Minimum guarantee

A minimum guarantee is an advance payment made by a licensee to a licensor for the right to sell or distribute music or films. The licensee should record this payment as an asset. This amount is subsequently charged to expense in accordance with the terms of the related license agreement. If a portion of the payment does not appear to be recoverable from the future use of the rights obtained by the licensee, the non-recoverable portion of the payment should be charged to expense in the current period.

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Entertainment Industry Accounting