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IFRS 15 - Principal and Agent

SSami8y ago
Entity A enters into a management agreement with Customer B to provide lawn maintenance services, including fertilization, mowing and trimming, and periodic seeding. Entity A does not provide lawn maintenance services itself; rather, it contracts with third-party service providers for each aspect of the lawn maintenance service. Entity A and Customer B have agreed on a single price for the lawn maintenance service. Entity A separately enters into contracts with third-party service providers and directs those service providers to perform each aspect of the lawn maintenance services. Once A enters into contracts with the third-party service providers, it can direct those service providers to perform services for any number of its customers. Even though A is not performing the services, it controls the right to the services by directing specific lawn maintenance service providers to perform each aspect of the lawn maintenance services. Because A controls the right to the services, A concludes that it is acting as the principal. From the above illustration, does it mean that third party service providers are acting as agents??
P2-D2P2-D2Tutor8y ago#1
Hi, Again, this is not likely to be seen in FR, but use the pointers that I gave in the previous post to help you identify the principal/agent. Thanks
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