CASE STUDY

Case study



Case study- SolvGen Inc.

Overview of the Company

SolvGen Inc - a pharmaceutical development company that has been involved in research & instruments systems. The main operation of SolvGen Inc comprises of research and launching of instruments systems, and for them to recognize revenue, milestone method is perfectly appropriate.

Discussion

During last past years, globalization has deeply affected numerous revenue recognition methods in accounting. The reason for this is the rigorous attempt that has been made to develop a universal accounting standards that can be adopt and used by the entire world. In case study of SolvGen and Careway, where these two companies has made certain agreement and these agreement due to globalization might have impact on the revenue recognition report (Staying ahead of IFRS challenges, 2010).

The core consequence that impacted on both companies comprises of

Examination of deliverables arrangement

Recognition of milestone payment as revenue

Impact of change in IFRS on the previous recorded of milestone payment

Simultaneously these diverse factors would offer the furthermost insight regarding the changes which will impact on SolvGen and Careway.

Deliverables for the Arrangement

The deliverable agreement of SolvGen state as:

Version 1- Commercial launch of instrument system

Version 2 - Commercial launch of instrument system

Version 3- Commercial launch of instrument system

The Careway deliverables has a capability to distribute and market various manufactured drugs. This is an important as both companies are involved in similar product and services. Furthermore, the deliverable of SolvGen also comprise of research and development along with the limited license and agreement of distribution. As SolveGen has preserve all rights of intellectual regarding the result of research and development agreement, both companies are not individual liable for the these research and development deliverable and neither it would be consider as a separate unit of accounting (Epstein, Jermakowicz E., 2010).

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