Revenue – ifrs 15 handbook

party vendors are not acting on X’s behalf. X notes that: 
– the third party vendors have primary responsibility for fulfilment. They pick 
and are responsible for shipping the requested hardware;
– the warranties and end-user agreements generally ensure that the third party 
vendors are known to the customer and establish their responsibility for the 
acceptability of the hardware; and 
– X has no return or other back-end inventory risk. Even though X’s customers 
will frequently initiate and send returns to X, substantially all of X’s return 
terms with its customers are mirrored in the contracts between X and its 
vendor partners.
Third party software licences
X similarly concludes that it does not control the third party software licences 
before they are transferred to its customers and therefore that it is an agent for 
those specified licences.
X’s conclusion is based on the following factors. 
– X does not have a pre-purchased pool of licences that it can resell.
– X does not obtain a master copy of the licensed software and cannot 
generate or grant licences or keys for a customer independently of the third 
party software vendor. It is the third party software vendor that transfers a 
copy of the software to the customer, provides the key necessary to register 
the licence directly to the customer and enters into an end-user licence 
agreement with the customer that grants the licence to the customer. 
X further concludes that the software licences in its contracts do not exist 
until customers issue a purchase order and execute the applicable end-user 
licence agreement with the third party software vendor. Therefore, X concludes 
that it does not control the software licences before they are transferred to 
its customers.
Example 9 – Entity is a principal in website sales
Company Y operates a website on which it advertises and showcases for sale 
a wide variety of consumer products. For a significant portion of its sales, 
customers’ orders placed with Y are shipped directly from the supplier to the 
customer. Y does not take title to or possess any inventory of these consumer 
products at any point. 
When a customer places an order, Y notifies the vendor and provides it with 
the appropriate customer shipping information – i.e. where to deliver the 
product. Y charges the customer the advertised price of the product (which Y 
established) and then pays the vendor the specified unit price under the vendor