Entertainment and media

Direct production costs are capitalised as content assets and amortised over the expected revenue period — typically the period in which the production generates substantially all of its lifetime revenue. The amortisation pattern should reflect the expected revenue curve (often front-loaded for theatrical releases, more even for library content). Impairment is tested whenever indicators suggest the asset will not recover its carrying value through expected revenue.

Payments received by Nepali residents from foreign platforms constitute income from foreign sources and are taxable under the Income Tax Act 2058. The receipt is generally on a gross basis; any foreign tax withheld can be claimed as foreign tax credit subject to applicable double tax avoidance agreements. VAT treatment depends on whether the underlying service is treated as a B2B export of services (typically zero-rated). For larger creator businesses, structuring through a registered company is more efficient than personal receipt.

Royalty audit examines whether royalties due under a licensing or distribution agreement have been correctly calculated and paid. It is commissioned by the rights holder (music label, publisher, author) against a licensee whose royalty reports the rights holder cannot independently verify. Findings typically include under-reported sales, misapplied royalty rates, untimely payment, and improperly deducted costs. Industry studies suggest material under-reporting is common.

Under NFRS 15, the answer depends on whether the agency is a principal or agent in each arrangement. For media buying where the agency takes inventory risk and customer credit risk, gross presentation may be appropriate. For pass-through media buying acting purely on the client's behalf, net presentation is correct. Many agencies use a mixed model and must apply the assessment per service line — this is one of the most-restated revenue items we see.