© 2019 KPMG IFRG Limited,
a UK company, limited by guarantee. All rights reserved.
10 Other application issues | 257
10.3 Principal vs agent considerations
|
ABC is not involved in developing the specifications for what P will produce.
ABC is not responsible if D is unsatisfied with P’s end product. D has no
recourse
against ABC, unless ABC has not satisfied its obligations in the
contract – generally limited to the responsibility for co-ordination between the
content developer and the consumer products company.
ABC has contracts with multiple content developers,
including P, to create
video content. ABC separately negotiates a fee with each content developer
for creating the content. ABC and D set the price for the content development
and P does not have visibility into that price. However,
D must pay P for costs
incurred plus a reasonable margin if it terminates the contract for reasons other
than P’s failure to perform.
ABC concludes that there is only a single specified service in this contract,
which is the service to produce the video content that promotes D’s consumer
products. ABC considered the following in evaluating
whether it controls the
specified service.
1. Is the service combined with other goods or services into a combined
output that is the specified good or service?
No. There are no other promised goods or services in the contract.
2. Does ABC direct P to provide services on its behalf?
No. ABC did not first enter into a contract with D and then engage P. D
and ABC entered into a contract that specified P’s involvement, so P
was engaged concurrently with ABC and D concluding their contract.
Furthermore, ABC does not control the services because it does not define
the services to be performed by P and is not involved
with the fulfilment of
the product.
3. Does ABC control a right to the specified service before it is provided to D?
No. ABC did not obtain the rights to the content, the content itself or commit
to purchasing the finished content before entering into the contract with D.
Therefore, ABC cannot direct the use of or benefit from P’s finished content
because it cannot use, resell or consume the content on its own.
Furthermore, ABC cannot benefit from the service
in the contract for its own
purposes.
ABC observes that its agent conclusion is further supported by the control
indicators.
–
Primary responsibility for fulfilment:
P is primarily responsible for providing
the content to D. ABC is only responsible for co-ordinating between P and D.
–
Price discretion:
ABC sets the price and contract with D and P. However, this
does not change the conclusion based on the other evidence provided.
–
Inventory risk:
ABC does not have inventory risk,
which supports a conclusion
that it does not obtain control of the content before it is transferred to D.
Based on the above, ABC concludes that it is the agent for the specified service
and recognises revenue on a net basis.
© 2019 KPMG IFRG Limited, a UK company, limited by guarantee. All rights reserved.
258 | Revenue – IFRS 15 handbook
Do'stlaringiz bilan baham: