The accounting treatment of transactions involving participants in a cooperation agreement is somewhat vague under existing GAAP. Accounting Standards Codification (ASC) Topic 808, collaborative arrangements, does not contain any approach and evaluation policy. The new guidelines first illustrate the interaction between Topic 808 and the FASB`s new revenue realization standard, Accounting Standards Codification Topic 606. In particular, it is specified when a transaction between companies is to be accounted for in a cooperation agreement as a contract with a customer and therefore within the framework of the new turnover standard. In accordance with the amendments to ASU No 2018-18, non-revenue transactions must be assessed to determine whether they are covered by other accounting information and, if not, an adequate and consistently applied accounting and valuation directive must be developed for them. The Board of Directors has released Accounting Standards Update (ASU) #2018-18, Collaborative Arrangements (Topic 808): clarifying the interaction between Topic 808 and Topic 606 in order to determine when business-to-business cooperation agreements generate revenue compared to partner-to-partner payments. The US GAAP clarification should concern the pharmaceutical and biotechnology industry, where cooperation agreements are often used to develop new medicines. In accordance with the rules published on Monday, parts of the cooperation agreement that do not fall within the scope of the turnover realisation standard should be presented separately from the turnover recognised according to the turnover realisation standard. The new standard of achieving turnover has contributed to the confusion.
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