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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 attempt to resolve all guidance issues with collaborative arrangements. Practice fellow Amy Park affirmed this by saying no single, all-encompassing model will be able to prevent businesses from applying the guidance in an inconsistent manner.

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