CFA Level I · CFA Level I Exam · Analyzing Income Statements
A company acts as an agent when arranging sales of a supplier's goods, never taking control of them. The customer pays $900, and the company keeps a $90 commission and remits $810 to the supplier. Under IFRS 15, the company most likely reports revenue of:
The company reports revenue of $90. As an agent it does not control the goods before they reach the customer, so revenue is recognized net as the commission earned, not the $900 gross amount collected from the customer.
- A$90Correct
- B$810
- C$900
Explanation
An agent does not control the goods before transfer, so it reports revenue net, equal to its fee or commission of $90. Reporting $900 is the gross treatment suited to a principal. $810 is the amount passed to the supplier, not the agent's revenue.
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