Case Memo: Revenue Recognition and the Vaccine Industry

Case Memo
Name Course Instructor Date
CASE memorandum
Date: February 1, 2021

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Subject:

Revenue Recognition and the Vaccine Industry

This memo focuses on revenue recognition for vaccine companies with stockpiled vaccines, SEC modification, and amendment of the revenue recognition approach. This links to the revenue recognition issues for bill-and-hold sales in the pharmaceutical and vaccine industry. Bill-and-hold transactions occur when there are customer billing and payment before shipping for goods ready for delivery. Revenue recognition for these transactions is at the point of sale, even as delivery is at a later date. The U.S. government's Vaccine for Children Program (VCP) buys pediatric vaccines' federal stockpile from selected pharmaceutical companies. As an auditor in a pharmaceutical firm, I will address the issue of revenue recognition.
Before ASC 605-15-S99-1, vaccine companies recognized revenue for stockpiled inventories of vaccines when their payment was received. This was helpful to the companies that recorded revenue without delivering the vaccines that were already stockpiled. There had already been high costs incurred in R & D and a long time to approve the vaccines. ASC 605-15-S99-1 required that the vaccine makers recognize revenue on ship...