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FASB and IASB Discuss Changes to Principal versus Agent Considerations

During its joint meeting on December 16th, the Financial Accounting Standards Board (“FASB”) and International Accounting Standards Board (“IASB”) redeliberated proposed amendments to the principal versus agent guidance. The meeting was in response to feedback received on the boards’ exposure drafts, FASB Proposed Accounting Standards Update, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net), and IASB Exposure Draft, Clarifications to IFRS 15.

During redeliberations, the FASB and IASB reached tentative decisions in regard to the following:

  • Principle for determining whether an entity is a principal or an agent;
  • Unit of account for the principal versus agent evaluation;
  • Application of the control principle; and
  • Control indicators.

As part of its next steps, the FASB ordered staff members to prepare a final Accounting Standards Update for vote.

More on the decisions from the December 16th meeting can be found in the Revenue from Contracts with Customers Project Update.

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