Article Review: FASB Proposes Amending Revenue Standard’s Guidance on Principal-vs-Agent Considerations

Article Review: FASB Proposes Amending Revenue Standard’s Guidance on Principal-vs-Agent Considerations

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Article Review: FASB Proposes Amending Revenue Standard’s Guidance on Principal-vs-Agent Considerations

In the article, FASB Proposes Amending Revenue Standard’s Guidance on Principal-vs-Agent Considerations by Joe DiLeo and Nick Tricarichi, the two authors present the accounting standard updates by FASB in reference how entities should clarify whether a good or a service can be categorized as a principle or an agent consideration. Under the new proposal, entities will be able to substantiate the specified goods of services, which include the rights that accrue to these goods from a different third party. If for example, an entity opts to control goods or services before it is transferred to buyer, in that case it would be viewed as a principal. However, the agent will provide this arrangement (Joe & Nick, 2015).

Most stakeholders have always raised concerns on the processes they follow while determining the unit of account. They concern specifically falls on whether to determine these unit if accounts as contract level or in the performance obligation level. In addition, they have also raised concerns in regards to the new revenue standard, which will assist the single evaluation control or be a representation of an additional evaluation.

Being a clarification, FASB has presented the control considerations whenever an individual engages in a transaction with a customer. In the clarification, FASB presents indicators on how an entity should be viewed as a principal advising accountants and entities on how they should view the parties in a transaction. The indicators are; if an entity is responsible to

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