Revenue sharing - payment to the customer
A company recently entered into a revenue-sharing agreement with a customer, requiring it to pay 80% of the annual fees and interchange fees to the customer as agreed. This article focuses on the accounting recognition and measurement of this expenditure, analyzing its nature (expense or reduction of revenue), timing of recognition, and presentation, while noting that judgment should be based on contract terms and applicable standards.
Hi, hopefully it is a quick question. Our company just started to do revenue sharing with a customer, we are paying the customer 80% annual fee and 80% interchange fees based on the information that we have received. What is the proper way to book the payment to the customers? thanks