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FASB to Take on Collaborative Arrangements Project

The Financial Accounting Standards Board (“FASB”) plans to address the inconsistent application of Topic 808, Collaborative Arrangement. Last week, the FASB said it will look into clarifying when payments in a collaborative arrangement should be disclosed as revenue or cost reimbursement. Collaborative arrangements not established as legal entities would be impacted by the clarification.

The collaborative arrangements project would be limited in scope, as the FASB wants to focus on the interaction between Topic 808 and Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers (Topic 606). James Kroeker and board member Harold Schroeder were the sole detractors of adding the project to the FASB’s standard-setting agenda, arguing that the limited scope could create other accounting issues.

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