Revenue Recognition

Revenue Recognition

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A  UK company is going to recieve money from a US firm to fund development work, when the product is finished they will revenue share the sales.

The treatment of the money received by the US firm i see falling under on of three standards.

1. Non Exchange Transaction - recognise the income as soon as the performance conditions are satisfied.

 2. Investment in Joint Venture - I'm not convinced by this as we would need "jointly controlled operations"

 3. Treat the contract as a financial instrument, would not treat as income received 

interested to hear what your thoughts are.

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By WhichTyler
23rd Dec 2015 15:20

Fee?

Why over complicate things? It is a fee for performing the development work, assuming it is commissioned by the US Co.

Any future earnings (which may or may not arise) could be a royalty, couldn't they? May depend on who owns the IP?

EDIT So have a look at the contract. 

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