In accountancyHollywood accounting is the practice of distributing the profit earned by a large project to corporate entities which, though technically distinct from the one responsible for the project itself, are typically owned by the same people. This has the net result of reducing the project's reported profit by a substantial margin, sometimes eliminating it altogether. This is most often done to reduce the amount which the corporation must pay in royalties or other profit-sharing agreements.
Due to the secrecy surrounding costs and profit margins in the film industry, figures of losses are usually Hollywood accounting estimates at best, and there are often conflicting estimates over how much a film has lost. To accommodate this uncertainty the losses are presented as ranges where this is the case and the list is ordered alphabetically in the absence of a definitive order.
Because the films on the list have been released over a large span of time currency inflation is also a factor that must be considered, so the losses are adjusted for inflation using the United States Consumer Price Index to enable a fair comparison.
Some films on this list grossed more than their production budgets yet are still regarded as flops. This can be due to Hollywood accounting practices that typically manipulate profits or keep costs secret to avoid profit-sharing agreements,  but it is also possible for films to lose money legitimately even when the theatrical gross exceeds the budget.
This is because a distributor does not collect the full gross, and the full cost of a film can substantially exceed its production budget once distribution and marketing is taken into account.
For example, tax filings in for Cinemark Theatres show that only While the distributor's cut will vary from film to film, a Hollywood studio will typically collect half the gross in the United States and less in other parts of the world.
Marketing often represents a substantial share of the overall cost of the picture too:Apr 13, · Sylvester Stallone sues Warner Bros.
over studio accounting practices. Stallone believes he's been cheated of film profits by studio.
His lawsuit seeks to reform Hollywood accounting . Michael Moore filed a lawsuit in Los Angeles against Hollywood movie producers “classic Hollywood accounting tricks and financial Read More Read More Was Success In . When you think of Hollywood, you probably don’t think of accounting, but at entertainment studio Lionsgate, every film that the studio produces or buys must have its own budget, and the finance team must have very accurate numbers for every movie in its growing library.
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Chris holds a degree in business from Johnson & Wales University with studies in event management. Hollywood Accounting is how a production studio weasels out of paying royalties or anything else based on a percentage of profit: just overestimate your expenses, and bingo, there is no profit, or at least a lot less of it — at least on paper, even if the gross reaches into the billions.
The "expenses" are charged to a separate entity or aspect of .
I've been reading about the way Hollywood accounting works and I think I am going to adopt their system. It's a wonder of ingenuity, based on wholly novel accounting principles. Say I buy a cup of. 5 thoughts on “ Ah, Hollywood Accounting! Stacy February 1, at AM. Disappointed with the results translates to “Didn’t beat Disney to a pulp.” The numbers are simply a CYA measure that doesn’t seem to pan out under scrutiny. Hollywood Accounting Despite the many copyright infringement accusations and the recent economic recession, the Hollywood box office remains a multi-billion dollar industry.