Summary of Significant Accounting Policies (Tables)

9 Months Ended

Jun. 30, 2019

Schedule of Cumulative Effect of Changes to Opening Balance Sheet from Adoption of ASC 606

The following table provides the cumulative effect of the changes made to the opening balance sheet, as of October 1, 2018, from the adoption of ASC 606 and which primarily relates to the accrual of licensing revenue in the period of sale or usage.



	September 30, 2018			Impact of Adoption			October 1, 2018
	(in millions)
Assets
Accounts receivable, net	$	447		$	257		$	704
Total current assets	1,176			257			1,433
Other assets	78			15			93
Total assets	$	5,344		$	272		$	5,616
Liabilities and Equity
Accrued royalties	1,396			79			1,475
Accrued liabilities	423			(1		)	422
Deferred revenue	208			(27		)	181
Other current liabilities	34			33			67
Total current liabilities	2,373			84			2,457
Deferred tax liabilities, net	165			37			202
Other noncurrent liabilities	307			1			308
Total liabilities	5,664			122			5,786
Equity:
Accumulated Deficit	(1,272		)	139			(1,133		)
Noncontrolling interest	14			11			25
Total equity	(320		)	150			(170		)
Total liabilities and equity	$	5,344		$	272		$	5,616

Schedule of Impact of Adoption on Consolidated Statement of Operations, Balance Sheet and Statement of Cash Flows

The disclosure of the impact of adoption on the consolidated statement of operations for the three and nine months ended June 30, 2019, the consolidated balance sheet as of June 30, 2019, and the consolidated statement of cash flows for the nine months ended June 30, 2019 are as follows (in millions):



	Three Months Ended June 30, 2019									Nine Months Ended June 30, 2019
	As Reported			Balances without adoption of ASC 606			Effect of Change			As Reported			Balances without adoption of ASC 606			Effect of Change
	(in millions)									(in millions)
Revenue	$	1,058		$	1,057		$	1		$	3,351		$	3,322		$	29
Cost and expenses:
Cost of revenue	(577		)	(558		)	(19		)	(1,762		)	(1,765		)	3
Operating income	58			76			(18		)	327			295			32
Income before income taxes	2			20			(18		)	253			221			32
Income tax benefit (expense)	12			17			(5		)	(86		)	(75		)	(11		)
Net income	14			37			(23		)	167			146			21
Less: Income attributable to noncontrolling interest	(1		)	—			(1		)	(1		)	(3		)	2
Net income attributable to Warner Music Group Corp.	$	13		$	37		$	(24	)	$	166		$	143		$	23



	June 30, 2019
	As Reported			Balances without adoption of ASC 606			Effect of Change
	(in millions)
Assets
Accounts receivable, net	$	744		$	465		$	279
Total current assets	1,580			1,301			279
Other assets	158			143			15
Deferred tax assets, net	7			7			—
Total assets	$	5,955		$	5,661		$	294
Liabilities and Equity
Accounts payable	208			209			(1		)
Accrued royalties	1,577			1,501			76
Accrued liabilities	448			449			(1		)
Deferred revenue	170			199			(29		)
Other current liabilities	123			95			28
Total current liabilities	2,544			2,471			73
Deferred tax liabilities, net	236			189			47
Other noncurrent liabilities	302			298			4
Total liabilities	6,088			5,964			124
Equity:
Accumulated deficit	(1,061		)	(1,221		)	160
Noncontrolling interest	19			9			10
Total equity	(133		)	(303		)	170
Total liabilities and equity	$	5,955		$	5,661		$	294



	June 30, 2019
	As Reported			Balances without adoption of ASC 606			Effect of Change
	(in millions)
Cash flows from operating activities
Net income	$	167		$	146		$	21
Deferred income taxes	25			15			10
Changes in operating assets and liabilities:
Accounts receivable, net	(50		)	(28		)	(22		)
Accounts payable and accrued liabilities	(94		)	(96		)	2
Royalty advances	(107		)	(104		)	(3		)
Deferred revenue	(17		)	(15		)	(2		)
Other balance sheet changes	(1		)	5			(6		)
Net cash provided by operating activities	249			249			—
Effect of exchange rate changes on cash and equivalents	(1		)	(1		)	—
Net decrease in cash and equivalents	27			27			—
Cash and equivalents at beginning of period	514			514			—
Cash and equivalents at end of period	$	541		$	541		$	—