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Chapter 10 — Principal-Versus-Agent Considerations

10.3 Determining Whether an Entity Is Acting as an Agent

10.3 Determining Whether an Entity Is Acting as an Agent

If an entity concludes that it does not obtain control of a good or service before that good or service is transferred to a customer, the entity is acting as an agent. That is, the entity’s performance obligation is to arrange for another party to transfer the good or service to the customer. As an agent, the entity will recognize as revenue the commission or fee it earns (i.e., the net amount of consideration retained) when or as it satisfies its performance obligation of arranging for the specified goods or services to be provided by another party. This guidance is articulated in ASC 606-10-55-38 as follows: