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Joint Venture
9 Months Ended
Mar. 31, 2019
Equity Method Investments And Joint Ventures [Abstract]  
Joint Venture

Note 15. Joint Venture

 

In January 2019, the Company’s wholly-owned subsidiary, Accuray Asia Limited (“Accuray Asia”), entered into an agreement with CNNC High Energy Equipment (Tianjin) Co., Ltd. (the “CIRC Subsidiary”), a wholly-owned subsidiary of China Isotope & Radiation Corporation, to form a joint venture, CNNC Accuray (TianJin) Medical Technology Co. Ltd. (the “JV”), to manufacture and sell radiation oncology systems in China. Accuray Asia initially has a 49% ownership interest in the joint venture and the CIRC Subsidiary initially has a 51% ownership interest in the joint venture. The JV was granted a business license in April 2019. For the three and nine months ended March 31, 2019, no JV business activities took place as the business license was not yet issued.

 

In exchange for the initial 49% equity interest in the JV, the Company, through Accuray Asia, expects to make its initial capital contributions to the JV by December 31, 2019 in the form of in-kind contributions consisting of components for two full radiation oncology systems from the Company’s inventory. Any remaining amount of capital contributions due, if not satisfied by such in-kind contributions, will be made by the Company, through Accuray Asia, in accordance with the schedule set by the board of directors of the JV.

 

The Company is assessing the accounting treatment of its investment in the JV and expects to apply the equity method of accounting to the ownership interest in the JV as it has the ability to exercise significant influence over the JV but lacks controlling financial interest and is not the primary beneficiary. The Company will recognize the 49% proportionate share of the JV income or loss on a one-quarter lag due to the timing of the availability of the JV’s financial records.