Identify the specified goods or services to be provided to the customer and.To determine the nature of its promise to the customer, the entity should: However, which presentation looks better? Obviously, revenues are higher using gross presentation.ĪSU 2016-08, Principal versus Agent Considerations (Reporting Revenue Gross versus Net) amends revenue recognition guidance within ASC 606 for these types of transactions. This transaction results in operating income of $16.50, regardless of how it is presented in the income statement. However, should Walmart present the transaction gross or net? This transaction contributes $16.50 ($110.00 less $93.50) to Walmart’s bottom line. The headphones are shipped from Incredible Cellular’s warehouse.Incredible Cellular is responsible for fulfilling the order and delivery.In our case, Walmart owes Incredible Cellular $93.50 ($110.00 x 85%). Incredible Cellular set the sales price and Walmart agreed to pay Incredible Cellular 85% of the sales price collected. ![]()
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