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  • Jul 13th, 2010 @ 11:39am

    Accounting for recoupment

    One of the things that amuses me is the idea that the labels keep the accounts of un-recouped bands and tout them as "liabilities". They aren't liabilities, they're ASSETS. This is not some complex accounting trick, this is classic "t-account" stuff. Those unrecouped balances are assets on the label's balance sheet. They have already booked the expenses against those assets long ago so they have no incentive to reduce them. If they do teduce those amounts by applying income from artist royalties then assets go down and, overall, the company is not worth as much. Also, where do you think the money from non-applied recoupments go? Yep, like balls through a pachinko machine, it eventually finds it's way to the bottom line. So, it is entirely in the label's favor to be screw-ups on the expenses side and quite diligent in keeping track of recoupment account balances. -*Zortag*-