What primary responsibility does a principal have under IFRS 15?

Under IFRS 15, the primary responsibility of a principal is to provide goods or services to the customer. This standard focuses on the recognition of revenue derived from contracts with customers and outlines the criteria for identifying whether an entity is acting as a principal or an agent in a transaction.

When an entity is acting as a principal, it is responsible for fulfilling the contract by delivering the promised goods or services, which means that the entity recognizes revenue at the gross amount—reflecting the total consideration it expects to be entitled to for transferring those goods or services.

While aspects such as setting prices and managing customer relationships can look relevant, they do not define the legal and contractual responsibilities established under IFRS 15. Therefore, these activities, while important, serve more as auxiliary functions that support the principal's role in ensuring that the goods or services are provided as agreed in the contract. The cornerstone of the principal’s responsibilities is the actual provision of the goods or services, which directly correlates with revenue recognition.