Revenue recognition by an airline ticketing agent

Question

We are an airline ticketing agent. We sell air tickets of various airlines. What we do is we add a certain % of margin to the ticket price of the agent & sell to customers. My question is whether we need to recognize gross amount receivable from the customer as revenue or only the *** margin we have?

Answer 1

This is discussed under EITF Issue No. 99-19; download here: http://***.fasb.org/resources/ccurl/839/596/abs99-19.pdf

Whether to recognize gross or *** revenue depends on the relevant facts and circumstances and that the factors or indicators set forth below should be considered:

Indicators of Gross Revenue Reporting
-The company is the primary obligor in the arrangement
-The company has general inventory risk
-The company has latitude in establishing price
-The company changes the product or performs part of the service
-The company has discretion in supplier selection
-The company is involved in the determination of product or service specifications
-The company has physical loss inventory risk
-The company has credit risk

Indicators of *** Revenue Reporting
-The supplier (not the company) is the primary obligor in the arrangement
-The amount the company earns is fixed
-The supplier (and not the company) has credit risk