Jing Statistical Services operates a website that links experienced statisticians with businesses that need data analyzed. Statisticians post their rates, qualifications, and references on the website, and Jing receives 25% of the fee paid to the statisticians in exchange for identifying potential customers. VetMed Associates contacts Jing and arranges to pay a consultant $1,500 in exchange for analyzing some data. Jing's income statement would include the following with respect to this transaction:
A) Revenue of $1,500
B) Revenue of $1,500, and cost of services of $1,125
C) Revenue of $375
D) Revenue of $1,875 and cost of services of $1,500

Question

Quizplus · Accepted Answer

Jing is an agent. It doesn't have primary responsibility for delivering the statistics services and doesn't collect payment from the customer. Rather, Jing is an agent, with its primary performance obligation being to facilitate transactions between customers and statisticians. Therefore, Jing would recognize as revenue only its commission of $375 (computed as 25% × $1,500).

Jing Statistical Services Operates a Website That Links Experienced Statisticians