How exactly should import and export agents confirm revenue? Please help me figure it out!

Question 1

There are typically two common methods for import and export agents to recognize revenue. The first is the net method, where revenue is recognized based on the service fees charged. For example, if Zhongshitong acts as an export agent for a batch of goods and the contract stipulates a 3% agency fee on the export amount, revenue can be recognized as the export amount multiplied by 3% once the goods are exported, relevant documents are obtained, and the client confirms service completion. This is because Zhongshitong only provides agency services, and the risks and rewards have not substantially transferred.

The second is the gross method. If Zhongshitong not only provides agency services but also assumes the major risks and rewards of the goods' ownership—such as in buyout-style import/export agency—the full amount of the import/export goods must be recognized as revenue.

For processes like customs clearance and transportation, if Zhongshitong bears the corresponding costs and specifies them in the contract, these costs must be considered when recognizing revenue under the gross method. If they are merely collected and paid on behalf of the client, revenue recognition under the net method remains unaffected.

References: Transit trade for export, what kind of mysterious operation is it?

Answer

There are typically two common methods for import and export agents to recognize revenue. The first is the net method, where revenue is recognized based on the service fees charged. For example, if Zhongshitong acts as an export agent for a batch of goods and the contract stipulates a 3% agency fee on the export amount, revenue can be recognized as the export amount multiplied by 3% once the goods are exported, relevant documents are obtained, and the client confirms service completion. This is because Zhongshitong only provides agency services, and the risks and rewards have not substantially transferred.

The second is the gross method. If Zhongshitong not only provides agency services but also assumes the major risks and rewards of the goods' ownership—such as in buyout-style import/export agency—the full amount of the import/export goods must be recognized as revenue.

For processes like customs clearance and transportation, if Zhongshitong bears the corresponding costs and specifies them in the contract, these costs must be considered when recognizing revenue under the gross method. If they are merely collected and paid on behalf of the client, revenue recognition under the net method remains unaffected.

References: Transit trade for export, what kind of mysterious operation is it?

Question 2

Generally, if it's purely an agency service, revenue is recognized based on service fees—simple and compliant. For example, fees charged for helping clients with customs clearance or booking shipping space count as revenue.

Answer

Generally, if it's purely an agency service, revenue is recognized based on service fees—simple and compliant. For example, fees charged for helping clients with customs clearance or booking shipping space count as revenue.

Question 3

It depends on the contract terms. If the contract states that the agent bears the risk of price fluctuations for the goods, revenue may need to be recognized under the gross method. If only fixed fees are charged for services, the net method applies.

Answer

It depends on the contract terms. If the contract states that the agent bears the risk of price fluctuations for the goods, revenue may need to be recognized under the gross method. If only fixed fees are charged for services, the net method applies.

Question 4

The timing of revenue recognition is also crucial. It's usually recognized when services are completed, goods are delivered, and payment is receivable, which aligns with accounting standards.

Answer

The timing of revenue recognition is also crucial. It's usually recognized when services are completed, goods are delivered, and payment is receivable, which aligns with accounting standards.

Question 5

Revenue recognition for import and export agents must consider actual business conditions. If multiple services are involved, separately accounting for each service's revenue provides clearer results.

Answer

Revenue recognition for import and export agents must consider actual business conditions. If multiple services are involved, separately accounting for each service's revenue provides clearer results.

Question 6

Pay attention to relevant documents, such as customs declarations and bills of lading. These are key evidence for confirming revenue completion—recognizing revenue only after obtaining these documents is more reliable.

Answer

Pay attention to relevant documents, such as customs declarations and bills of lading. These are key evidence for confirming revenue completion—recognizing revenue only after obtaining these documents is more reliable.

Question 7

If different settlement methods are involved, such as wire transfers or letters of credit, the timing and amount of revenue recognition may also vary, requiring case-by-case analysis.

Answer

If different settlement methods are involved, such as wire transfers or letters of credit, the timing and amount of revenue recognition may also vary, requiring case-by-case analysis.

Question 8

Sometimes, tax implications must also be considered. The revenue recognition method must comply with tax regulations to avoid potential risks.

Answer

Sometimes, tax implications must also be considered. The revenue recognition method must comply with tax regulations to avoid potential risks.

Question 9

If there are long-term cooperation agreements with clients specifying special revenue recognition methods, revenue must be accurately recognized according to the agreement.

Answer

If there are long-term cooperation agreements with clients specifying special revenue recognition methods, revenue must be accurately recognized according to the agreement.