Accounting Hollywood

Guardians of the Galaxyis one of the most beloved MCU films to date, and it made the Guardians one of the most famous groups of comic book characters in existence. It’s kind of hard to believe that they were once obscure characters. Capacity and commitment to work hours a week, Monday through Friday, during traditional daytime business hours supporting clients and team members. Our Accounting firm can help you develop a strategy for maximizing your tax return, also helping with several common tax problems. We take the guesswork out of everything and give you peace of mind.

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  • Of course, all creatives would love to negotiate net points instead of gross points, but not all have the leverage against the studio.
  • Solomon, then, fresh of two bombs did not have the clout to get a good definition for his back end deal.
  • Gone in 60 Seconds grossed $240M at the box office, but the studio said a $212M loss, fundamentally through Hollywood accounting as described on NPR.
  • Paramount subsequently argued that it spent so much money on marketing and development that they made no net profit.
  • Corporations in other industries use them all the time to play accounting tricks.

The saying in Hollywood is “a percentage of the net is a percentage of nothing.” All of the above means of calculating overhead are highly controversial, even within the accounting industry. Namely, these percentages are assigned without much regard to how, Bookkeeping Hollywood in reality, these estimates relate to actual overhead costs. In short, this method does not, by any rational standard, attempt to adequately trace overhead costs. To determine this number, studios usually determine about 10% of all advertising costs.

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The 2002 film My Big Fat Greek Wedding was considered hugely successful for an independent film, yet according to the studio, the film lost money. Accordingly, the cast sued the studio for their part of the profits. The original producers of the film sued Gold Circle Films in 2007 due to Hollywood accounting practices because the studio has claimed the film, which cost less than $6 million to make and made over $350 million at the box office, lost $20 million. Hollywood accounting gets its name from its prevalence in the entertainment industry—that is, in the movie studios of Hollywood at a time when most studios were located in Hollywood. Those affected can include writers and actors, but also production companies, producers and investors.

Accounting Hollywood

Well, perhaps… but it’s more likely that Warner Bros. paid itself, its properties or other divisions of Time Warner for this marketing . And once these easy things are taken into account, there is no surprise that we can find things like $57 million in “Interest” and $315 million in “Negative Cost and/ or Advance” lurking around that spreadsheet like hungry money pits. The SOPA issue was also parodied in To Boldly Flee, where a producer claims his writers aren’t getting any money thanks to piracy…despite the fact that he keeps them chained in closet-offices and admits to having multiple houses himself. The Big Bad is actually a studio head who prefers big-money-making cheap schlock to actually putting effort into films at the risk of them not making a return, undermining things more for that side.

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The famous director’s newest filmThe Suicide Squaddebuted to fantastic reviews and fan response. He even has a new show for HBO Max on the horizon,Peacemaker, which continues to build John Cena’s DCU story.

Author’s note: How Hollywood Accounting Works

But what if 20th Century Fox employed a little creative accounting to keep that 30 percent from being too high? For the sake of this argument, let’s pretend Brandywine agreed to 30 percent of the net profits of Alien, while Fox agreed to accept the remaining 70 percent. Keep in mind that the aforementioned expenses include revenue sharing with the actual exhibitors as well as shipping costs and the cost of printing the actual films to put in those shipping cans, it’s true that the costs can add up. That’s where large box office revenues tend to cancel out the expenses.

The specific schemes can range from the simple and obvious to the extremely complex. From an accounting perspective (I’m a business professor), there are some tricky ways studios try to distort net profits. In most companies, overhead is allocated rather than being traced directly to individual products or projects. This allocation is generally arbitrary, though it’s best if you use some sort of allocation method they tracks with overhead usage.

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