The science of change: How will proposed changes in revenue recognition impact your company? - October 2009

Pharmaceutical and life sciences companies may soon face significant changes to the timing of revenue recognition. These changes are due to the issuance of new US GAAP guidance and the prospect of a completely new revenue recognition model. Changes in US GAAP standards, which are expected to be in effect within the next year, are designed to result in a revenue recognition model that will more closely reflect the underlying economics of a transaction compared to current practice. More changes may be seen in the future as a result of a joint revenue recognition project by the US Financial Accounting Standards Board (FASB) and the International Accounting Standards Board (IASB) (collectively the boards).

This publication is designed to assist pharmaceutical and life sciences companies understand the potential impacts of the upcoming US GAAP changes and the joint revenue recognition project to their businesses.

The report covers the following proposed standards:

  • Emerging Issues Task Force Issue 08-1 (EITF Issue 08-1): Revenue Arrangements with Multiple Deliverables
  • Emerging Issues Task Force Issue 09-3 (EITF Issue 09-3): Certain Revenue Arrangements That Include Software Elements
  • Emerging Issues Task Force Issue 08-9 (EITF Issue 08-9): Milestone Method of Revenue Recognition
  • FASB/IASB Joint Revenue Recognition Project