The new revenue standard generally shifts revenue guidance to a control-based principle. This change extends to guidance on principal-agent determinations. While entities continue to recognize revenue gross as a principal and net as an agent, the framework for the determination has been modified to also reflect a control-based principle.
In this report, we will focus on tangible goods where a distributor has the tangible goods shipped directly from its supplier (usually a manufacturer) to the distributor’s customer, otherwise known as