Hollywood accounting

Hollywood accounting (also known as Hollywood bookkeeping) is the opaque or creative set of accounting methods used by the film, video, television and music industry to budget and record profits for creative projects. Expenditures can be inflated to reduce or eliminate the reported profit of the project, thereby reducing the amount which the corporation must pay in taxes and royalties or other profit-sharing agreements, as these are based on net profit.

Hollywood accounting gets its name from its prevalence in the entertainment industry—that is, in the movie studios of Hollywood at a time when most studios were located in Hollywood. Those affected can include writers and actors, but also production companies, producers and investors.[1][2] A number of cases of creative accounting have been successfully pursued in court and have resulted in hundreds of millions of dollars in awarded damages.

  1. ^ McDougal, Dennis (December 29, 1989). "Judge Must Solve Buchwald-Murphy Whodunit: Lawsuits: Final arguments in multimillion-dollar complaint against Paramount are over. Both sides accuse the other of stealing idea for $300-million movie". Los Angeles Times. Retrieved March 23, 2014.
  2. ^ Vincent, Mal (February 20, 1995). "After 61 films, Connery remains much in demand". The Baltimore Sun. Retrieved March 23, 2014. I hired my own bookkeepers to keep a watch on everything. Hollywood bookkeeping can be very suspect.

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