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Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets | 12 Months Ended
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Dec. 31, 2021
Credit Loss [Abstract] |
Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets | Cumulative Allowance and the Provision for Changes in Expected Cash Flows from Financial Royalty Assets The cumulative allowance for changes in expected future cash flows from financial royalty assets is presented net within the non-current portion of Financial royalty assets, net on the consolidated balance sheets and includes the following activities: •the movement in the cumulative allowance related to changes in forecasted royalty payments we expect to receive based on projected product sales for royalty bearing products as estimated by sell-side equity research analysts’ consensus sales forecasts, and •the movement in the cumulative allowance for current expected credit losses. The periodic movement in the cumulative allowance is presented on the consolidated statements of operations as the Provision for changes in expected cash flows from financial royalty assets. Upon the January 1, 2020 adoption of ASU 2016-13, we recorded a cumulative adjustment to Retained earnings of $192.7 million to recognize an allowance for current expected credit losses on our portfolio of financial royalty assets with limited protective rights. The current period provision for changes in expected cash flows from financial royalty assets reflects the activity for the period primarily new financial royalty assets and changes in the underlying cash flow forecasts used in the effective interest model to measure income from our financial royalty assets. Refer to Note 2–Summary of Significant Accounting Policies for further information. The following table sets forth the activity in the cumulative allowance for changes in expected cash flows from financial royalty assets, inclusive of the cumulative allowance for credit losses, as of the dates indicated (in thousands):
| Activity for the Year
Balance at December 31, 2018 | $ | (1,982,897) |
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets | (322,717) |
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets | 1,342,038 |
Write-off of cumulative allowance (a) | 95,158 |
Balance at December 31, 2019 | $ | (868,418) |
Cumulative adjustment for adoption of ASU 2016-13 | (192,705) |
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets | (645,612) |
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets | 570,959 |
Write-off of cumulative allowance (a) | 2,964 |
Write-off of credit loss allowance (b) | 25,174 |
Current period provision expense for credit losses, net (c) | (156,186) |
Balance at December 31, 2020 | $ | (1,263,824) |
Increases to the cumulative allowance for changes in expected cash flows from financial royalty assets | (912,710) |
Decreases to the cumulative allowance for changes in expected cash flows from financial royalty assets | 446,955 |
Write-off of cumulative allowance (a) | 21,721 |
Current period provision income for credit losses, net (c) | 12,913 |
Balance at December 31, 2021 | $ | (1,694,945) |
(a) Relates to amounts removed from the allowance at the end of a royalty asset’s life to bring the account balance to zero. Write-offs solely impact the asset account and allowance account; there is no impact on the consolidated statements of operations. (b) Relates to amounts reversed out of the credit loss allowance associated with omecamtiv mecarbil as a result of the write-off of the related financial royalty asset balance of $90.2 million. (c) In the year ended December 31, 2020, the provision for credit losses was primarily related to certain additions to our portfolio of financial royalty assets with limited protective rights in 2020, mainly the final tranche of Tazverik. In the year ended December 31, 2021,the provision income for credit losses was primarily related to a significant decline in the financial asset value for Tazverik, which was offset by increases in our portfolio of financial royalty assets with limited protective rights in 2021, primarily related to zavegepant.

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- Definition The entire disclosure for credit loss on financial instrument measured at amortized cost basis, net investment in lease, off-balance sheet credit exposure, and available-for-sale debt security. + References Reference 1: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 7 -URI http://asc.fasb.org/extlink&oid=124269663&loc=SL82922895-210455 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 21 -URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919272-210447 Reference 3: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 8 -URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919236-210447 Reference 4: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 20 -URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919269-210447 Reference 5: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 30 -Section 50 -Paragraph 4 -URI http://asc.fasb.org/extlink&oid=124269663&loc=SL82922888-210455 Reference 6: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 11 -URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919244-210447 Reference 7: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 326 -SubTopic 20 -Section 50 -Paragraph 5 -URI http://asc.fasb.org/extlink&oid=124255953&loc=SL82919230-210447 + Details
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