Twenty-First Century Fox 2014 Annual Report Download - page 70

Download and view the complete annual report

Please find page 70 of the 2014 Twenty-First Century Fox annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 168

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96
  • 97
  • 98
  • 99
  • 100
  • 101
  • 102
  • 103
  • 104
  • 105
  • 106
  • 107
  • 108
  • 109
  • 110
  • 111
  • 112
  • 113
  • 114
  • 115
  • 116
  • 117
  • 118
  • 119
  • 120
  • 121
  • 122
  • 123
  • 124
  • 125
  • 126
  • 127
  • 128
  • 129
  • 130
  • 131
  • 132
  • 133
  • 134
  • 135
  • 136
  • 137
  • 138
  • 139
  • 140
  • 141
  • 142
  • 143
  • 144
  • 145
  • 146
  • 147
  • 148
  • 149
  • 150
  • 151
  • 152
  • 153
  • 154
  • 155
  • 156
  • 157
  • 158
  • 159
  • 160
  • 161
  • 162
  • 163
  • 164
  • 165
  • 166
  • 167
  • 168

64
time to time, as appropriate, in light of additional information. The amount of any loss ultimately incurred in relation
to matters for which an accrual has been established may be higher or lower than the amounts accrued for such
matters. It is possible that these proceedings and any adverse resolution thereof, including any fees, expenses, fines,
penalties, judgments or settlements which might be incurred by the Company in connection with the various
proceedings could damage the Company’s reputation, impair its ability to conduct its business and adversely affect
its results of operations and financial condition.
The Company’s operations are subject to tax in various domestic and international jurisdictions and as a
matter of course, the Company is regularly audited by federal, state and foreign tax authorities. The Company
believes it has appropriately accrued for the expected outcome of all pending tax matters and does not currently
anticipate that the ultimate resolution of pending tax matters will have a material adverse effect on its consolidated
financial condition, future results of operations or liquidity.
CRITICAL ACCOUNTING POLICIES
An accounting policy is considered to be critical if it is important to the Company’s financial condition and
results and if it requires significant judgment and estimates on the part of management in its application. The
development and selection of these critical accounting policies have been determined by management of the
Company and the related disclosures have been reviewed with the Audit Committee of the Company’s Board of
Directors. For the Company’s summary of significant accounting policies, see Note 2 – Summary of Significant
Accounting Policies to the accompanying Consolidated Financial Statements of Twenty-First Century Fox.
Use of Estimates
See Note 2 – Summary of Significant Accounting Policies to the accompanying Consolidated Financial
Statements of Twenty-First Century Fox.
Revenue Recognition
Revenue is recognized when persuasive evidence of an arrangement exists, the fees are fixed or determinable,
the product or service has been delivered and collectability is reasonably assured. The Company considers the terms
of each arrangement to determine the appropriate accounting treatment.
Cable Network Programming, Television and Direct Broadcast Satellite Television
Advertising revenue is recognized as the commercials are aired, net of agency commissions. Subscriber fees
received from MVPDs for Cable Network Programming and Television are recognized as affiliate fee revenue in the
period services are provided. Direct Broadcast Satellite Television subscription and pay-per-view revenues are
recognized when programming is broadcast to subscribers, while fees for equipment rental are recognized as
revenue on a straight-line basis over the contract period.
The Company classifies the amortization of cable distribution investments (capitalized fees paid to MVPDs to
facilitate carriage of a cable network) against affiliate fee revenue in accordance with ASC 605-50, “Revenue
Recognition—Customer Payments and Incentives.” The Company defers the cable distribution investments and
amortizes the amounts on a straight-line basis over the contract period.
Filmed Entertainment
Revenues from distribution of motion pictures and television programming are recognized in accordance with
ASC 926. Revenues from the theatrical distribution of motion pictures are recognized as they are exhibited, and
revenues from home entertainment sales, net of a reserve for estimated returns, are recognized on the date that DVD
and Blu-ray units are made widely available for sale by retailers or when made available for viewing via digital
distribution platforms and all Company-imposed restrictions on the sale or availability have expired. Revenues from
television distribution are recognized when the motion picture or television program is made available to the
licensee for broadcast.