Project Update

Collaborative Arrangements—Targeted Improvements

Last updated on February 13, 2018.  Please refer to the Current Technical Plan for information about the expected release dates of exposure documents and final standards.

(Updated sections are indicated with an asterisk *)

The staff has prepared this summary of Board decisions for information purposes only. Those Board decisions are tentative and do not change current accounting. Official positions of the FASB are determined only after extensive due process and deliberations.

*Project Objective
Due Process Documents
*Decisions Reached at Last Meeting
*Tentative Board Decisions Reached to Date
*Next Steps
*Board/Other Public Meeting Dates
*Background Information
Contact Information

*Project Objective

The objective of this project is to make targeted improvements to the guidance in Topic 808, Collaborative Arrangements, to clarify when transactions between participants in a collaborative arrangement are within the scope of the revenue guidance. The project also aims to provide unit of account guidance for collaborative arrangements.
 

Due Process Documents

No due process documents have been issued.
 

*Decisions Reached at Last Meeting (February 7, 2018)

The Board discussed the project scope for potential improvements to Topic 808, Collaborative Arrangements, based on the feedback received during workshops held with stakeholders in December 2017.

The Board decided to retain the current scope of the project. The current scope includes certain transactions between participants of a collaborative arrangement; it excludes transactions directly related to sales to third parties. The current scope clarifies when certain transactions are within the scope of the revenue guidance; it does not include the development of a model for the financial reporting for non-revenue transactions.

On the remaining issues for deliberations, the Board decided the following:
  1. Entities would be required to apply the amendments resulting from the proposed Accounting Standards Update using a retrospective approach. The amendments would be required to be applied retrospectively as of an entity’s adoption date of Topic 606, Revenue from Contracts with Customers, subject to modification using the practical expedients in paragraph 606-10-65-1(h).
  2. Additional recurring disclosures should not be required as a result of the targeted improvements, given the existing disclosures in Topics 606 and 808.
The Board concluded that it received sufficient information and analysis to make an informed decision on the expected costs of the targeted improvements. Subject to what it learns from comment letters, the Board believes that the expected benefits of the targeted improvements justify the expected costs. The Board authorized the staff to draft a proposed Update for vote by written ballot that will be issued for public comment for a 45-day comment period.
 

*Tentative Board Decisions Reached to Date (February 7, 2018)

Tentative Board Decisions Reached to Date.
 

*Next Steps

The Board authorized the staff to draft a proposed Update for vote by written ballot that will be issued for public comment for a 45-day comment period.

Please refer to the current technical plan for information about the project timeline.

*Board/Other Public Meeting Dates

The Board meeting minutes are provided for the information and convenience of constituents who want to follow the Board’s deliberations. All of the conclusions reported are tentative and may be changed at future Board meetings. Decisions become final only after a formal written ballot to issue a final standard.
 
*February 7, 2018 Board Meeting—Project Scope and Permission to Ballot a Proposed ASU

October 4, 2017

Board Meeting—Revenue Scoping, Unit of Account, and Non-Revenue Model.
November 16, 2016 Board Meeting—Added project to Board agenda.

*Background Information

Topic 808, Collaborative Arrangements, provides guidance for income statement presentation, classification, and disclosures related to collaborative arrangements. The objective of Topic 808 is to define collaborative arrangements and to establish reporting requirements for transactions between participants in a collaborative arrangement and between participants in the arrangement and third parties. Stakeholders informed the Board that there are questions in practice about the accounting for transactions between participants in a collaborative arrangement because Topic 808 does not include recognition and measurement guidance. Specifically, questions have arisen about whether certain activities and related payments in collaborative arrangements are within the scope of the revenue guidance. Entities currently apply different approaches to account for collaborative arrangements. Some entities apply the revenue guidance to some or all elements of the arrangement. Other entities establish accounting policies for the recognition and measurement of transactions between participants, and these policies may or may not be consistent with the revenue guidance. Depending on the approach selected, there can be differences in the measurement and recognition patterns for the cash inflows and outflows from a collaborative arrangement and their classification on the income statement.

This project is aimed at making targeted improvements to clarify when transactions between partners in a collaborative arrangement are within the scope of the revenue guidance. The project also aims to provide unit of account guidance for collaborative arrangements.

Contact Information

Amy Park
Practice Fellow
apark@fasb.org

Andy Bologna
Practice Fellow
abologna@fasb.org

Jared Cline
Postgraduate Technical Assistant
jcline@fasb.org