This site uses cookies to provide you with a more responsive and personalised service. By using this site you agree to our use of cookies. Please read our cookie notice for more information on the cookies we use and how to delete or block them.
The full functionality of our site is not supported on your browser version, or you may have 'compatibility mode' selected. Please turn off compatibility mode, upgrade your browser to at least Internet Explorer 9, or try using another browser such as Google Chrome or Mozilla Firefox.

FASB issues ASU on principal-versus-agent considerations

  • FASB document Image

Mar 17, 2016

The FASB has issued Accounting Standards Update (ASU) No. 2016-08, “Principal Versus Agent Considerations (Reporting Revenue Gross Versus Net),” to clarify certain aspects of the principal-versus-agent guidance in its new revenue recognition standard in response to feedback received from the FASB-IASB joint revenue recognition transition resource group.

The ASU clarifies the following implementation guidance on principal-versus-agent considerations:

  • How “an entity determines whether it is a principal or an agent for each specified good or service promised to the customer.”
  • How “an entity determines the nature of each specified good or service.”
  • “When another party is involved in providing goods or services to a customer, an entity that is a principal obtains control of (a) a good or another asset from the other party that it then transfers to the customer; (b) a right to a service that will be performed by another party, which gives the entity the ability to direct that party to provide the service to the customer on the entity’s behalf; or (c) a good or service from the other party that it combines with other goods or services to provide the specified good or service to the customer.”

In addition, ASU 2016-08 updates the indicators in ASC 606-10-55-39 and revises the existing examples in ASC 606 to better illustrate the application of the principal-versus-agent guidance.

The amend­ments in the ASU are ef­fec­tive at the same time as those in ASU 2014-09 (as amended by ASU 2015-14).

For more in­for­ma­tion, see Deloitte's related Heads Up newsletter as well as the ASU on the FASB’s Web site.

Correction list for hyphenation

These words serve as exceptions. Once entered, they are only hyphenated at the specified hyphenation points. Each word should be on a separate line.