The American Institute of Certified Public Accountants (AICPA) on Feb. 22, 2019, said that it is releasing an updated version of the Audit and Accounting Guide (AAG) for Revenue Recognition.
The 2019 edition reflects new and updated industry implementation issues since the last edition was published in 2018 and includes guidance on the Financial Accounting Standards Board (FASB) Accounting Standards Update (ASU) 2018-18, Collaborative Arrangements (Topic 808): Clarifying the Interaction Between Topic 808 and Topic 606.
In November 2018, the FASB published ASU 2018-18 for companies that team up to share research or technology to develop new products. The update clarifies when collaborative arrangements between businesses result in revenue as opposed to payments between partners. The clarification of U.S. generally accepted accounting principles (GAAP) is expected to affect the pharmaceutical and biotechnology industries, where collaborative arrangements are commonly used to develop new drugs.
The FASB said that when a collaborative participant is a customer, the contract may need to be accounted for according to FASB Accounting Standards Codification (ASC) 606, Revenue From Contracts With Customers, including the recognition, measurement, presentation and disclosure requirements.
The AICPA said the updated revenue recognition guide also includes a comprehensive set of indexes.
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