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 website.

Comparison with IFRS

The amendments in the FASB's ASU are the same as the amendments the IASB decided to make to its principal versus agent considerations application guidance in its forthcoming final standard, Clarifications to IFRS 15. The FASB has adopted a more piecemeal approach to amending its revenue standard and has decided to publish more extensive amendments. ASU 2016-08 is the first of three expected FASB ASUs on revenue clarification.