FASB to Clarify Collaborative Arrangements Guidance
Pharmaceutical and biotechnology companies that set up joint ventures to develop drugs will receive new accounting guidance soon. In a unanimous decision on July 26, the Financial Accounting Standards Board (“FASB”) agreed to finalize a small change to U.S. GAAP that would help companies account for transactions in collaborative arrangements as revenue. The FASB hopes the update will help companies follow the revenue guidance under Accounting Standards Codification (“ASC”) 606, Revenue From Contracts With Customers. Likely to be issued before year’s end, the update will reflect guidance under Proposed Accounting Standards Update (“ASU”) No. 2018-240, Collaborative Arrangements (Topic 808): Targeted Improvement. The. Read More.
FASB Proposes Improved Collaborative Arrangements Guidance
A newly proposed Accounting Standards Update (“ASU”) by the Financial Accounting Standards Board (“FASB”) offers organizations improved guidance regarding collaborative arrangements. The proposed ASU, Collaborative Arrangements (Topic 808): Targeted Improvements , focuses on changes to generally accepted accounting principles related to collaborative arrangements. One proposed change includes adding unit-of-account guidance under Topic 808, which would align the guidance with Topic 606, Revenue from Contracts with Customers, limited to when a company is reviewing the nature of Topic 606. The FASB also proposes two clarifications, such as defining when certain transactions concerning collaborative participants must be accounted for as revenue under Topic 606 when the collaborative member. Read More.
Limited Proposal Coming for Payments in Collaborative Arrangements
The Financial Accounting Standards Board (“FASB”) plans to issue for public comment a limited proposal that clarifies when to account for payments in collaborative arrangements as revenue. The proposed amendment to Topic 808, Collaborative Arrangements, would state that certain transactions between collaborative partners that are separate from third-party sales can create revenue that is accounted for consistent with Topic 606, Revenue From Contracts With Customers. FASB members unanimously approved releasing the proposal after reviewing feedback from its December workshops with auditors and companies. Members rejected calls for more specific guidance, stating that it would be tough to establish such guidance for. Read More.
FASB to Clarify Guidance for Collaborative Arrangements
The Financial Accounting Standards Board (“FASB”) will seek ways to make its guidance under Topic 808, Collaborative Arrangements, easier to follow. At its October 4 meeting, the FASB unanimously agreed to simplify the guidance to reflect the board’s initial goal of clarifying when partners in a collaborative arrangement must record revenue due to the venture’s cost reductions. The FASB also plans to examine the guidance for transactions that do not generate revenue for the partners, as well as consider guidance for what is the unit of accounting under Topic 808. FASB members and staffers said that the board will not. Read More.