Revenue – ifrs 15 handbook

Example 15 – Estimating gross revenue as a principal: Discount 
attributed to the intermediary
Company B is a principal that is entitled to receive 80% of the 10 
list price for each good sold by Intermediary D to end customers. 
Regardless of whether D sells the good for 7, 1 or another amount, 
the amount remitted by D will be 8 for each good sold to end 
customers on B’s behalf. 
B knows the list price, which is the product’s stand-alone selling 
price. Therefore, any incremental discount offered to the end 
customer by D is attributed to the intermediary. B’s transaction price 
for each good is 10.
10.3.4 
Transporting goods to customers
IFRS 15.B34, BC116S
In some arrangements, an entity delivers goods to a location specified by its 
customer and incurs transport costs. To determine how to account for these 
costs, an entity needs to consider whether the transportation service is a distinct 
performance obligation (see 
Chapter 2
) and when control of the goods transfers to 
the customer.
If control of the goods transfers to the customer on delivery to the final destination 
– i.e. transport and distribution costs form part of a single performance obligation 
for the sale of goods – then the entity recognises revenue when the goods are 
delivered and applies the guidance on inventory in the inventories standard on 
accounting for transport costs.
If control of the goods transfers to the customer before the goods are transported, 
then this may indicate that the transportation service is a separate performance 
obligation and the entity needs to determine whether it is a principal or an agent in 
relation to it (see 
10.3.1
).
– If the entity acts as a principal for the transportation service, then it recognises 
the gross revenue as the service is provided and applies the guidance in the 
revenue standard on fulfilment costs. 
– If the entity acts as an agent for the transportation service, then it recognises the 
net revenue when the service is arranged.

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262 | Revenue – IFRS 15 handbook
The following flowchart summarises how an entity may analyse transport costs.
Principal or agent?
Revenue gross as
:
service is provided
Transport costs:
apply the revenue
standard
Revenue net when
:
the service is
arranged
Transport costs N/A
: