Pass-through costs

Costs rebilled to a customer at little or no markup. The billing label does not determine whether amounts are recognized as gross revenue or net fees; principal-versus-agent and control assessments under the applicable accounting rules matter.

Gross billings and accounting revenue

Gross billings are total amounts invoiced to customers. They are distinct from pass-through costs and need not equal recognized revenue. Accounting presentation depends on the nature of the promise and whether the entity controls the specified goods or services before transfer, not simply on the markup.

Pass-through costs in round numbers

Hypothetical annual US$ millions: gross billings of 12 include 3 of parts rebilled at cost. Excluding those billings gives an analytical subtotal of 12 − 3 = 9, not automatically statutory net revenue. If equal revenue and cost of 3 were both included and then removed for analysis, profit dollars would be unchanged while the margin denominator would change.

Source: IFRS Foundation: IFRS 15 principal versus agent considerations.

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