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FASB directs its staff to draft proposed amendments to new revenue standard

Published on: 29 Jul 2015

Today, the FASB met to discuss potential changes to the guidance in the new revenue standard1 on whether an entity is a principal or an agent under the standard. 

The FASB tentatively agreed not to undertake any standard-setting activities regarding whether an entity that is a principal in a revenue transaction should estimate gross revenue when it does not know the price the intermediary charged to the end customer because:

  • Its staff believes that the only practical solution is to amend the guidance in the new revenue standard but that doing so (1) could create unintended consequences and (2) would cause divergence because the IASB has decided to not amend the new revenue standard with respect to this issue.
  • The staff’s research indicated that this issue is very narrow in scope.

In addition, the Board unanimously agreed to permit its staff to draft a proposed Accounting Standards Update (with a 45-day comment period) that reflects the Board’s June 22, 2015, tentative decisions (i.e., proposing to amend the principal-agent guidance in the new standard). 

For more information on the FASB’s June 22, 2015, meeting, see Deloitte’s June 26, 2015, journal entry.


1 FASB Accounting Standards Update No. 2014-09, Revenue From Contracts With Customers.

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