Corporation Tax Act 2009 section 1189

Calculation of profits or losses of separate film trade

Section 1189 sets out how to calculate the profits or losses of the separate film trade for each period of account, by bringing into account the income earned and costs incurred on the film.

• Profits or losses of the separate film trade are calculated period by period using a proportion of estimated total income matched against costs incurred to date
• For the first period of account, you include costs incurred to date and a proportion of estimated total income based on how far through the project you are
• For subsequent periods, you calculate the cumulative position and then deduct the amounts already recognised in earlier periods, so only the movement is brought into account
• The proportion of income earned is determined by the formula (C / T) × I, where C is cumulative costs to date, T is estimated total cost, and I is estimated total income