Hollywood Accounting

harry potter

Hollywood accounting refers to the notoriously opaque accounting methods used by Hollywood to budget and record profits for film projects. Expenditures can be inflated to reduce or eliminate the profit of the project thereby reducing the amount which the corporation must pay in royalties or other profit-sharing agreements based on the net profit.

For example, Winston Groom’s price for the screenplay rights to his novel Forrest Gump included a share of the profits; however, due to Hollywood accounting, the film’s commercial success was converted into a net loss, and Groom received nothing. That being so, he has refused to sell the screenplay rights to the novel’s sequel, stating that he, ‘cannot in good conscience allow money to be wasted on a failure.’

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