Accounting Policies and General Information

6 Months Ended

Jun. 30, 2011

Accounting Policies and General Information [Abstract]

ACCOUNTING POLICIES AND GENERAL INFORMATION

NOTE 1. ACCOUNTING POLICIES AND GENERAL INFORMATION

     Mills Music Trust (the “Trust”) was created in 1964 by a Declaration of Trust, dated December 3, 1964 (the “Declaration of Trust’) for the purpose of acquiring the rights to receive payment of a deferred contingent purchase price contract obligation, (the “Contingent Portion”), relating to certain copyright materials. The amounts are currently payable by EMI Music (“EMI”), the current owner and administrative entity for the copyrighted materials. The payments of the Contingent Portion are determined quarterly and are based on a formula which takes into account gross royalty income paid to composers, authors and others, and less amounts deducted by EMI in accordance with contract terms. Through December 31, 2009, the Contingent Portion was calculated as the gross royalty income from existing copyrights for the applicable period, less royalty expenses and 25% to 35% of gross royalty income, and was guaranteed to be at least a minimum of $167,500 per quarter. Commencing with the first quarter of 2010, which was reported on a cash basis for the three months ended June 30, 2010, the Contingent Portion for each quarterly period is calculated as 75% of the gross royalty income, less related royalty expenses with no guaranteed minimum.

     Payments from EMI to the Trust of the Contingent Portion are made in March, June, September and December, based on net royalty income received by EMI for the applicable copyright material during the preceding calendar quarter. The payments received are accounted for on a cash basis, as are expenses. The Declaration of Trust requires the distribution of all funds received by the Trust to the Trust Unit holders after payment of expenses.

     The statements of cash receipts and disbursements reflect only cash transactions and do not include transactions that would be recorded in financial statements presented on the accrual basis of accounting, as contemplated by accounting principles generally accepted in the United States of America.