Hi!
I have two questions relating to revenue and expense netting.
(1) Revenue Sharing - We have an agreement with a a partner brand wherein they share a certain % for revenues we earn on their product brand with us. For financial reporting, can we offset/net their revenue share against the income we recognized? I
(2) Expense Sharing - We are paying our partner brands for marketing fees. As part of the contract with them, our entity is entitled to receive bounty fees / marketing funding based on a usage of the product with their branding. For financial reporting, can we offset/net the amount we receive against the expense we recognized?
Hope you could help
Revenue and Expense Netting
Re: Revenue and Expense Netting
1. You need to determine whether you're an agent or a principal:
https://ifrscommunity.com/knowledge-bas ... ss-vs-net/
2. You need to be careful here, it may be the case that you *must* offset the revenue. It largely depends on whether you're receiving a distinct marketing services or not. Read this section:
https://ifrscommunity.com/knowledge-bas ... a-customer
https://ifrscommunity.com/knowledge-bas ... ss-vs-net/
2. You need to be careful here, it may be the case that you *must* offset the revenue. It largely depends on whether you're receiving a distinct marketing services or not. Read this section:
https://ifrscommunity.com/knowledge-bas ... a-customer
Re: Revenue and Expense Netting
Sorry Marek, for the point 2, I can't understand your point.
The question was about how to treat the marketing funding by the partner, as a revenue or in reduction of marketing expenses. It would've been applicable if the company is the one who pays.
The question was about how to treat the marketing funding by the partner, as a revenue or in reduction of marketing expenses. It would've been applicable if the company is the one who pays.
Re: Revenue and Expense Netting
maybe it's not clear, I understood that they are paying some marketing fees to their customer
Re: Revenue and Expense Netting
Hi Leo, Marek,
On the 2nd point - Leo is correct, the main question is how to treat the marketing funding by the partner/vendor, as a revenue or in reduction of marketing expenses.
On the 2nd point - Leo is correct, the main question is how to treat the marketing funding by the partner/vendor, as a revenue or in reduction of marketing expenses.