Revenue Recognition Crossroads: Principal versus Agent Evaluation
The surge in e-commerce necessitates clarifications on Principal vs. Agent roles. FASB’s ASU 2016-08 provides guidance in multi-party setups.
In this episode, Scrubbed’s technical accounting experts Gliezel David and Junel Mamaril offer an in-depth look at the challenges and nuances of revenue recognition. From identifying contracts to satisfying performance obligations, they’ll guide us through the Five Steps of Revenue Recognition and explain how the Principal vs. Agent consideration can significantly impact financial outcomes.
Key points:
- Identifying contracts: challenges of unwritten contracts and assessing collectability
- Identifying performance obligations: how to determine if a promise within a contract is distinct, using examples from the Software as a Service (SaaS) industry.
- Determining the transaction price: how to account for significant financing components, non-cash considerations, and variable considerations
- Allocating transaction price to each performance obligation: using standalone selling prices and addressing the challenges when these prices are not readily available.
- Recognizing revenue: assessing progress over time, transfer of control at a point in time, and, principal vs agent analysis
Whether you’re a CEO, CFO, HR professional, or simply interested in SBC, this episode offers valuable knowledge and practical advice.
Find out how Scrubbed can help with you Technical Accounting challenges.
Episode Transcript
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About the Podcast Participants
Junel Mamaril
Junel Mamaril is a Technical Accounting Supervisor at Scrubbed with over 8 years of combined experience in audit, technical accounting, and academia. He specializes in US GAAP, particularly lease accounting and revenue recognition, and has worked with manufacturing and retail companies under PCAOB. Before joining Scrubbed, Junel spent six years as an accounting professor and is still an active exam reviewer for US CMA, Philippine CPA, and US CPA. He also contributes to Scrubbed’s platforms like FASTTalks and podcasts. Junel holds an MBA from the University of the Cordilleras and previously worked with EY.
Gliezel David
Gliezel is the Director of the Technical Accounting Services at Scrubbed with more than 15 years of experience providing technical accounting, audit, and advisory services to public and private companies and professionals. She has extensive knowledge of IFRS, US GAAP, and SOX/PCAOB reporting requirements. Gliezel helps our clients prepare technical memoranda, adopt new accounting standards, convert financial statements between accounting frameworks and conventions, and prepare and review SEC forms. Before joining Scrubbed, she was an Audit and Methodology Senior Manager in PwC Philippines and was assigned to the New York and Connecticut offices of PwC USA.
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