![]() ![]() The Task Force also added guidance to indicate that a vendor's assessment that it expects to achieve a milestone does not necessarily mean that there is not substantive uncertainty associated with achieving the milestone. The Task Force agreed and revised the term substantial uncertainty to substantive uncertainty to clarify its intent that there need not be a specified amount of uncertainty about achieving an event for the event to be considered a milestone. Some respondents thought the term substantial uncertainty was unclear and may reflect a higher threshold than was being applied in practice when applying the milestone method. Respondents generally agreed with the Task Force's proposed milestone method however, some respondents questioned the proposed requirement that there be substantial uncertainty of achieving the milestone to qualify for this method. The Task Force noted that the current Board project on revenue recognition is better suited to develop broad guidance on how to recognize contingent consideration in an arrangement and that the amendments in this Update should be limited to addressing the practice issue raised.īC7. The Task Force ultimately decided not to expand the scope because it was concerned that the amendments would inadvertently affect transactions that were not intended to be addressed by the practice issues the Task Force was attempting to resolve. The Task Force considered whether the amendments in this Update should apply more broadly than to just research or development arrangements or whether the amendments should address how contingent consideration should be allocated in a multiple-element arrangement. The Task Force decided to limit the scope of the amendments to arrangements that include milestones relating to research or development deliverables that is, the amendments would include activities that involve at least one of those phases. The Task Force had several discussions to determine the scope of the amendments in this Update and created a Working Group to assist it in making that determination. If the consideration from an individual milestone is not considered to relate solely to past performance, the vendor is not precluded from using the milestone method for other milestones in the arrangement.īC5. In addition, if a portion of the consideration earned from achieving a milestone may be refunded or adjusted based on future performance (for example, through a penalty or clawback), the contingent consideration is not considered to relate solely to past performance, and, thus, the related milestone cannot be considered substantive. Milestone consideration shall not be bifurcated into substantive and nonsubstantive components. To recognize the milestone consideration in its entirety as revenue in the period in which the milestone is achieved, the milestone shall be substantive in its entirety. Transfers and servicing of financial assetsĦ05-28-25-3 A milestone shall not be considered substantive if any portion of the associated milestone consideration relates to the remaining deliverables in the unit of accounting (that is, it does not relate solely to past performance). Revenue from contracts with customers (ASC 606) Loans and investments (post ASU 2016-13 and ASC 326) Investments in debt and equity securities (pre ASU 2016-13) Insurance contracts for insurance entities (pre ASU 2018-12) Insurance contracts for insurance entities (post ASU 2018-12) IFRS and US GAAP: Similarities and differences ![]() ![]() Business combinations and noncontrolling interestsĮquity method investments and joint ventures
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