Twenty-First Century Fox 2014 Annual Report Download - page 88

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TWENTY-FIRST CENTURY FOX, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
82
Use of estimates
The preparation of the Company’s Consolidated Financial Statements in conformity with generally accepted
accounting principles in the U.S. (“GAAP”) requires management to make estimates and assumptions that affect the
amounts that are reported in the Consolidated Financial Statements and accompanying disclosures. Although these
estimates are based on management’s best knowledge of current events and actions that the Company may
undertake in the future, actual results may differ from those estimates.
Cash and cash equivalents
Cash and cash equivalents consist of cash on hand and marketable securities with original maturities of three
months or less.
Concentration of credit risk
Cash and cash equivalents are maintained with several financial institutions. The Company has deposits held
with banks that exceed the amount of insurance provided on such deposits. Generally, these deposits may be
redeemed upon demand and are maintained with financial institutions of reputable credit and, therefore, bear
minimal credit risk.
Receivables, net
Receivables, net are presented net of an allowance for returns and doubtful accounts, which is an estimate of
amounts that may not be collectible.
The allowance for doubtful accounts is estimated based on historical experience, receivable aging, current
economic trends and specific identification of certain receivables that are at risk of not being paid. In determining
the allowance for returns, management analyzes historical returns, current economic trends and changes in customer
demand and acceptance of the Company’s products. Based on this information, management reserves a percentage
of each dollar of product sales that provide the customer with the right of return.
The Company has receivables with original maturities greater than one year in duration principally related to
the Company’s sale of program rights in the television syndication markets within the Filmed Entertainment
segment. Allowances for credit losses are established against these non-current receivables as necessary. As of
June 30, 2014 and 2013, these allowances were not material.
Receivables, net consist of:
As of June 30,
2014 2013
(in millions)
Total receivables ............................................................................................................. $ 7,737 $ 6,795
Allowances for returns and doubtful accounts ................................................................ (815 ) (899)
Total receivables, net ...................................................................................................... 6,922 5,896
Less: current receivables, net .......................................................................................... (6,468 ) (5,459)
N
on-current receivables, net ........................................................................................... $ 454 $ 437
Inventories
Filmed Entertainment Costs
In accordance with ASC 926, “Entertainment—Films” (“ASC 926”), Filmed Entertainment costs include
capitalized production costs, overhead and capitalized interest costs, net of any amounts received from outside
investors. These costs, as well as participations and talent residuals, are recognized as operating expenses on an
individual motion picture or television series based on the ratio that current year’s gross revenues for such film or