Solvgen Case Study

Memorandum To: Audit Engagement Team Manager From: Zach Halstead, minor(postnominal) Auditor take: Due Diligence on SolvGen Inc. accompaniment: October 4, 2011 After reviewing some(prenominal) the research and development (R& vitamin A;D) intellect and the independency and diffusion covenant between SolvGen Inc. and C atomic number 18way Pharma Inc., I hold up grow to the following conclusions: Deliverables Discussion * In agreement with code 605-25-25, a deliverable must have objective note value on a stand-al matchless soil. * The deliverable in this agreement is the selling of max instrument sy solutions which fall below the permission and distribution agreement. * The R& vitamin A;D agreement does not constitute a deliverable since Careway is barred to any of the findings of SolvGens R&D department, even in the point of a SolvGen bankruptcy. * With egress much(prenominal) access to R&D research, the agreement basically has no value to Careway on a complete basis. milepost Payment Revenue Recognition * In accordance with codification 605-28-20, a milepost is achieved if the event would result in additional wagess beingness due to the vendor. * Therefore, the milestone payments cannot be accepted as tax tax income enhancement until the date of the first launch, when revenue is earned and more payment comes due to SolvGen from Careway.

* Since R&D does not set up a deliverable, the milestone payments are essentially an up-front payment for the license and distribution deliverable. * milepost payment revenue should then be spread out on a pro rata bas! is as products are distributed under the license and distribution agreement. Differences under IFRS? * Since the agreement has secure one deliverable, and the agreements went into effect at the same, no material leaving exists when comparing GAAP and IFRS. * However, under IFRS, one could record revenue up-front, mainly from the milestone payments. * This decision would stem from IAS-18, which states that revenue is acknowledge when future...If you want to get a full-of-the-moon essay, order it on our website: OrderCustomPaper.com

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