Turnover is the amount receivable under the company’s commissioning agreement to produce a television series. Under the agreement, the commissioning party funds the total production costs of the series. Turnover is stated net of value added tax.
The company recognises turnover when the completed series is delivered, because that is when the company has met its obligations under the commissioning agreement. Funding received before delivery is shown in creditors as deferred income. Production costs incurred before delivery are carried forward as work in progress and charged to cost of sales when the related turnover is recognised.
Some fees, including writers’ fees, only become payable if royalty income is received. These are recognised as costs only when the related royalty income arises. Any royalty income will be recognised when the company becomes entitled to it.