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If two companies agree to bundle each other's product and resell, when is it cogs or revenue if you are the distributor or licensor? I am assuming it is cogs if you are the licensor and revenue if you are the distributor

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Answers

Michelle Rogers
Title: Principle
Company: MR Consulting
(Principle, MR Consulting) |

Assuming the distributor and the licensor are separate legal entities, and the distributor handles the invoicing to the end client/user, the distributor would record the revenue from end client/user and the partner margin as COGS. The licensor would record the amount the distributor recorded as COGS as revenue. For example, a software license is sold to an end user for $100 and the licensor charges a 25% margin fee. The distributor would record $100 in revenue and $25 in COGS. The licensor would record $25 in revenue.

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