Table of Contents
Vitae Pharmaceuticals, Inc.
Notes to the Financial Statements (Continued)
For the Years Ended December 31, 2013 and 2012
2. Summary of Significant Accounting Policies and Basis of Accounting (Continued)
and repairs are expensed as incurred. The following estimated useful lives were used to depreciate the Company's assets:
||Estimated Useful Life
|Computer equipment and software
|Office furniture and equipment
retirement or sale, the cost of the disposed asset and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is charged to income.
Revenue Arrangements with Multiple Deliverables
The Company's revenues are generated primarily through collaborative arrangements which generally contain multiple elements, or
deliverables, including licenses and research and development activities to be performed by the Company on behalf of the licensee. Payments to Vitae under these arrangements typically include one or
more of the following: (1) nonrefundable, upfront license fees, (2) funding of discovery research efforts on a full-time equivalent ("FTE") basis, (3) reimbursement of research,
development and intellectual property costs, (4) milestone payments, and (5) royalties on future product sales.
Company accounts for revenue arrangements with multiple deliverables entered into prior to January 1, 2011 in accordance with ASC 605-25, Revenue
Recognition: Multiple-Element Arrangements.
The multiple-deliverable items are divided into separate units of accounting if certain criteria are met, including whether the delivered item has stand-alone value to the customer and whether there
is objective and reliable evidence of the fair value of the undelivered items. The Company allocates the consideration it receives among the separate units of accounting based on their respective fair
value, and applies the applicable revenue recognition criteria to each of the separate units. Where an item in a revenue arrangement with multiple deliverables does not constitute a separate unit of
accounting and for which delivery has not occurred, the Company defers revenue until the delivery of the item is completed.
January 1, 2011, the Company adopted on a prospective basis Accounting Standards Update ("ASU") 2009-13, Multiple-Deliverable Revenue
Arrangements, which amends ASC 605-25 and also adopted ASU 2010-17, Revenue RecognitionMilestone Method.
accordance with ASU 2009-13, the Company considers whether the deliverables under the arrangement represent separate units of accounting. In determining the units of accounting,
management evaluates certain criteria, including whether the deliverables have stand-alone value. The consideration received is allocated to the separate units of accounting using the relative selling
price method, and the applicable revenue recognition criteria are applied to each of the separate units.
Company determines the estimated selling price for agreement deliverables using the following hierarchy: (1) vendor-specific objective evidence ("VSOE"),
(2) third-party evidence ("TPE") or (3) best estimate of selling price if neither VSOE nor TPE is available. Determining the best estimate of selling