Ultimate revenue is the estimated total revenue to be obtained from the exploitation and exhibition of a film in all markets. Ultimate revenue is used in the amortization of film costs, where the amortization calculation is to divide current period actual revenue by the estimated remaining unrecognized ultimate revenue as of the beginning of the current fiscal year. The ultimate revenue concept is subject to the following qualifications:
- Revenue estimate duration. The revenue estimate should not span a period of more than 10 years from the film release date, with the exception of episodic television series. For an episodic series, the estimation cap is 10 years from the delivery date of the first episode; if the series is still in production, then the cap is five years from the delivery date of the most recent episode, if that is a later date.
- Acquired film library. When films are acquired as part of a film library, ultimate revenue can be estimated for a period of as long as 20 years from the acquisition date. Films can only be included with a film library for revenue estimation purposes if their initial release dates were at least three years before the acquisition date for the library.
- Revenue evidence. Estimates can only be included in the ultimate revenue figure if there is persuasive evidence that the revenue will occur, or if there is a demonstrated history of recognizing similar revenue at the level of a market or territory. When there is a newly developed territory, no revenue estimates should be associated with it unless there is persuasive evidence that the revenue will be realized.
- Licensing arrangements. Ultimate revenue can include estimates of revenue from licensing arrangements with third parties to market film-related products, but only if there is persuasive evidence that revenue will be generated, such as from a nonrefundable minimum guaranteed payment, or there is a history of recognizing revenue from such arrangements.
- Peripheral items. Ultimate revenue should include estimated revenue from the sale of peripheral items, such as toys, that are associated with the themes or characters of a film, but only if there is a history of recognizing this type of revenue in similar films.
- Undeveloped technologies. Ultimate revenue should not include any estimated revenue related to unproven or undeveloped technology, since there is a high probability that the revenue will not occur.
- Reimbursements. It is not permissible to include estimates for advertising reimbursements to be received from third parties. These amounts should instead be offset against the costs of film exploitation.
- Inflation effects. Ultimate revenue should not be increased in future periods to incorporate projections for inflation in later years.