Revenue – ifrs 15 handbook

Example 4 – Entity is an agent and a principal for sales of virtual or 
intangible goods
IFRS 15.IE248A–IE248F
Company H contracts to provide recruiting services. As part of the contract, 
Customer J agrees to obtain a licence to access a third party’s database of 
information on potential recruits. H arranges for this licence and collects 
payment from J on behalf of the third party database provider. However, the 
database provider sets the price to J for the licence and is responsible for 
providing technical support.
H concludes that the recruitment services and the database access are distinct. 
H considers the control principle and indicators to determine whether it controls 
the specified goods and services before they are transferred to J.
H concludes that it is the principal in relation to the recruitment services 
because it performs those services itself. In contrast, H concludes that it is an 
agent in relation to the promise to provide access to the third party’s database 
because H does not control access to the database before it is transferred to J 
for the following reasons.
– H is not responsible for fulfilling the promise to provide access to the 
database access. 
– H does not have inventory risk because it does not purchase, or commit to 
purchasing, the database access from the database provider.
– H does not have discretion in setting the price for the database access.
Principal-agent indicators support application of the general 
control principle, but cannot override it
When evaluating whether an entity obtains control of the specified good or 
service, an entity first applies the general definition of control and relevant 
indicators. To help it make this assessment, the entity may also use the 
principal-agent indicators. 
The principal-agent indicators are helpful when the overall assessment of 
control is unclear or highly judgemental. However, the key consideration 
remains whether the entity obtains control; if the conclusion of the control 
evaluation is clear, then the principal-agent indicators cannot override 
this conclusion.

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250 | Revenue – IFRS 15 handbook