Revenue Recognition Principle Or Agent

Net presentation of revenue.

Revenue recognition principle or agent. 12 revenues in the media sector can arise from the sale of goods or rendering of services in areas as diverse as books newspapers magazines music film television video games and more. Agent considerations january 27 2020 by brandon coates. Before recognizing revenue under asc 606 an entity must determine whether it is a principal or an agent for each promised good or service. A principal recognises revenue and expenses in gross amounts whereas an agent recognises only fees or commissions even if gross cash flows go through the agent ifrs 15 b35 b36.

Revenue recognition media companies accounting issues media industry accounting ifrs principal arrangements pwc sam tomlinson christoph gruss media industry accounting group accounting for ebooks television content distribution created date. 19 may 2015 this session was primarily devoted to discussing actions the iasb could take to resolve issues discussed by the trg on the application guidance principal versus agent considerations in ifrs 15. A recent accounting standards update asu issued by the financial accounting standards board fasb provides four amendments to the application of revenue recognition guidance depending on whether an entity is the principal or the agent. Principal and agent definitions.

This classification affects the amount of revenue recognized by an entity a principal recognizes revenues at the gross amount received for the goods and services while an agent recognizes revenue at the net amount i e the fee or commission the entity. Agents typically arrange for something to happen therefore once it is arranged revenue can be recognised. Principal agent arrangements issues for media companies keywords. Revenue recognition principal versus agent considerations date recorded.

Revenue recognition standards clarify principal vs. Within the guidance it specifies that to determine the nature of its promise to the customer the entity should. Asu 2016 08 principal versus agent considerations reporting revenue gross versus net was subsequently issued to clarify revenue recognition guidance within asc 606 for these types of transactions. The update is the result of input from the joint transition resource group for revenue recognition created by the fasb and the international accounting.

Being a principal or agent impacts both the timing and amount of revenue recognised. Agent considerations are otherwise known as gross vs. The two key definitions are as.