Legal11 bit studios
Current Report No. 4/2025: Change in Depreciation Method for Frostpunk 2 Game
7 Apr 20251 pages~1 min full read
11 bit studios has shifted the depreciation method for Frostpunk 2 from a five-year straight-line model to a seven-year declining balance method.
The new accounting approach resulted in an amortization charge of PLN 12,521,440 for the 2024 fiscal year, compared to PLN 3,130,360 under the previous method.
This change front-loads depreciation expenses to better align with the typical revenue lifecycle of premium games, where sales are highest immediately following the September 20, 2024, launch.
The adjustment applies specifically to the PC version of Frostpunk 2 and was finalized in consultation with the company's auditor during the 2024 financial statement preparation.
The strategic shift provides a more conservative representation of the asset's book value by recognizing costs more aggressively in the initial months of the game's seven-year lifespan.
The Management Board of 11 bit studios has implemented a strategic shift in the accounting treatment for its major release, Frostpunk 2, transitioning from a straight-line depreciation model to a declining balance method. This adjustment, finalized during the preparation of the 2024 financial statements in consultation with the company’s auditor, applies specifically to the PC version of the title following its launch on September 20, 2024. The new methodology extends the amortization period to seven years, departing from the previously utilized five-year straight-line framework.
This accounting change significantly impacts the company's reported financial results for the 2024 fiscal year. Under the new declining balance approach, the amortization charge for Frostpunk 2 totals PLN 12,521,440. In contrast, the previous straight-line method would have resulted in a substantially lower charge of PLN 3,130,360 for the same period. By front-loading the depreciation expenses, the company aligns its financial reporting more closely with the typical revenue lifecycle of premium game releases, where the highest volume of sales and consumption generally occurs shortly after launch.
The scope of this decision is centered on the intangible assets of the Warsaw-based developer and reflects a specific valuation strategy for its primary intellectual property within the global PC gaming market. This technical adjustment serves as a critical update for investors regarding the company’s internal valuation of its assets and the resulting impact on comprehensive income. The move underscores a more aggressive recognition of costs in the initial months of the game's lifecycle, providing a more conservative representation of the asset's book value over its projected seven-year lifespan.
