Revenue – ifrs 15 handbook

Example 3 – Entity arranges for the provision of goods or services
IFRS 15.IE231–IE233
Internet Retailer B operates a website that enables Customer E to buy goods 
from a range of specific suppliers that deliver the goods directly to E. The 
website facilitates payment between the supplier and E at prices set by the 
supplier, and B is entitled to commission of 10% of the sales price. E pays in 
advance and all orders are non-refundable. 
B notes that each supplier delivers its goods directly to E and that B itself does 
not control the goods. In reaching the conclusion that it does not control the 
goods before they are transferred to E, B makes these observations.
– The supplier is primarily responsible for fulfilling the promise to provide the 
goods to E (i.e. by shipping the goods to E). B is not obliged to provide the 
goods to E if the supplier fails to deliver and is also not responsible for the 
acceptability of the goods delivered by the supplier. 
– B does not take inventory risk at any time before or after the goods are 
transferred to E (because the goods are shipped directly by the supplier to 
E), B does not commit to obtain the goods from the supplier before they are 
purchased by E and B is not responsible for any damaged or returned goods.
– B does not have discretion in establishing prices for the goods because the 
sales price is set by the supplier.

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10 Other application issues | 249
10.3 Principal vs agent considerations
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Consequently, B concludes that it is an agent and that its performance 
obligation is to arrange for the supplier to provide the goods. When B satisfies 
its promise to arrange for the supplier to provide the goods to E – which, in this 
example, is when the goods are purchased by E – B recognises revenue at the 
amount of the commission to which it is entitled.