Property, plant, equipment and other assets. BC19. Please seewww.pwc.com/structurefor further details. ]bqi"w8=8YWf8}3aK txg^+v!a{Bhk 5YliFeT?}YV-xBmN(}H)&,# o0 These materials were downloaded from PwC's Viewpoint (viewpoint.pwc.com) under license. Accordingly, $95 million of the consideration transferred would be allocated to the group of assets acquired and $5 million would be allocated to the TSA, based on their relative fair values. endstream endobj 1369 0 obj <>/Metadata 136 0 R/Outlines 177 0 R/PageLayout/OneColumn/Pages 1360 0 R/StructTreeRoot 254 0 R/Type/Catalog>> endobj 1370 0 obj <>/Font<>>>/Rotate 0/StructParents 0/Type/Page>> endobj 1371 0 obj <>stream In March 2015, the FASB received an agenda request asking the Board to clarify the interaction between Topic 606 and Topic 808 and to provide recognition and measurement guidance for collaborative arrangements to address certain areas of diversity. How should Company A account for the asset acquisition, including the noncontrolling interest? The SG&A line item frequently includes the sum of all direct and indirect selling expenses, as well as all general and administrative expenses of the reporting entity. Our publication is intended to help entities better understand the relief, which is codified in ASC 848, and assist them in determining which . Some respondents requested that the Board provide additional guidance on how to determine whether a collaborative arrangement participant is a customer. uGj|] h8 Eo9C6JJ>&4h\MV u: Assuming the water bottles are initially held in inventory by FSP Corp prior to their eventual sale, the cost of the inventory would be reduced by $10,000 on a per unit basis such that cost of sales will be reduced when recognized in FSP Corps income statement. However, the Board continues to believe that the principles in Topic 606 might be appropriate to apply to a collaborative arrangement by analogy even if the counterparty is not considered a customer, provided there is no other more relevant authoritative guidance. Instead, financing costs relating to the issuance of debt should be recognized as a reduction of the debt balance in accordance with. See more on AccountingLink Subscribe to AccountingLink updates, Do Not Sell or Share My Personal Information. Entities involved in collaborative arrangements observed that, in some situations, a collaborative arrangement participant contracts to obtain goods or services that are the output of an entitys ordinary activities. In some cases, a vendor provides consideration to resellers to reimburse them for sales incentives (e.g., rebates or coupons) offered to end customers to stimulate consumer demand for the vendors products. Once you have viewed this piece of content, to ensure you can access the content most relevant to you, please confirm your territory. This content is for general information purposes only, and should not be used as a substitute for consultation with professional advisors. Disclosure of unusual amounts, net of applicable income taxes, and their earnings per share effect, net of applicable income taxes, is permissible only in the footnotes. In addition, the amendments in this Update provide more comparability in the presentation of revenue for certain transactions between collaborative arrangement participants. Accordingly, if the consideration transferred is in the form of cash or other monetary assets, recognition and measurement of the acquired assets is based on the amount of cash or other monetary assets paid to the seller, in addition to direct transaction costs incurred. 1434 0 obj <>stream 1368 0 obj <> endobj 2.2 Initial recognition (asset acquisitions), 2.4Allocating cost in an asset acquisition. If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. The aggregate amount of goodwill impairment losses should be presented as a separate line item on the income statement within continuing operations unless a goodwill impairment is associated with a discontinued operation. Company A acquires a group of assets that does not constitute a business for $100 million from Company B. 2019 - 2023 PwC. An entity may not adopt the amendments earlier than its adoption date of Topic 606. Refer to Appendix D of the publication for a summary of the updates. For non-SEC filers, ASC 855-10-25-2 indicates that subsequent events are events that occur after the balance sheet date but before the reporting entity's financial statements are available to be issued. In the period in which a collaborative arrangement is entered into (which may be an interim period) and all annual periods thereafter, a participant to a collaborative arrangement shall disclose all of the following: Information related to individually significant collaborative arrangements shall be disclosed separately. Cross Reference report and archive to locate and access legacy standards. Company A determines that the transaction should be accounted for as an asset acquisition, as the legal entity acquired does not constitute a business. Follow the asset acquisition cost accumulation model and include the acquirers carrying amount of the PHEI, along with the fair value of any consideration paid and direct transaction costs incurred, in determining the cost to be allocated to the assets acquired. Select a section below and enter your search term, or to search all click Any unallocated fixed cost overheads, including depreciation expense, are considered period costs and should be charged to earnings in the current period. EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. If the consideration given is nonfinancial assets or in substance nonfinancial assets within the scope of Subtopic 610-20 on gains and losses from the derecognition of nonfinancial assets, the assets acquired shall be treated as noncash consideration and any gain or loss shall be recognized in accordance with Subtopic 610-20. Bulgaria stamp catalogue. BC30. A noncontrolling interest (NCI) is the equity interest in a subsidiary that is not attributable, directly or indirectly, to the parent. We use cookies to personalize content and to provide you with an improved user experience. The Board did not intend to establish an exception to the revenue requirements in Topic 606 for transactions in collaborative arrangements. Using Q&As and examples, this new guide explains in detail the accounting for general employee compensation, nonretirement postemployment benefits, retirement benefits and employee stock ownership plans (ESOPs). BC37. Q+ Welcome to the Deloitte Accounting Research Tool (DART)! Although the lack of guidance for collaborative arrangements has resulted in diversity in practice for more than a decade, the issuance ofAccounting Standards Update No. However, the consideration must be for reimbursement of specific, incremental, identifiable costs incurred by the reporting entity to sell the vendor's products. BC10. If the consideration transferred is in the form of liabilities incurred or equity interests issued to the seller, these amounts should generally be recognized on the acquisition date. For example, a reporting entity that provides security monitoring services may have an acquired customer-relationship intangible asset. If you have any questions pertaining to any of the cookies, please contact us us_viewpoint.support@pwc.com. The agreement also includes payment of an advertising allowance of $1,000 to FSP Corp by Toy Company. The following summarizes the Boards considerations in reaching the conclusions in this Update. Kompatybilno: Dla Fiat: Dla Fiat ABARTH Punto 1992012.03-Dla Fiat Doblo I Estate 119, 223 2001.03-2019Dla Fiat Doblo I Cargo 223 2001.03-2010Dla Fiat Fiorino III box/kombi 225 For additional copies of this Accounting Standards Update and information on applicable prices and discount rates contact: FINANCIAL ACCOUNTING SERIES (ISSN 0885-9051) is published monthly with the exception of May and October by the Financial Accounting Foundation, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. The Board ultimately decided that the scope of the revenue guidance in Topic 606 should be aligned for units of account inside and outside collaborative arrangements; that is, the revenue guidance in Topic 606 should be applied if the collaborative arrangement participant is a customer in the context of a given unit of account. Clarified that certain transactions between collaborative arrangement participants should be accounted for as revenue under Topic 606 when the collaborative arrangement participant is a customer in the context of the unit of account. ::m@[-`x=@O'~=e'Nssssssss(:QAaPG+M6vJ+cW~7~7~7~7~7K*K|_zfKaTfJcaYTOS4 ]?wq]ZwW + Clarified that, in a transaction that is not directly related to sales to third parties, presenting the transaction as revenue would be precluded if the collaborative arrangement participant is not a customer. Company A holds a 25% noncontrolling interest in a legal entity whose only asset is a patent. However, the benefits of providing information for that purpose should justify the related costs. H\@=OQEn$dy ! .|1=(_neNMtxlYk9ce]rt2O7nC|oS?_qVC_k}./{z7^w%1X7qSEz\^,_w=eUtH3{da__KyF~c~C0o[ww<=d^"2NOl{=~O4{=NM`6M`6M`6M`6M`v(Px By explicitly providing unit-of-account guidance in the context of assessing the scope of the revenue guidance and aligning the unit-of-account guidance with Topic 606, the Board also sought to eliminate potential future diversity in determining units of account when assessing whether a collaborative arrangement is partially within the scope of Topic 606 or other Topics. /EdB+hh? |. endstream endobj 1376 0 obj <>stream As described in paragraph 24(b) of Concepts Statement No. xWMk@(H$PhjCn[=wVKil1zO3o0kpu=hl`G?gsi@0(zY}9"3L-3BgR)Obzq7 H!H\kAT$ e`ecpD'p \Me1%4Lq%,S!?71c(Qdf(s%>L BD`RV. POSTMASTER: Send address changes to Financial Accounting Series, 401 Merritt 7, PO Box 5116, Norwalk, CT 06856-5116. Other respondents requested clarity on how to interpret. %%EOF See paragraphs BC31BC33 for the Boards basis for that decision. If not included in cost of sales, the reporting entity should follow the guidance in. The Board chose not to expand the scope of the project to include arrangements structured within a legal entity (such as joint ventures). This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax, or other professional advice. Are you still working? EY helps clients create long-term value for all stakeholders. % Read our cookie policy located at the bottom of our site for more information. S ZBF7l riQZ62=QSBa! ASC 946-10 notes that the the Topic "only provides incremental industry-specific guidance for the entities that meet the assessment of investment company status" described in ASC 946-10-15-4 through 15-9. It also clarifies and enhances interpretive guidance in several areas. Whensome or all of the depreciation and amortization related to the manufacturing of products or the services providedby a reporting entity are excluded from the cost of sales line item, Amortization expense may result from lease transactions that are accounted for under. EY helps clients create long-term value for all stakeholders. BC7. Several respondents requested that the Board clarify the types of transactions directly related to sales to third parties. The EITF did not provide specific recognition and measurement guidance because of the difficulty in developing a single accounting model that could be applied to the wide range of different collaborative arrangements. Some stakeholders raised concerns that the guidance in Update 2014-09 appears to be inconsistent with language included in the basis for conclusions of that Update. ASC 845 Nonmonetary Transactions This Topic notes that the "amount of monetary assets or liabilities exchanged generally provides an objective basis for measuring the cost of nonmonetary assets or services received by an entity as well as for measuring gain or loss on nonmonetary assets transferred from an entity." The guidance also states: A counterparty to the contract would not be a customer if, for example, the counterparty has contracted with the entity to participate in an activity or process in which the parties to the contract share in the risks and benefits that result from the activity or process (such as developing an asset in a collaboration arrangement) rather than to obtain the output of the entitys ordinary activities. Consequently, overriding an entitys ability to consider the specific terms of its arrangements and the nature of its ordinary activities and precluding revenue recognition broadly for collaborative arrangements could have resulted in less relevant financial reporting because the accounting may not have reflected the nature and economics of the arrangement. If the latter, some respondents disagreed because it would negatively affect performance measures that provide users with useful information. Asset acquisitions may includecontingent consideration, which represents an obligation of the acquirer to transfer additional assets or equity interests to the seller if future events occur or conditions are met. A creditor that measures impairment based on the present value of expected future cash flows is permitted to report the entire change in present value as bad-debt expense. The Board rejected including within the scope of this project collaborative-type arrangements structured in a separate legal entity. This Topic notes that it "only provides links to guidance on accounting for the cost of sales and services in other applicable Subtopics as the asset liability model used in the Codification generally results in the inclusion of that guidance in other Topics.". Nonmonetary transactions within the scope of ASC 845, Nonmonetary Transactions Lease contracts under ASC 840 Contributions of cash and other assets, including promises to give cash, that are either made by certain entities or received by not-for-profit entities within the scope of ASC 720-25, Other Expenses: Our Financial reporting developments (FRD) publication, Postretirement benefits, provides accounting and reporting guidance for employers that sponsor defined benefit and defined contribution pension and other postretirement benefit plans and postretirement benefits provided as part of special or contractual termination arrangements.The FRD provides an overview of the principles of . The amendments in this Update make targeted improvements to generally accepted accounting principles (GAAP) for collaborative arrangements as follows: The amendments in this Update provide guidance on whether certain transactions between collaborative arrangement participants should be accounted for with revenue under Topic 606. Added unit-of-account guidance to Topic 808 to align with the guidance in Topic 606 (that is, a distinct good or service) limited to when an entity is assessing the scope of Topic 606. You can set the default content filter to expand search across territories. Those entities are analogizing to those Topics either because the scope of the revenue guidance is not directly applicable or because the interaction between Topic 808 and those Topics is unclear. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. Content copyrighted by Financial Accounting Foundation may not be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the prior written permission of the Financial Accounting Foundation. We use cookies to personalize content and to provide you with an improved user experience. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. 0 We believe the acquirer in an asset acquisition should choose one of the following accounting policy elections on the acquisition date: In the absence of guidance for previously held equity interests in an asset acquisition, other measurement considerations may be acceptable (e.g., iterative equation). Yq:W+pM|v{ NCIs may arise in an asset acquisition when the acquirer obtains a controlling financial interest, but less than 100%, of an entity that does not meet the definition of a business. 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