In the context of IFRS 15, how is revenue recognized when acting as an agent?

In the context of IFRS 15, when an entity acts as an agent in a transaction, it recognizes revenue by acknowledging only the commission earned. This is because the agent does not control the goods or services provided to the customer; rather, it merely facilitates the sale between the principal (the entity that owns the goods/services) and the customer.

The agent's role is to arrange for the transfer of goods or services from the principal to the customer, and, as such, the agent recognizes revenue that corresponds to the commission or fee it earns for this service. This treatment reflects the underlying economic reality of the transaction, where the agent's performance obligation is to facilitate the sale rather than to provide the goods or services itself.

This approach aligns with the principle of revenue recognition under IFRS 15 that emphasizes the transfer of control over goods or services. In scenarios where the agent merely acts on behalf of the principal, recognizing only the commission earned provides a clearer picture of the agent's contributions to the revenue process.