directors and actors, are attracted to and agreements are made for them to perform their services in connection with the picture), and/or produce feature motion pictures. Production costs mainly consist of acquisition costs, salaries, equipment, overhead, participation costs and exploitation costs. Production costs in excess of the amounts reimbursable by the actual production entity are capitalized. Once production on a particular film project commences, FMLY begins to derive from producer fees. FMLY's primary source of revenue is from motion picture production fees. Production costs capitalized on that film are then amortized in the proportion that the revenue is received during the year for that film. Estimates of anticipated total gross revenues for all film projects are reviewed periodically and revised when necessary. Un-amortized film production costs are also compared with net realizable value each reporting period on a film-by-film basis. If estimated gross revenues are not sufficient to recover the un-amortized film production costs, the un-amortized film production costs are written down to their estimated net realizable value. |
