Youtube channel - Intangible asset

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hishamshams
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Youtube channel - Intangible asset

Post by hishamshams »

Hello all,

Just a quick query regarding intangible assets. Let’s say, a Company has purchased a YouTube channel (with a good number of subscribers and some content) from a third-party at a consideration agreed by both the parties. The Company that’s acquiring the channel is in visual media communication industry/sector. The seller has given the login credentials, all rights and control pertaining to the YouTube channel to the acquirer. The Company generates ad revenues from this channel. Can the Company account for the YouTube channel as an intangible asset and assess it for impairment annually? Is there any IFRS technical extract available for supporting this? As well as any audited financial statements (listed or unlisted) with a similar scenario (for reference purpose)?
JRSB
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Re: Youtube channel - Intangible asset

Post by JRSB »

Presumably it's not the channel you've acquired, but the videos saved to that channel which are monetised?

Or more specifically the cash flow generated from views of those videos, which I assume are protected so that no one else can post them?

IAS 38 gives the example of 'marketing rights' so it sounds something like that but you'd need to show how it is controlled
hishamshams
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Joined: 08 Jul 2019, 14:10
Location: Dubai, UAE

Re: Youtube channel - Intangible asset

Post by hishamshams »

Not entirely. The channel acquired is primarily for the videos saved to the channel that's monetised, the cash-flow that'd be generated from the views as well as the no. of subscribers (all complementary to each other). Post acquisition, the login credentials and all access/rights associated with the channel have been provided to the acquirer by the acquiree. The acquirer has all the rights to decide on what contents to be uploaded/removed from the channel post acquisition. Believe this would showcase how the acquirer can exercise control. Further, if required in future, the Company can sell the youtube channel to other companies within media & communication sector (it's a practice noted within this industry i.e. sale and managing of youtube channels). So believe the three parameters as per IAS 38 meets:

Identifiable - this asset is separable i.e. capable of capable of being separated or divided from the entity and sold, transferred, licensed, rented or exchanged, either individually or together with a related contract, identifiable asset or liability, regardless of whether the entity intends to do so;

Control - as explained above, the Company controls the asset

Future economic benefits - the Company is entitled to (and receives) revenues from Youtube (ad revenues).
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Marek Muc
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Re: Youtube channel - Intangible asset

Post by Marek Muc »

On one hand, I would see an analogy to buying e.g. a traditional publishing title (e.g. a newspaper).

On the other hand, you don't really control the channel as you are 100% dependent on YouTube's platform which can shut down your channel any time - this has happened! And when YouTube shuts your channel, you cannot take your subscribes and go somewhere else. Besides, you don't control the ads shown to your subscribers - it's up to YT's algorithms do decide.

My *tentative* view is that you don't have much control over the revenue from the channel.
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Marek Muc
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Re: Youtube channel - Intangible asset

Post by Marek Muc »

PS. I also think this depends on whether you plan to earn ad revenue (then see my previous post) or just resell the channel in near term. If the latter - then you could say that it's inventory and recognise it as an asset
JRSB
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Re: Youtube channel - Intangible asset

Post by JRSB »

do the videos advertise the services of your wider business? in which it's like advertising spend that you can't capitalise?
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