IFRS IC agenda decision on whether a software reseller is an agent or principal under IFRS 15

Keywords: Mazars, Thailand, IFRS, IFRS 15, IFRS IC, IAS 1

20 July 2022

This is available here, on whether a software reseller is an agent or principal under IFRS 15.

In the request submitted to the Committee, a reseller advises an end-customer on the type of software and number of licences but does not provide any other services (the licences are standard licences). If the customer chooses to buy the licences, the reseller places the order with the software manufacturer and the customer enters into a contract directly with the manufacturer. The software manufacturer provides the customer with the software licences – issued in the customer’s name – via a software portal and an activation key. If the reseller advises the customer to buy a type or number of licences that do not meet the customer’s needs, the customer may refuse to accept the licences. In this case, the reseller may neither return them to the manufacturer nor sell them to another customer.

In its agenda decision, the Committee did not reach a conclusion on whether the reseller is acting as an agent or as a principal under IFRS 15 – Revenue from Contracts with Customers. This would require the use of judgement based on the specific facts and circumstances of the case, including the terms and conditions of the contracts. The Committee thus simply drew attention to the relevant sections of the standard and explained how they apply, setting out its reasoning step by step. It also reminded preparers of the requirement to provide disclosures in the notes on material accounting policies in accordance with IAS 1, and on significant judgements made in determining revenue in accordance with IFRS 15.