‘The following two examples accompanying the Standard ilstrate how this determination might be made in practice, Example 1 ~ Entity enters into a promise to provide goods or services (entity is a principal) LUFRS 15 tlustratve Example 47} [An entity negotiates with major atines to purchase tickets at reduced rates compared with the price of tickets sd directly by the airlines tothe public. The entity agres to buy a specific number of tickets and must pay for those tickets regardless of whether itis able to resell them. The reduced rate paid by the entity for each ticket purchased i negotiated and agreed in advance. ‘The entity determines the prices at which the atine tickets will be sold to its customers. The entity sells the tickets and collects the consideration from customers when the tickets are purchased therefore there sno creitrisk The entity also assists the customers in resolving complaints with the service provided by anes. However, each aiine s responsible for fulfling oblgations associated withthe tcke, including remedies to a customer for dissatisfaction with the service Ta determine whether the entity's performance obligation isto provide the specified goods or services itself (the entity isa principal orto arrange for another party to provide those goods or services (the entity is an agent, the entity considers the nature ofits promise. The entity determines that its promise isto provide the customer with atcket, which provides the right to fly on the specified fight or anather fight if the specified fight is changed or cancelled. In determining whether the entity obtains control of the ight, to fy before control transfers tothe customer and whether the entity i a rincipal, the entity considers the indicators as folows (2) the entity is primary responsible fr fuliling the contract, which is providing the right to fly. However, the entty is not responsible for providing the fight tel, which will be provided by the airine. (b) the entity has inventory risk forte tickets because they are purchased before they are sod tothe entity's customers and the entity i exposed to any lass asa result of not being able to sel the tickets for more than the entity's cost (© the entity has discretion in setting the sales prices for tickets to its customers. (€)2s. result ofthe entity's abiity to set the sales prices the amount thatthe entity ears snot inthe form ‘of @ commission, but instead depends onthe sles price it sets and the costs ofthe tckes that were negotiated with the ative The entity concludes that its promise isto provide a ticket (ea right to fh) tothe customer. On the basis of the indicators, the entity concludes that it contol the tcket before i i transferred to the customer. Thus, the entity concludes that its principal in the transaction and recognises revenue inthe grass amount of| consideration to which tis entitled in exchange forthe tickets transferred, Implementing IFRS 15 Revenue from Contracts with Customers