Agent (Net Revenue)
Agent (Net Revenue)
The ASC 606 Standard
An entity that arranges for another party to provide goods or services, requiring revenue to be recorded strictly on a net basis. The entity only recognizes the commission or fee earned for facilitating the sale.
The Real-World Scenario
You operate a ticketing website; a customer pays $100 for a concert, you pass $90 to the venue and keep $10 as your fee.
The Spreadsheet Breaking Point
Manually stripping out pass-through costs from thousands of transactions to find the net margin is tedious and highly error-prone.
The Hidden Cost to the Bottom Line
Failing to properly classify as an Agent causes massive artificial inflation of revenue, severely damaging executive credibility during audits.
How GAAPX Eliminates the Risk
Automatically identifies pass-through arrangements and completely strips out third-party costs, recording only the pure net margin as revenue.