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FASB Proposes Gross-Net Guidance on Revenue Recognition

Tammy Whitehouse | September 1, 2015

To further clarify the requirements of the new revenue recognition standard, the Financial Accounting Standards Board has proposed an amendment to the standard meant to answer questions around when entities recognize revenue on a gross or net basis.

In its proposed update to accounting standards, FASB provides guidance to clarify the analysis of when an entity is acting as the principal in its interaction with a customer, or when its role is that of an agent for some other entity. That’s the analysis that helps a company determine if it should recognize revenue on a gross or net basis.

In discussions with FASB’s and the International Accounting Standards Board’s Joint Transition Resource Group, FASB learned companies were...

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