They’ve just cancelled their upcoming film “Coyote vs. Acme,” and everyone is calling it a tax write-off, just like they did with the cancelled Batgirl film.
Having spent so much on the production of these films, how is it beneficial to them to cancel the film outright? What is a tax write-off in that sense?
In: Economics
So far I haven’t seen the correct answer.
First, pretty much all expenses that WB has are “write offs.” So, if they spent 20mil making the movie, they already wrote off that money in the tax year they spent it.
So what’s this new “write off” everyone is talking about?
Well, when WB had the idea for the movie they created an ASSET on their balance sheet comprising of intellectual property, good will, future licensing, etc. of lets say 50mil.
When the scrapped the movie that ASSET is now worth ZERO. So subtract 50mil from assets, and it’s now moved to their income statement as a loss of 50mil.
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