An enterprise receives cash from an investor and agrees to pay to the investor for a defined period a specified percentage or amount of the revenue or of a measure of income (for example, gross margin, operating income, or pretax income) of a particular product line, business segment, trademark, patent, or contractual right. It is assumed that immediate income recognition is not appropriate due to the facts and circumstances. The payment to the investor and the future revenue or income on which the payment is based may be denominated in a foreign currency. The issues are: 1. Whether the enterprise should classify the proceeds from the investor as debt or as deferred income 2. How that debt or deferred income should be amortized 3. How the foreign currency effects, if any, should be recognized. Copyright © 2006, Financial Accounting Standards Board Not for redistributio
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