Wiley GAAP 2014: Interpretation and Application of Generally Accepted Accounting Principles

46   ASC 808 COLLABORATIVE ARRANGEMENTS

Perspective and Issues

Subtopic

Scope

Overview

Definitions of Terms

Concepts, Rules, and Examples

Collaborative Arrangements

Joint operating activities

Scope

Accounting for transactions with unrelated third parties

Accounting for transactions between participants

Disclosure

Matters for which guidance is not provided

Example of collaborative arrangements

PERSPECTIVE AND ISSUES

Subtopic

ASC 808-10, Collaborative Arrangements, contains one subtopic:

• ASC 809-10, Overall, which defines collaborative arrangements and gives reporting requirements.

Scope

ASC 808-10 applies to all collaborative arrangements, except for those addressed in other topics. See more on scope later in this chapter.

Overview

A collaborative arrangement (sometimes referred to in practice as “line-item” joint ventures or “virtual” joint ventures) is a contractual agreement between two or more parties (participants) to jointly conduct business activities for their mutual benefit without the formation of a separate entity in which to conduct the activities. These types of arrangements are commonly used for such purposes as producing motion pictures; designing and developing hardware and/or software; or developing new pharmaceutical drugs. Determining the proper accounting treatment for the various activities included in these endeavors is the subject of Accounting Standards Codification (ASC) 808, Collaborative Arrangements.

DEFINITIONS OF TERMS

Source: ASC 808-10-20

Collaborative ...