FASB finalizes targeted improvements for collaborative arrangements

Filed Under: Broad transactions, Revenue, Collaborative arrangements

KPMG reports on targeted improvements that clarify when transactions between collaborative participants are in the scope of ASC 606. The new ASU also provides some guidance on presentation of transactions not in the scope of ASC 606.

Applicability

ASU 2018-18

• All companies with collaborative arrangements

Relevant dates

Mandatory effective dates and early adoption provisions:

Key impacts

The following are the main provisions of ASU 2018-18:

• Clarifies that certain transactions between collaborative partners should be accounted for as revenue under the new revenue standard (ASC 606), when the collaborative partner is a customer
• Specifies the unit of account for determining whether a transaction with a customer is a distinct good or service under ASC 606
• Precludes a company from presenting transactions with a collaborative partner that are not in the scope of ASC 606 together with revenue from contracts with customers

ASU 2018-18 does not address the recognition and measurement of collaborative arrangements that are not in the scope of ASC 606

Report contents

• Applicability
• Key facts and impacts
  
• Background on collaborative arrangements
  
• Scoping and unit-of-account guidance
  
• Transactions not in the scope of ASC 606
  
• Presentation
  
• Effective dates and transition