Revenue – ifrs 15 handbook

Certain conditions may help with control determination
When assessing whether the entity acting as intermediary has obtained control 
of the specified good or service before it transfers to the end customer, the 
following general control considerations may be helpful.
– 
Intermediary does not obtain control: agent.
The supplier has a substantive 
unconditional right to recall the inventory before sale to an end customer, or 
the supplier and the intermediary enter into a consignment arrangement and 
control passes only on sale to the end customer.
– 
Intermediary obtains control: principal.
The supplier and the intermediary 
enter into a bill-and-hold arrangement and all of the criteria for the transfer of 
control are met (see 
Section 5.7
).
No individual indicator is generally determinative
IFRS 15.B37
There is no specific hierarchy for the indicators and an entity considers all of 
the indicators in making the assessment. The assessment of whether the 
entity controls the specified good or service before it is transferred to the 
customer does not depend on whether one or more of the indicators are met 
or on a majority evaluation of the indicators. For instance, meeting two of the 
three indicators, or not meeting two of the three indicators, does not in itself 
determine the conclusion of the control evaluation. 
The indicators are intended to inform the control evaluation and, depending 
on the facts and circumstances, provide more or less relevant evidence in that 
evaluation. Therefore, meeting one (or more) of the indicators cannot override 
other more relevant evidence of whether the entity controls the specified 
good or service before it is transferred to the customer in accordance with the 
control principle.
Assessing the relevance of the indicators may be challenging when it is unclear 
whether the entity or other party bears the responsibility, or when there are 
shared responsibilities between the entity and other party. For example, an 
entity that does not have primary responsibility for providing the specified good 
or service or inventory risk may have discretion to set prices. In this case, the 
entity makes an overall assessment of all of the facts and circumstances. This 
may include assessing whether the discretion to set prices is merely a way for 
the entity to generate additional revenue while arranging for another entity to 
provide the specified goods or services, or evidence that the entity is acting as 
a principal.

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10 Other application issues | 251
10.3 Principal vs agent considerations
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